Republished as “Legislation and Law in a Free Society,” Mises Daily (Feb. 25, 2010). See archived comments below.
For a more in depth treatment of these issues, see “A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability,” in Legal Foundations of a Free Society (Houston, Texas: Papinian Press, 2023).
***
From the Archives:
“Legislation and Law in a Free Society,” 45 The Freeman: Ideas on Liberty 561 (September 1995)
Legislation and Law in a Free Society
By N. Stephan Kinsella • September 1995 • Volume: 45 • Issue: 9
Mr. Kinsella practices law with Schnader, Harrison, Segal & Lewis in Philadelphia. This article is adapted from a longer essay forthcoming in the Journal of Libertarian Studies, which contains detailed references to the authors and works cited here.
Libertarians and classical liberals have long sought to explain what sorts of laws we should have in a free society. But we have often neglected the study of what sort of legal system is appropriate for developing a proper body of law.
Historically, in the common law of England, Roman law, and the Law Merchant, law was formed in large part in thousands of judicial decisions. In these so-called “decentralized law-finding systems,” the law evolved as judges, arbitrators, or other jurists discovered legal principles applicable to specific factual situations, building upon legal principles previously discovered, and statutes, or centralized law, played a relatively minor role. Today, however, statutes passed by the legislature are becoming the primary source of law, and law tends to be thought of as being identical to legislation. Yet legislation-based systems cannot be expected to develop law compatible with a free society.
Certainty, which includes clarity of and stability in the law, is necessary so that we are able to plan for the future. Often it is thought that certainty will be increased when the law is written and enunciated by a legislature, for example in the civil codes of modern civil-law systems.
As the late Italian legal theorist Bruno Leoni pointed out, however, there is much more certainty in a decentralized legal system than in a centralized, legislation-based system. When the legislature has the ability to change the law from day to day, we can never be sure what rules will apply tomorrow. By contrast, judicial decisions are much less able to reduce legal certainty than is legislation.
This is because the position of common-law or decentralized judges is fundamentally different from that of legislators in three respects. First, judges can only make decisions when asked to do so by the parties concerned. Second, the judge’s decision is less far-reaching than legislation because it primarily affects the parties to the dispute, and only occasionally affects third parties or others with no connection to the parties involved. Third, a judge’s discretion is limited by the necessity of referring to similar precedents. Legal certainty is thus more attainable in a relatively decentralized law-finding system like the common law, Roman law, or customary law, than in centralized law-making systems where legislation is the primary source of law.
Negative Effects of Uncertainty
Legislation tends to interfere with agreements that courts would otherwise have enforced and thereby makes parties to contracts less certain that the contract will ultimately be enforced. Thus, individuals tend to rely less on contracts, leading them to develop costly alternatives such as structuring companies, transactions, or production processes differently than they otherwise would have.
Another pernicious effect of the increased uncertainty in legislation-based systems is the increase of overall time preference. Individuals invariably demonstrate a preference for earlier goods over later goods, all things being equal. When time preferences are lower, individuals are more willing to forgo immediate benefits such as consumption, and invest their time and capital in more indirect (i.e., more roundabout, lengthier) production processes, which yield more and/or better goods for consumption or for further production. Any artificial raising of the general time preference rate thus tends to impoverish society by pushing us away from production and long-term investments. Yet increased uncertainty, which is brought about by a legislation-based system, causes an increase in time preference rates because if the future is less certain, it is relatively less valuable compared to the present.
In addition to materially impoverishing society, higher time preference rates also lead to increased crime. As a person becomes more present-oriented, immediate (criminal) gratifications become relatively more attractive, and future, uncertain punishment becomes less of a deterrent.
Central Planning and Economic Calculation
Ludwig von Mises showed that, without a decentralized private property system, the free market prices which are essential in economic calculation cannot be generated. As Leoni has explained, Mises’ criticism of socialism also applies to a legislature attempting to “centrally plan” the laws of a society. The impossibility of socialism is only a special case of the general inability of central planners to collect and assimilate information widely dispersed in society. The widely dispersed, decentralized character of knowledge and information in society simply makes it too difficult for centralized legislators to rationally plan the laws of society.
Legislators’ inescapable ignorance also makes them less able to truly represent the general will of the populace and likely to be influenced by special interests. Because of their ignorance, they have no reliable guide for knowing what statutes to enact, which makes them more likely to be influenced by lobbyists and special interest groups. This leads to statutes that benefit a select few at the expense of others and, in the long run, at the expense of all of society.
