Abstract
‘Economics of Theft’ analyses theft asan economic and social activity. The article challengesconventional attitude to theft as repulsive activitywhich causes moral indignation. Theft is analysedthrough two criteria which economists usually usewhen judging any economic activity; efficiency andequity. In addition to these two criteria a third one isintroduced, namely the optimal level of theft. In a vastmajority of cases theft redistributes income from betteroff to worse off; therefore, theft passes the test ofequity. Also, at lower levels a thief’s utility exceeds thedamage which a victim of theft suffers. As levels oftheft increase, marginal utility to a thief falls andmarginal damage to a victim of theft increases.Optimal level of theft is achieved when marginal utilityto a thief equals marginal damage to a victim of theft.Economists do not feel any moral indignation to theftsince it passes the test of equity. What concernseconomists is the fact that theft is unproductive activitywhich does not create any new value. Theft, therefore,does not pass the test of efficiency. The articleanalyses and compares theft with several economicactivities which do not create any material, intellectualor spiritual value and which pass neither the efficiencynor the equity test. Those activities might cause moralindignation but are perfectly legal. Economists canjustify theft until optimal level is reached, i.e. when thethief’s utility is equal to the damage suffered by avictim of theft. Laws, however, punish every theft evenwhen it is socially just. Apparently, there is a frictionbetween the economic theory and the legal system.Something must be wrong either with the economictheory or with the law. Or maybe both of them arewrong. A possible explanation might be found inMontesque’s statement that the legal system is anetwork through which big fish pass and small fish arecaught.