The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword to the Third Edition
• Freedom and the Law
• Introduction
• 1: Which Freedom?
• 2: “freedom” and “constraint”
• 3: Freedom and the Rule of Law
• 4: Freedom and the Certainty of the Law
• 5: Freedom and Legislation
• 6: Freedom and Representation
• 7: Freedom and the Common Will
• 8: Some Difficulties Analyzed
• Conclusion
• The Law and Politics
• 1: The Law As Individual Claim
• 2: Law and Economy In the Making
• 3: The Economic Approach to the Political
• 4: Voting Versus the Market

2

Law and Economy in the Making

General studies on the nature of economic science are rather rare. The same can be said, by and large, of general studies of legal science. This is probably a good reason why we lack studies worth mentioning comparing the nature of the law-making process with the nature of the economic process and, specifically, with the nature of the market process. But this is certainly not the only reason for that shortage. In our era of specialization, few economists are also lawyers, and few lawyers are also economists. We do have a few outstanding examples of economists who are trained in law, for example, Professor Mises and Professor Hayek. Some economic or legal advisers of great industries or federations of industries are lawyers trained in economics. (I could mention, in this respect, my good friend Arthur Shenfield, who is both a lawyer and an economist and serves presently as the Chief Economic Adviser for the Federation of British Industries.) People who are both willing and able to delve into the comparative study of both processes are extremely rare. I do not pretend to be one of those persons. Still, being a lawyer by profession, and also being keenly interested in the theory and practice of economics, I have always considered it very important for lawyers and economists to have a clear idea of what these processes are, of what their main aspects are as compared with each other, and, finally, of what the theoretical and practical relationships are between these two processes.

The importance of an inquiry of this kind is not merely theoretical. Whether politicians feel entitled or not to adopt some policies in view of some ends they try to reach in the economic field depends to a large extent on the ideas they have concerning the respective aspects of each process, and of their reciprocal relationships. Whether the man in the street demands or approves or simply tolerates those policies depends to a great extent on those ideas.

I do not think that politicians and the man in the street are necessarily conditioned by their own political ideologies in their ideas about the relationships between the law-making process and the economic process. On the contrary, I suspect that, in many cases, their own political ideologies may be conditioned by their own more or less clear ideas about the nature and relationships of the law-making process and, respectively, of the economic process.

I shall start from an attempt to describe the main kinds of law-making processes as we know them, at least in the history of the West. We shall see later that all of these kinds of processes may be traced back to a more general, though less apparent way, of producing law, of which I shall speak in the end.

I wish to summarize my argument by saying that there are three main ways or methods of making law, which emerge with independent features, though not each independently and to the exclusion of others, all through the history of the West, from the ancient Greeks to the present day. They are: 1) the production of the law through the opinions of a special class of experts called juris-consults in Rome, Turisten in Germany in the Middle Ages, and lawyers in Anglo-Saxon countries. These people produced a kind of law that is called from its origin “lawyers”-law,” or as the Germans say, turistenrecht. 2) The production of law on the part of another special class of experts called judges. The English expression “judge-made-law” implies exactly what I have in mind concerning this kind of law. 3) The production of the law through the legislative process. This is a process that has become so frequent in present days that in many countries the man in the street cannot even imagine another kind of production of what we call the law. Legislation is conceived as the product of the will of some people called legislators, the underlying idea being that what the legislators will is ultimately to be considered as the law of the country.

Legislation differs profoundly from the two preceding ways of “producing law.” Lawyers and judges produce law by working on some materials that are considered to be given to them in order to condition their own production. To adopt a happy metaphor of a great contemporary scholar, Sir Carleton Kemp Allen, they “make” law in the same sense that a man who chops a tree into logs has “made” the logs.1 On the contrary, the ambition of the legislators is to make the law without being conditioned that way. They not only “produce” law, but they also want to produce it by a kind of fiat, regardless of materials and even of contrary wills and opinions of other people. What they mean is not sheer production but, as one of the most famous contemporary theorists and defenders of this process would say, creation of the law.2 The peculiar nature of these features of legislation has been realized for centuries and expressed by the scholars through the contrast between words like jus and lex, law and will, law and king, law and sovereign, etc. This contrast has been frequently tinged through the ages with metaphysical or religious meanings and implications.