Decentralized law-finding systems like the common law, on the other hand, are analogous to free markets in that a natural order, unplanned by government decrees, arises in both. Additionally, as pointed out by Richard Epstein, because alteration of legislation and regulation is likely to have more of a payoff for lobbyists than convincing a judge to change common-law type rules, judges are also less likely to be the target of special interests than are legislators.
The Proliferation of Laws
Because of the systematic ignorance that legislators face, legislation often disrupts the delicate economic, legal, and social order of society, leading to unintended consequences. And invariably, because of government propaganda combined with public ignorance and apathy, the inevitable failures of legislation are blamed, not on interventionist government, but on freedom and unregulated human conduct, leading to even more meddlesome legislation.
Such a continual outpouring of artificial laws has many insidious effects. As special interest groups become successful, others become necessary for self-defense, and soon a legal war of all against all begins to emerge. Thus we are led into conflict rather than cooperation. Additionally, when so many laws exist, and with such arcane, vague, complex language as is common today, it becomes impossible for each citizen to avoid being a law-breaker—especially given the perverse rule that “ignorance of the law is no excuse.” Almost everyone has violated a tax law, securities regulation, “racketeering” law, gun law, alcohol law, customs regulation, or at least traffic ordinance. But when we are all lawbreakers the law is discredited and, what is worse, the government can selectively and arbitrarily enforce whatever law is convenient against any “trouble-maker.”
Furthermore, as another Italian theorist, Giovanni Sartori, has pointed out, when legislation is thought of as the primary source of law, citizens become more accustomed to following orders, and thus become more docile, servile, and less independent. Once people lose their rebellious spirit, it is easier and more likely for the government to become tyrannical.
Because of the danger of legislation, several constitutional safeguards should accompany its exercise. Supermajority and referendum requirements are one way to limit the legislature. Another way would be for all legislation to be constitutionally limited to replacing the opinion of a given court decision with a new decision. Then, if a given case or line of cases were issued that had particularly egregious reasoning or results, the legislature could rewrite the unfortunate opinion in better form, and enact this into law, as if the court had first issued the rewritten decision. The rewritten opinion would then assume the status of a judicial precedent, at least for that court.
This limit on the legislature’s ability would prevent it from enacting huge legislative schemes like the Americans with Disabilities Act out of whole cloth. To the extent the legislated “substitute opinion” strayed from the facts of the particular case, it would be merely dicta, of no binding force.
Sunset provisions that automatically repeal legislation unless re-enacted after a given number of years are also useful. Another prophylactic measure would be an absolute right to jury trials in all cases, civil or criminal, so that government could not escape the jury requirement by calling truly criminal sanctions “civil.” This should be combined with a requirement that the jury be made aware of their right to judge the law’s validity as well as the defendant’s liability or guilt.
The Role of Commentators and Codes
Law codes are essential in the development, systematization, and promulgation of law. Modern civil codes of civil-law systems are one example of very impressive and useful codifications that developed under the largely decentralized Roman law system. However, the dangers of legislation also counsel that legal codifications not be legislated. There is no reason that law codes cannot be privately written. Indeed, Blackstone’s Commentaries on the Law of England was private and very successful in codifying the law, and we today have successful, private treatises such as the Restatements of the law. Law codes would be far more rational and systematic, and shorter, if they did not have to take an unwieldy and interfering body of legislation into account; if they could focus primarily on common-law developments.
Both private and statutory codification of existing case law can make mistakes. But if the code is private, judges can ignore the lapses in the codifier’s reasoning. This has the extra benefit of giving an incentive to private codifiers not to engage in dishonest reasoning or meddlesome social planning. If a codifier wants his work to be used and acknowledged, he will attempt to accurately describe the existing body of law when he organizes and presents it, and will likely be explicit when recommending that judges adopt certain changes in future decisions.
Both the Roman law and common law have been corrupted into today’s inferior legislation-dominated systems. The primacy of legislation should be abandoned, and we should return to a system of judge-found law. Scholars who codify naturally-evolved law have a vital function to serve, but they should not ask for the governmental imprimatur on their scholarly efforts.
Of course, the form of a legal system does not guarantee that just laws will be adopted. We must always be vigilant and urge that individual freedom be respected, whether by legislator or judge.
