Volume 2 Issue 2, 2024
THE COMMON LAW
AND ADAM SMITH'S WEALTH OF
NATIONS
1 Lawyer, Hong Kong, Hong Kong SAR, stephen.crosswell@gmail.com.
Abstract. Adam Smith
developed a theory of the ‘four-stage’ advancement of society as England was
entering the Industrial Revolution (the fourth stage) and becoming the leading
commercial centre in the world. That transition was raising new and novel legal
issues that required legal solutions more complex than the earlier three stages
in human advancement, as innovation gave rise to new technologies and ways of
working. He and other juridical thinkers saw the debate about whether
legislation could effectively drive that transition as the central question of
their time, the answer to which would, in the long run, affect the fate of
nations and Empire. They had a clear view on this, informed by the study of
thousands of years of human history. For them, the common law was vastly
superior.
This article
examines the debate that took place on these issues, the Benthamite revolution
that followed and the modern basket of rights that obfuscate the key question
that policy-makers should be asking in our generation:
if the common law was so successful in driving the Industrial Revolution, what
confidence can we have in a legislated approach as we move into the fifth
stage, the Technology Revolution? This is one of the most important issues
facing the world as societies decide what legal framework(s) will regulate
humanity’s move into a digital society and the efforts to discover and invent
the technologies that will support us on that journey.
Keywords: Common Law,
Legislation, Adam Smith, Hume, Free Markets, Liberty,
Bentham, Hayek, Leoni, Sartori, Kames,
Mansfield, Niall Ferguson.
JEL: B11, B12, B13, G38, K15, O11, O31, P1
© 2024 Durham & Thunmann, London Journal of Global Trade, Ethics and Law ISSN
2977-0025 (Online). Published under Creative Common (CC) BY 4.0 license.
‘I have reason to assure
myself … that Long Experience makes more discoveries touching conveniences or
Inconveniences of Laws then is possible for the wisest Council of Men at first
to foresee.’ (Hale 1922-66, 5:504)
Introduction
I believe that we
increasingly have the concept of liberty wrong. At this point, it is looked at
primarily as an economic concept or in a confused assessment of a basket of
issues that should more properly be viewed under a larger umbrella. This is
essentially because lawyers, with a few exceptions, and most particularly the
common lawyers, have left the field of debate.
The consequences
of this are significant. Policymakers have forgotten the debate that took place
as England entered the Industrial Revolution, the decision that was made to use
common law to foster the development of a legal system to support global commerce,
the framework thus given to liberty to drive invention and progress, and the
warnings given about the use of legislation.
Understanding the
relative effectiveness of common law and legislation led systems is plainly
relevant as the UK unshackles itself from the regulatory system of the European
Union and as discussions take place on Hong Kong’s future as a common law
jurisdiction to service China’s financial markets and international trade.
However, there are much bigger shifts in the world that move this issue to a
level of fundamental importance.
Adam Smith developed a theory of the ‘four-stage’ advancement of
society - from hunter-gatherer to herder, then agricultural and finally
commercial society. He
developed this theory at a time when England had substantially transitioned out
of the agricultural stage, through what became known as the Agricultural
Revolution, into its role as the seat of the Industrial Revolution and the
leading commercial centre in the world. He, and other juridical thinkers of the
time, saw the debate about whether legislation could effectively drive that
transition as the central question of their age, the answer to which would, in
the long run, affect the fate of nations and Empire. They had a clear view on
this, informed by the study of thousands of years of human history. For them,
the common law was vastly superior.
Some places in the
world are transitioning into what appears to be a fifth stage of society, a
Technology Revolution, where we must reassess our relationship with social
platforms, virtual reality and complex AI-driven, semi-autonomous systems. As
was the case for England as it provided the engine for the Industrial
Revolution, and while billions of people are benefiting from this, it is only a
few places in the world that are driving the transition to this fifth stage.[1] The
jurisdictions that are at the forefront have, at least to this point, provided
an environment more supportive of invention, more accepting of experimentation
and more willing to allow inventors freedom to succeed.
We are now
witnessing attempts by the Europe Union and some other jurisdictions to impose
legislation in digital markets and AI of a breadth and reach that has never
before been seen. The EU is pushing for more jurisdictions, including common
law jurisdictions around the world, to follow with their own legislated
approach. This is one of the most important issues
facing the world as societies decide what legal framework(s) will regulate
humanity’s move into a digital society and the efforts to discover and invent
the technologies that will support us on that journey.
This article
examines the debate that took place on these issues at the time that England
was going through the Industrial Revolution, the Benthamite revolution that
followed[2] and the modern basket of rights that
obfuscate the key question that policy-makers should
be asking: if the common law was so successful in driving the Industrial
Revolution, what confidence can we have in a legislated approach to the
Technology Revolution?
1. The Economic
Perspective
For economists,
prominence is given to the concept of free markets and Adam Smith’s invisible
hand. The focus is on economic freedom, which is seen as the bedrock of broader
liberties.[3] The concept of an invisible hand guiding
market activity is generally seen as synonymous with the notion of
laissez-faire, although Smith never used the term.[4] Proponents of laissez-faire, reflecting the
foundations of the Physiocratic school, advocate that government should stay
out of the economy and that markets would naturally be competitive if left
alone. Thus, the concepts of free markets, laissez-faire and minimal government
intervention are generally seen, from an economic perspective, as apparently
fundamental components of liberty.