Nonetheless, the contrast is also quite understandable on simply human and worldly terms. If one assumes that the law is a creation of a legislator, one must also assume, at least implicitly, that the law is the result of the unconditioned will of some people like kings or sovereigns or so on. Therefore, legislation is traced back, more or less implicitly, to the unconditioned will of a sovereign, whoever he may be. The very idea of legislation encourages the hopes of all those who imagine that legislation, as a result of the unconditioned will of some people, will be able to reach ends that could never be reached by ordinary procedures adopted by ordinary men; that is, by judges and lawyers. The usual phrase by the man in the street today, “There ought to be a law” for this or for that, is the naive expression of that faith in legislation. While the processes conducive to lawyers’-law and judge-made-law appear as conditioned ways of producing law, the legislative process appears, or tends to appear, to be unconditioned and a pure matter of will.

The very idea that there could be an unconditioned way of producing law has been denied in all times by many eminent scholars. For instance, in Roman times one of the most eminent Roman statesmen, Cato the Censor, the champion of the traditional way of life against the foreign (that is, Greek), used to boast that the superiority of the Roman legal system as compared with the Greek system was due to the fact that the Roman system had been produced piece by piece through a long series of centuries and generations by a great number of people, each of whom had to base his work on experience and on precedents and was always conditioned by the existing situation. Later on, in the Middle Ages, and using a completely different language, owing to his different philosophical and religious background, the celebrated English lawyer Bracton used to say that the King himself was subject to the law, for the law makes the King. “Let the King then attribute to the law what the law attributes to him, namely, domination and power, for there is no King where the will and not the law has dominion.” If we translate Bracton’s language into more modern words, it boils down to this: Not even the King with all his power can create law; he can only enforce it. There is no unconditioned way of making law at will, not even if we have a great power over other people.

In the eighteenth century another lawyer said the same thing in other words. I am referring to Blackstone, who used to say that the sovereign is not the fountain but simply the reservoir of the law, from which, through a thousand channels, justice and law are derived for the individual.

The same criticism of the purported possibility of creating the law from nothing on the part of a legislator has been shared by the most famous lawyers in the West. For instance, the greatest German lawyer of the nineteenth century, Savigny, the so-called founder of the Historical School in law, wrote at the beginning of that century that what binds the rules of our behavior (including legal behavior) into one whole “is the common conviction of the people, the kindred consciousness of an inward necessity, excluding all notion of an accidental and arbitrary origin.” And another great lawyer, Eugen Ehrlich, whose influence in the United States has become more and more important in recent times through lawyers such as Pound, Timasheff, Cairns, and Julius Stone, stated flatly in our century that, “At the present as well as at any other time, the centre of gravity of legal development lies not in legislation . . . but in society itself.” To these critics of the idea of the legislative process as an unconditioned way of producing the law at will, we should add many of the economists, both of the classical and of the neoclassical school. (We shall go back later to legislation and to the idea that underlies all the attempts to substitute legislation for any other kind of law-making process.)

Let us now examine the other two ways of producing law mentioned above. The first one is the way adopted by the lawyers. Probably excepting only ancient Greece, all countries in the West had lawyers as a special class of experts after a certain point in the development of their civilizations. The country in which lawyers seem to have had their highest status, however, is ancient Rome. The ancient Roman lawyers “produced” the law through the centuries in a professional, openly recognized, and almost official way. It is true that they themselves were not in general eager to recognize this fact. While working out legal rules they frequently used to refer to old legendary statutes like that of the Twelve Tablets; however, they actually worked out those rules and their fellow citizens accepted them quite willingly, while their government usually did not interfere in that process. Of course, the Romans enacted many statutes during their history, but those statutes related mainly to the functioning of their own government, and extremely rarely to private relationships between individuals. We have records of only about 50 statutes enacted by the Roman legislative powers relating to private relationships among citizens throughout their history—embracing more than 1000 years.