***
February 25, 2010 at 9:09 am-
Bah humbag! The only primary law in Anarchtopia is that the private landowner get to make the laws on his or her land. Private landowners can war with each other or seek a disinterested arbritrator if they can find one. However when on someone’s private land they can get to make the rules therefore it’s statutory/regulatory law there. Those who are landless don’t get to make any laws and there’s probably the Law of the Jungle when they travel in the commons between one landlord’s estate and another’s. In many respects Anarchtopia existed in Europe in the early to mid- Medieval era.
February 25, 2010 at 11:07 am-
“Those who are landless don’t get to make any laws and there’s probably the Law of the Jungle when they travel in the commons between one landlord’s estate and another’s.”
In anarchtopia there are no commons.
Second, I may be landless, but I am at the mercy of no-one.I have labor to sell, and the buyer has to cater to me if he wants it.
The seller of goods similarly must cater to me for my
business.Plenty of competition in anarchtopia, you’d like it there.As to midieval Europe, people were forced into serfdom by poll taxes.
A typical example- http://en.wikipedia.org/wiki/Russian_serfdom
February 25, 2010 at 11:59 am-
Dare I ask wherefrom the “judges” derive the right to judge?
February 25, 2010 at 3:03 pm-
Wouldn’t they act as arbitrators or moderators which would ask for the voluntary aquiescence of both parties involved in a dispute?
- February 25, 2010 at 5:49 pm
-
Daniel,
That’s kind of the point. The “judges” we all know and talk of were agents of the State. Some doctrines developed by these fine fellows was sound, some was not, but what ties all of the common law together is the thread of instituionalized violence – I can judge thee because….uh…. well…….the Sovereign delegated to me, or God told me I can…..
Is it any wonder that crazy doctrines like “intent analysis” was developed by these robed tyrants?
- February 25, 2010 at 8:24 pm
-
Indeed HL the judges seemed have derived from someone and thus ‘common’ law is merely just another law. However the buck has to stop somewhere and someone has to have law-making authority and it falls onto those who have the most valuable asset class: land.
February 25, 2010 at 8:39 pm-
“While Leoni is vague and wavering on the structure that his courts would take, he at least indicates the possibility of privately competing judges and courts. To the question: who would appoint the judges. Leoni answers with the question: who now “appoints†the leading doctors or scientists in society? They are not appointed, but gain general and voluntary acceptance on their merits.” – MNR
“The role of freely competitive judiciaries has, in fact, been far more important in the history of the West than is often recognized. The law merchant, admiralty law, and much of the common law began to be developed by privately competitive judges, who were sought out by litigants for their expertise in understanding the legal areas involved.[2] The fairs of Champagne and the great marts of international trade in the Middle Ages enjoyed freely competitive courts, and people could patronize those that they deemed most accurate and efficient.
Let us, then, examine in a little more detail what a free-market defense system might look like. It is, we must realize, impossible to blueprint the exact institutional conditions of any market in advance, just as it would have been impossible 50 years ago to predict the exact structure of the television industry today. However, we can postulate some of the workings of a freely competitive, marketable system of police and judicial services. Most likely, such services would be sold on an advance subscription basis, with premiums paid regularly and services to be supplied on call. Many competitors would undoubtedly arise, each attempting, by earning a reputation for efficiency and probity, to win a consumer market for its services.” – MNR
February 25, 2010 at 8:43 pm-
I understand the independent arbitrator concept as a mediator between consenting parties; but, how do you coerce the unwilling party: unrepentent murder, rapist, and such. Is it consensual and binding if the accused is brought in by force?
February 25, 2010 at 11:10 pm-
The murderer can fall into one of two categories: those who admit to the initiation of force and don’t care, or those who don’t admit it — i.e., who claim to be innocent or to have had good reason for their actions (the other guy initiated it, etc.). In the latter case, why would he refuse to put his case before some judge? In the former case, see Stephan Kinsella’s article on estoppel — he has no argument against the use of force against him.
February 26, 2010 at 2:04 am-
“As Leoni has explained, Mises’s criticism of socialism also applies to a legislature attempting to “centrally plan” the laws of a society. The impossibility of socialism is only a special case of the general inability of central planners to collect and assimilate information widely dispersed in society.”
