From: robert@kohlrabi.tcs.com (Robert Blumen)
Subject: Re: How would free market anarchism work?
Organization: Teknekron Communications Systems Inc.
Date: Sat, 9 Jan 1993 23:19:44 GMT

In article <1993Jan8.223721.29219@shearson.com>, pmetzger@snark.shearson.com (Perry E. Metzger) writes:
> 2) Why would everyone agree to more or less the same legal system? How
>    would the legal system arise and get standardized? How could people
>    possibly make contracts in peace not knowing the commercial code?
> 
> When one goes into a court arguing that in a corporate annual meeting
> one was unfairly prevented from taking some action that the
> parliamentary law would permit, the court will likely note that the
> corporate charter mentions in it a little book called "Roberts Rules
> of Order~. "Roberts" is published by Scott Foresman and Company, not
> by the government. None the less, it has somehow aquired sufficient
> force that people treat it as if it were the law, and in fact it is.
> The need to standardize parliamentary law and proceedure lead people
> to pick parliamentary guides in the free market and this is the one
> that was standardized apon, purely by free market forces. This is an
> example of "customary law" in action.
> 
> It turns out that people very rapidly standardize on agreed social and
> legal norms in a society. The developement of the Lex Mercatoria in
> the medieval merchant courts produced a standard for how merchants
> were expected to behave, even though no central authority existed. For
> many centuries, judges of all sorts have looked to prior decisions and
> to custom to guide them when deciding on matters that are not
> codified. this is the so-called common law, which is another example
> of customary law at work.
> 
> Presumably, common reference works, the common law, and custom will
> form a fairly commonly understood legal base in a system such as the
> one I am refering to. 

What you are getting at here, Perry, and later in item 3) which I did not
copy here, is that the law itself is the outcome of a market process.  It
is often assumed in these type of discussions (although you do not assume
this in your item 3), is that the law is somehow fixed and given (even
though there is no monopoly agency to enforce it), and the competing
agencies compete only to enforce the law.  

As you have pointed out in your discussions of the law merchant, law is
something that emerges out of a market process.  Just as markets are good
at producing better widgets more efficiently, markets, or more generally
what Hayek calls "spontaneous order" can generate the rules as well.  

Could rules emerge that, say, prohibit homosexuality or certain kinds of
music?  Yes, probably if the vast majority of the populace held these
beliefs sufficiently strongly.  But as Perry points out, it is more costly
to pay for these kind of rules than for non-coercion rules.  Thus a market
order in law will tend to produce more libertarian rules.

One thing that seems to me to be mssing in the discussion of the state by
many objecitivists is some sense of real politics.  They usually begin by
postulating a state has a monopoly on force and that obeys objectivist
principles.  By why should an agency with a monopoly on force not act in
its own self-interest and try to expand its power?  This insight is the
core of a school of political econonomy known as public choice -- that
governments act in their own self-interest.  Again, if the government has a
monopolh on force, who is there to watch the watchers?

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Robert Blumen                          | robert@tcs.com
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