An almost similar status was enjoyed by Italian, French, and German lawyers, both in the Middle Ages and in modern times until the beginning of the last century and, as far as German countries are concerned, until the end of it. The peculiar way of producing law by these lawyers was rather different from the old Roman way. But still they “produced” law of their own in a way that was openly and even officially recognized although submitted to several strictures from time to time until the introduction of the codes on the European continent towards the end of the eighteenth century and at the beginning of the nineteenth. I have already tried to define briefly the nature of the process adopted by Roman lawyers in Freedom and the Law. In that attempt, I took advantage of the fascinating studies of some contemporary scholars like the Italians Rotendi and Vincenzo Arangio Ruiz, the Englishman Buckland, and the German Schulz. In this respect I stated:

I have already pointed out that this concept of law was certainly essential to the freedom that Roman citizens usually enjoyed in business and in all private life. It is very important to note in this connection that the process of making law adopted by Roman lawyers resulted in putting juridical relations among citizens on a plane very similar to that on which a free market put their economic relations. Law as a whole was no less free from constraint than the market itself. Or to adopt the words of Professor Schulz, the private law in Rome was developed “on a basis of Freedom and Individualism.”4

I shall take this opportunity to answer one of the reviews devoted to Freedom and the Law5 in which I was accused of being too enthusiastic about the Roman system. I feel I was not. I never said that Roman law provided a “paradise of liberty” and even less that Roman law provided that “paradise” under the rule of the Emperors. Still, I think that there is much to say in favor of the legal system of the Romans, even under the rule of the Emperors, when we compare that system with many others prevailing today. It is true that those Roman rulers who were omnipotent sometimes disposed of the life and property of some citizens at will. But this was always done and considered as an exception and also as an undue exception to the general rule, according to which life and property of the citizens could not be disposed of by the state. Compare that general rule with those prevailing in almost all contemporary states, in which confiscatory practices or other limitations to the free choice of the individuals in the market relate actually, or at least in principle, to all citizens. The comparison between the present legal systems and the old Roman is very flattering for the latter.

A Roman tyrant in the times of the old Republic, like Sulla, could take vengeance against his enemies by trying to put them to death or by confiscating their property. A Roman Emperor in later times could send a murderer to kill some dangerous rival or pretender and issue a decree to confiscate his property. But contemporary rules, even in free countries like this one, have the power in principle, only provided that they abide by some legal formalities, to deprive all citizens of practically all of their property if not their lives.

If we consider the Roman taxation system as compared with many contemporary ones we arrive at similar conclusions. The above-mentioned review of my book has mentioned the purported “crushing taxation” operated by the Romans. We do not know well, unfortunately, the real way in which the fiscal system was operated by the Romans, as there are still several unknown points about it. But it is certain that Roman citizens were not submitted in principle to any real taxation, at least in the classic period. All that their government did was to resort to compulsory borrowing when it was necessary to wage a war. When the war was won, which frequently happened, the money borrowed by the government was given back to the citizens. In their turn, the conquered countries were usually submitted to a taxation (the so-called vectigal) that was conceived as a kind of ransom to be paid to the Roman conquerers for the use of the land on the part of the conquered people. But even this taxation never went, as a rule, over 10 percent of the income of the people who had to pay it. If we consider that the taxing power of our contemporary governments, even in free countries such as this one, is practically unlimited and can absorb the quasi-totality of the income of some taxpayers belonging to the so-called high brackets, the comparison with the Roman taxing system is likely to leave us breathless because of its generosity. Contemporary governments in the so-called free countries behave towards their citizens in a way that no Roman government would have behaved, at least as far as fiscal policy is concerned, not only towards its own citizens, but also towards the citizens of conquered countries.

To complete this comparison before reverting to our main argument, I must finally refer to the so-called repressive network of controls and welfare measures purportedly adopted by the Romans, according to my reviewer. Even here, we should sharply distinguish between the classical Roman period and the post-classical period of what we call the decay of the Roman Empire. Controls and welfare measures were practically unknown during the former period. They were occasionally introduced in the later period by some Emperors and reached their peak at the time of Diocletian in the fourth century after Christ, that is, towards the end of the history of the Roman Western Empire. But even if we were to compare the welfare state and planning introduced by Diocletian with the welfare state, nationalization, and planning introduced by our contemporary governments, the comparison would result in favor of the Romans. As a rule, privately owned land was never confiscated in Rome, and the government never imposed itself in the operation of private enterprises. We can make similar considerations about inflation and currency debasement. All that the Roman government could do in this respect was relatively little as compared to the unlimited power of contemporary governments to promote inflation through legal tender laws and similar practices.