I wonder, does the advance of technology into constantly improving information-gathering weaken Mises’s argument? What if the central planners really could collect and assimilate the information?
February 26, 2010 at 3:41 am-
“I wonder, does the advance of technology into constantly improving information-gathering weaken Mises’s argument?”
I think it does.
“What if the central planners really could collect and assimilate the information?”
Then we wouldn’t have the need for markets anymore. I guess with some sort of supercomputers that could gather and calculate all information conceivably in existence prices and competition loose their meaning.
But we’re nowhere near that level.
February 26, 2010 at 3:57 pm-
Good article. I especially liked the part about law codification and commentary, because I hadn’t really thought much about that part.
And Gil still fails to understand how a free society works, or how the coercion of centralized legislation increases conflict, instead of reducing it, and thus, his “final arbiter” is likely to cause more problems than solve them.
Also, you don’t have to own land to take a grievance to court. Thus, landowners really don’t have more power in deciding law.
Gil, if government law is necessary for peace, then how do you explain the existence and workings of common law and Merchant Law? I’ll admit I’m not too familiar with Roman Law–I’ll have to look that up. 
February 26, 2010 at 9:19 pm-
to kristian lj and learner:
this article by hülsmann shows why the the knowledge aspect, stressed by hayek but not mises, is not the primary problem with socialism.
increasing computational power will not compromise mises in the slightest.
http://mises.org/journals/rae/pdf/RAE10_1_2.pdf
- February 26, 2010 at 9:50 pm
-
Huelsman’s point can be applied to the problem of “justice.” Justice is subjective. The wisest and most gifted sage of a judge cannot truly effectuate justice as between a victim and an aggressor UNLESS there is some voluntary submission.
Note that this problem does not apply to problems of negative rights and the recovery of property – hey, give me back my wallet. Here, there is an objective reality. If we move further into the gray, as in “hey, I was here homesteading first,” a learned fellow could, assuming voluntary assent, apply whatever’s cool in that jurisdiction to solve the problem.
It’s where there is no submission by the party to be judged that we run into a variation of the calculation problem: even invoking the ridiculous voodoo of “intent analysis” a judge can just barely approximate a “just” restitutionary outcome – mainly by seeing if the “victim” is happy with five cane lashings of the bad guy instead of four. Going one step further, the same judge is but a soviet commissar in applying “retribution” to the bad guy. It’s basically pulled out of thin air. Even MNR admitted he had no idea why “two times” makes sense, except that it sat well in his belly. (His belly had more wisdom than most, but still….)
- February 26, 2010 at 10:09 pm
-
Well quite frankly M. A. Clem if there’s no to be no final arbitrator – public or private – then in a truly free society the victim and/or the victim’s family seek retribution/restitution from the perpetrator at their own expense (though they can try to get the perpetrator to pay for ‘enforcement costs’). Two parties seeking the ruling of a disinterested third party would only work in contract law not criminal law.
- February 26, 2010 at 10:25 pm
-
to kristian lj and learner:
the herbener paper also makes it quite clear why the socialist calculation debate is not about arithmetic, but appraisement.
http://mises.org/journals/rae/pdf/RAE9_1_9.pdfsee also the salerno papers
http://mises.org/econcalc/POST.asp
http://mises.org/journals/rae/pdf/RAE9_1_8.pdf - March 1, 2010 at 10:46 am
-
Well quite frankly M. A. Clem if there’s no to be no final arbitrator – public or private – then in a truly free society the victim and/or the victim’s family seek retribution/restitution from the perpetrator at their own expense
Gil, this kind of thing has been answered before, even if you didn’t like the answer. If there’s a financial incentive offered, then any number of people or organizations might find it worthwhile to “pursue justice” for a poor individual or family who cannot afford the legal expenses involved. Part of the problem with the current “public defender” idea is that it truly is charitable work that doesn’t pay for itself–a lawyer has to either be forced to do it or to truly do it for altruistic purposes.
However, I fail to see why the existence or lack of a final arbiter makes any difference as far as this particular point is concerned.
Two parties seeking the ruling of a disinterested third party would only work in contract law not criminal law.
This can be addressed in different ways, too, although essentially what you do is make the risk or penalty for not agreeing to court stronger or harsher than appearing in court, i.e. the “outlaw” brand or status. This, of course, depends largely on having a legal system that one can trust to be fair, but that’s already been argued.
{ 17 comments… read them below or add one }