May 3, 1996 Contact: Jennifer McNulty (408) 459-2495; mcnulty@ua.ucsc.edu

ECONOMIST KENNETH KLETZER DISCUSSES CONTRACT ENFORCEMENT WITHOUT LAWS DURING PUBLIC LECTURE MAY 14

FOR IMMEDIATE RELEASE

SANTA CRUZ, CA--How do individuals, firms, or states enforce agreements over time without lawyers, contracts, or courts? That will be the topic of a free public lecture by professor of economics Kenneth Kletzer of the University of California, Santa Cruz, on Tuesday, May 14. The event will begin at 8 p.m. in the Performing Arts Concert Hall at UCSC.

In his talk, entitled "Contracts Without Laws: Premarket Economics from Villages to Sovereign States," Kletzer will discuss his research on what he calls "mutual help arrangements" between individuals or families, informal credit markets in poor agrarian societies, and international political or economic cooperation between governments.

"What these relationships have in common is that one party must make a payment to or take an action that is beneficial for another while trusting that his or her counterpart will repay or return the favor in the future without entering into a contract enforceable by an external legal authority," explains Kletzer. In today's modern market economies, financial contracts rely on a legal system backed by the power of the state, notes Kletzer. It is frequently presumed that without any legal means of enforcing cooperation, barter would become the predominant form of trade.

But credit markets emerged before reliable legal systems did, and the development of commercial laws followed needs that were created in emerging markets. Various forms of mutual help occur in many societies, with or without reliable legal rights and authorities, says Kletzer, whose work shows how informal contracts enforced by the participants can be sustained without legal means or the involvement of external parties.

Kletzer's talk is presented as part of a series of inaugural lectures offered by UCSC faculty who have attained the rank of full professor. Kletzer came to UCSC as a full professor in 1992 from the faculty of Yale University.

This release is also available on the World Wide Web at UCSC's "Services for Journalists" site (http://www.ucsc.edu/news/journalist.html) or via modem from UC NewsWire (209-244-6971).

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