But let’s go back to our main argument, that is, the “production” of law by lawyers. We shall now try to investigate a little more closely how and from where the Roman lawyers derived their legal rules. Recent studies allow us to conclude that they were probably never clear about their own way of working. However, we can conclude that the ultimate data with which they worked were always the feelings and behavior of their citizens. This was revealed by their habits and customs in making agreements with each other, and in their expectations of other persons” behavior on the basis of those agreements, or even without any explicit agreements. The Roman lawyers included these data within the concept of the “nature of things” and within the other no less important concept of “what most frequently happens.” Their own attitude towards those data was that of trying to interpret them in order to let their implicit rules emerge. Of course, it wasn’t an easy task in many cases, especially when old habits and customs were obviously tapering off, and new and comparatively unprecedented ones were developing.

The task of the lawyers was that of working out a rule that could be considered, as far as possible, as an extension or as an analogue of an already revealed rule, or at least a new rule corresponding to the preceding ones and fitting in with them in a consistent manner. That kind of interpretation of the data, according to those lawyers, was not only possible but also susceptible to a more or less rigorous procedure. In fact, it was always possible, according to them, to make a kind of calculus in order to find out the reasons for the behavior of people in their mutual relationships, and in order to discover their implicit logic. This was what Roman lawyers called, in fact, the ratio of these relationships and of their implicit rules. This ratio they used to call natural, as it didn’t depend on the arbitrary will of anybody concerned, and least of all on the arbitrary will of the lawyers who tried to discover it. It was only when a Roman lawyer was almost completely at a loss, if not in working out a legal rule, at least in giving the reasons for his conclusions on it, that he invoked the authority of another lawyer who had preceded him, and who had come to similar results in similar respects.

Sometimes, in a rather paradoxical way, he resorted to invoking his own authority, although this was rather rare. What is worth noting, relating to this Roman concept of authority, is that resorting to it did not imply, on the part of the lawyers, any mystical implications. Roman lawyers certainly did not refer to any kind of divine revelation for the correct solution of a legal question. What they very probably implied was a kind of hypothesis that their own solution was right, even if they could not prove it for the time being. Even in the history of mathematics you can notice a similar attitude on the part of some great representatives of mathematical thought. There are theorems, like that of Fermat, of which we do not know whether the alleged demonstration actually existed, or whether any demonstration can be discovered in the future. In a similar way, concepts of fundamental importance in modern mathematics, like that of function, contrived by the Italian Lagrange, or that of infinitesimal calculus, contrived by the German Leibnitz, or the Englishman Newton, were employed at first as provisional results of reasonings that could not be completely justified, because the demonstrations concerned were still to be made.

In other words, what Roman lawyers thought about their own work was that they could always, or almost always, reconstruct completely both the logic of the behavior of their own citizens and the logic of the relationships in that behavior. In a similar way, modern economists who study the so-called economic action of man imply the possibility of reconstructing both the rationale of these actions and that of their relationships with other actions of other operators.

Let’s now examine briefly what the work and the attitude of lawyers was in less ancient times. Lawyers on the Continent in the Middle Ages tried to work out legal rules as had their Roman predecessors. Both they and their contemporaries considered that work as preferable in a logical way, on the basis of a fundamental logic implicit in the data of that work.

There was, however, a main difference between the work of the latter lawyers and that of the former. Lawyers in the Middle Ages and in modern times on the Continent, before the introduction of codes, worked out their legal rules by deriving them from a different kind of data. Instead of considering directly as their data the behavior of the people, they studied behavior in an indirect way by looking at them through the screen of a set of rules already worked out before them by the Romans themselves, and continued in that great legal Bible of the Western people on the Continent, which was the so-called Corpus Juris, enacted by Emperor Justinian in the first half of the sixth century. Thus, the lawyers in that new era were not interpreting the behavior of their fellow citizens. Instead they were applying the words used by the Roman lawyers to interpret the behavior of their own citizens, and to work out legal rules for them. This was indeed, on the part of the new lawyers, a rather paradoxical and anachronistic way of working out legal rules for their contemporaries, but it worked; and this seems to prove that the rationale of human behavior in what is usually called the legal field is not so contingent and accidental as to be humanly bound to a certain historical period or to a certain country of the world.

