ABSTRACT:

 

Ancient Athens is a useful case study to gain insight into modern debates of political economy and prison privatization.  The administration of justice in Athens between 800 and 400 B.C. radically changed from a decentralized private market into a centralized state-sponsored legal system.  What is the optimal role of the state? I compare the conditions of Athens before and after state prisons and state justice on several margins: economic prosperity, equality before the law, protection of private property, and the potential for rent-seeking and capture.  On some margins the private legal system has preferable results.  On other margins, the state legal system is not clearly preferred.