It isn’t my task here to try to explain the reasons for that paradoxical procedure on the part of the lawyers of the Middle Ages and of more modern times in the European countries. I only want to point out once again that what those lawyers did was not exactly what they pretended to do. What they actually did was much more interpreting of the behavior of their contemporaries and its rationale than of the words of their Roman predecessors and their meaning. We have stated, on the other hand, that their Roman predecessors had, in their turn, pretended to do something different than they were doing; that is, interpreting words instead of facts—the clauses of a purported written law (that of the Twelve Tablets) instead of the actual behavior of living people.

Fundamentally, medieval and modern lawyers on the one hand, and Roman lawyers on the other hand, have all done the same thing. They interpret their own fellow citizens” behavior and reconstruct its own rationale and its implicit rules.

Let’s now have a look at the category of the law producers I mentioned in the beginning: the judges. The law-making process through judges is probably as old as our Western civilization. When Homer wants to illustrate in the Odyssey the barbarous condition of the Cyclops, he says that they even lacked two things: assemblies to make collective decisions on the one hand, and judicial decisions on the other. The Cyclops, as Homer adds, simply lived at home with their families, without having any kind of political or legal system, as we would say now.

Judicial decisions have probably been, in fact, the main way of finding out and rendering explicit many legal rules prevailing in ancient Rome before the era of legislation. Once again, judicial decisions were a usual way of finding out legal rules in ancient Rome through the so-called Jus honorarium; that is, through the decisions of the main judicial authority of the Romans, the Praetor. This process of finding out the law through the lawyers and that of finding out the law through the judges co-existed successfully for several centuries in Rome. They were not incompatible; they were even complimentary whenever new legal rules were adopted or required by the citizens. The Praetor pretended not to enter the core of the questions possibly raised by the new rules as far as consistency with the old ones was concerned. He simply pretended to pronounce himself on procedural technicalities, while taking care to reach in this way the goal of accepting and enforcing the new rules. This was a kind of trick, indeed, to which the Praetor was probably induced by his respect both for old customs and for the professional work of the lawyers. Just as the Roman judges had produced law by pretending to deal only with procedural technicalities, the Roman lawyers had produced law in a disguised way by pretending to interpret old words instead of new facts. Greek judges had produced laws more openly, as did English judges in medieval and modern times, although we know that at least the English judges were fond of several kinds of tricks throughout their history. But once again, what judges had in mind in Greece, as in Rome and in England, was the behavior of their own citizens, their rationale, and the rationale of their relationships. They all could and actually did resort to concepts similar to those of the Roman lawyers, like the “nature of things” whose general meaning was that the problems confronting them did not allow solutions to be contrived at their own will, or in an unconditioned way. The Greek judges and orators meant this when they said they were simply following the advice of the Goddess Themis, or that of the Oracle of Delphus. This was implied by the Roman Praetor who pretended to deal only with procedural technicalities, and not with the substance of the law itself. This was meant by English judges who used to speak of the law of the land as something superior to their own arbitrary choice.

We have pointed out thus far a basic similarity between both ways of producing law: that of the lawyers and that of the judges. Let’s examine a little more profoundly what the relationships are between the data of their work and their work itself. These relationships are not easy to scrutinize, and it is not surprising that the opinions of the scholars about them diverge widely in some respects. Two main conceptions of these relationships have been stated and championed by the theorists.

According to one of these concepts, mainly represented by the above-mentioned Savigny, the interpreters of the law perform a mostly passive and receptive task: They reflect the habits and customs of the people by describing them in their own language, just as a physicist would describe in his own language the relationships between physical forces. According to this theory, there would not be any special reaction on the habits and customs of the people themselves as a result of the work of the professional interpreters. In other words, the latter would not influence, in their turn, customs and habits by their own work. They would just be conduit pipes for a liquid that they did not change. Of course conduit pipes, to be efficient, must be made of good material and built in a proper way. Similarly, the professional interpreters of the law would be learned, clever, and trained, but according to this theory they produce law mainly in the sense that they scrutinize it.

The contrary theory is that customs and habits would just derive from the work of the lawyers and judges. Some scholars like Maine in his famous book, Ancient Law, have maintained, for instance, that this happened with the ancient Greeks, whose customs would have been created by the decisions of the judges. Another scholar, the Frenchman Lambert, has insisted on the so-called creative force of jurisprudence, i.e., of judicial decisions, which would be an essential element and one of the most productive agencies in law. An intermediate theory, worked out by Erlich, maintains that we should distinguish clearly between legal rules applied by the courts on the one hand, and legal arrangements existing in society on the other.

Accordingly, the function of the interpreter should be considered as two-fold: On the one hand he should discover the existing legal convictions of the community in order to describe them, and on the other hand he should frame uniform generalizations reflecting those convictions in order to apply them to all cases. This latter operation implies technical aspects that should be considered as different from convictions and consciousness of the people. Just for this latter operation, we should distinguish between lawyers’-law and people’s-law, and we should recognize that, although lawyers’-law comes out of the people’s-law, it may react on the latter. But all theories, regardless of their emphasis on customs and habits on the one hand and techniques and generalizations of the lawyers on the other hand, recognize in general that there wouldn’t be any lawyers’-law or any judge-made-law without the common ground of the people’s customs, habits, and convictions. Even Lambert, who was one of the most convinced supporters of the theory that lawyers’-law reacts powerfully on people’s habits and customs, admitted that lawyers’-law is, after all, a kind of crystallization in rules of what the Romans and the Canonists of the Roman Catholic Church would have called the common consent of the people concerned (communis consensus utentium). Both of these opposite theories can resort to several historical instances to support their own conclusions. If it is not true that custom is something resulting from a long series of judgments in ancient Greece, as Maine maintained, it is true that judgments very probably influenced the custom in the historical period of the Greek civilization before the appearance of the written law. If it is not true that people living in countries based on customary and judge-made-law, as in England, are not simply adapting their own conduct to decisions of the judges by obligatory resignation, as Lambert maintained, it is true that the history of common law in England reveals the decisive influence exercised on it by the outstanding personalities of some lawyers and judges, and even by Acts of Parliament not now to be found on record.

History is never simple and never adapts itself entirely to consistent theories of it. But there is one good reason why we should, I think, take into very serious consideration Savigny’s opinion that it is not the lawyers who make the law of the people, but the people who make the lawyers. As a distinguished contemporary scholar remarked in this connection, whatever the importance and the influence of the interpreters may be, not only is there a native law of the community, but the greatest conceivable interpreter can work only with material “which its environment vouchsafes to it, and can express itself only in language and only about things, which are intelligible to contemporary minds.” We should also remember in this respect one of the most fascinating comparisons made by Savigny in his famous essay on the vocation of our time for legislation and jurisprudence: the comparison between law and language. Law, he said, like language, is a spontaneous expression of the minds of the people concerned. Grammarians, we should add, may have a great influence on the language, and the rules they work out may well react on the linguistic usage of their country, but grammarians cannot create a language—they are simply given it. People who create languages are usually unsuccessful. Ready-made languages do not work, regardless of their purported utility as simple and possibly universal ways of communication between different people. Only half-learned people can trust the attempts made to introduce Esperanto or similar languages as ready-made universal means of communication. What these purported languages lack is people behind them. In the same way, one could not create a universal or even a particular law if no people were behind it, with their convictions, habits, and feelings. Law, like language, is not a gadget that a man can contrive at will. Of course one can try. But according to the whole experience we have, he can only succeed within very narrow limits or he doesn’t succeed at all.

[1 ] Carleton Kemp Allen, Law in the Making (5th ed.; Oxford: at the Clarendon Press, 1951), p. 288.

[2 ] We shall see later precisely what this “creation of the law” means, at least in practice, and what are the limits and the misconceptions related to this idea. It may be said that the law-making process through legislation presents very peculiar features that do not exist or that exist in a much lesser degree in the two other processes of making law.

[3 ] This volume, pp. 83-84.

[4 ] Fritz Schultz, History of Roman Legal Science (Oxford: at the Clarendon Press, 1946), p. 84.

[5 ] Murray N. Rothbard, “On Freedom and the Law,” in New Individualist Review, Vol. 1, No. 4, Winter 1962, pp. 37-40. Complete edition of New Individualist Review reprinted by Liberty Fund, Indianapolis, 1981. Pages 163-166.