The economic
assessment of the relative effectiveness of legislation and the common law
draws heavily on the concept of efficiency. Posner argued that common law tends
toward efficiency, and thereby sought to justify its superiority over
legislation and civil law systems (Posner 2003). Nicola Gennaioli
and Andrei Shleifer (2007) presented a quantitative model of lawmaking by
appellate courts using a cost and benefit framework to provide a theoretical
foundation for the evolutionary adaptability of common law under what they
refer to as the Cardozo theorem.[5]
However, this
elevates efficiency as some form of objective benchmark without recognising its
limits. Efficiency is an obscure concept. It sweeps aside ethics, moral
sentiment, self-determination and the aesthetic in favour of something that
appears, for the most part, quite numerical and inhuman. The concept of
efficiency clearly has some utility in measuring whether a process can be
achieved in ways that reduce the required work or input (its traditional
definition). Even in this role, it has limited application given the
acknowledged difficulty measuring static and productive efficiency and the
impossibility of measuring the far more important impact of dynamic efficiency,
which drives innovation. The concept has no apparent utility in debates about
the legitimate field of human endeavour and when, or to what extent,
governments might impede individual liberty.[6]
Attempts to frame
the concept of liberty as an argument for minimal government intervention have
also led to confusion. An example is Jacob Viner’s endeavour to reconcile Adam Smith’s
contribution to economic thinking with what he said about law and government,
in which he concluded that Smith sought to extend the system of natural liberty
by abolition of government regulation, but failed to bring the two strains
together or to appreciate that government was part of the order of nature
(Viner 1927, 221).[7]
This work in the
area of economics appears to have come from attempts to put an ‘economic’
framework around Smith’s notion of liberty, the invisible hand and the concept
of ‘free markets’. However, Smith never looked at the
issue this way. There is, and was for him, no such thing as a 'free' market.
Adam Ferguson succinctly stated the point thus: “Liberty or freedom is not,
as the origin of the name may seem to imply, an
exemption from all restraint, but rather the most effectual application of
every just restraint to all the members of a free state, whether they be
magistrates or subjects.” (A. Ferguson 1792, 258). Indeed, such a thing
could only exist in a state of anarchy. The framework that was envisaged by
Smith to constrain and guide his invisible hand was a LEGAL framework.[8] Furthermore, it was a framework that
encapsulated not just commerce, but all aspects of the law.
Recently, Paul
Mahoney (2017) has advanced a more nuanced theory seeking to demonstrate that
Smith is a “prophet of law and economics”. He has catalogued a number of the
jurisprudential points underpinning Smith’s legal framework and Smith’s
connection with other important juridical thinkers of the time, such as
Blackstone and Kames. He astutely observes how, as Positivism became the
dominant school of thought in English jurisprudence, it overshadowed Smith and
Blackstone’s legal theories (Mahoney 2017, 228)[9] and he
references the attacks that were being made on the English (and subsequently,
the US) common law legal systems by reform-minded legislators (Mahoney 2017,
228).[10]
However, ultimately, he returns to the rubric of law and economics theory to
assess Smith’s contribution to law.
2. The Legal
Framework of Liberty
The question that
should have been asked, but which seems for the most part to have been quite
profoundly ignored since the end of the 18th century, is what form of legal
framework Smith (and his contemporaries) contemplated.[11] This is
somewhat surprising given the written record.
2.1.
Smith
and his contemporaries
Smith was, at the
time of his death, working on a third book, on jurisprudence. As he lay on his
death bed, he asked his colleagues to destroy all his manuscripts. However, he
had presaged the book in the introduction to the last reprint of The Theory of
Moral Sentiments (1817).
In his
introduction to the 1828 reprint of the Wealth of Nations, J. R. McCulloch
summarised how this third work fitted into Smith’s intended trilogy: “Mr.
Miller, the distinguished author of the Historical view of the English
Government, and professor of law in the University of Glasgow, had the
advantage of hearing Dr. Smith’s course of lectures
on moral philosophy: of which he has given this account:- “his course of
lectures was divided into four parts. The first contained Natural Theology. The
second comprehended ethics … which he afterwards published in his Theory of
Moral Sentiments. In the third part, he treated at more
length of that branch of morality which relates to justice … Upon this subject
he followed the plan that seems to be suggested by Montesquieu; endeavouring to
trace the gradual progress of jurisprudence, both public and private, from the
rudest to the most refined ages, and to the accumulation of property, in
producing correspondent improvements or alterations in law and government. …
In the last part of his lectures, he examined those political regulations which
are founded, not upon the principles of justice, but that of expediency, and
which are calculated to increase the riches, the power, and the prosperity of a
state … afterwards published under the title of An Inquiry into the Nature and
Causes of the Wealth of Nations.”” (Smith 1828, Preface iii).
Smith’s views on
the law have also recently gained broad accessibility with the publication of
Smith’s Lectures on Jurisprudence, following the discovery of a second, more
comprehensive, set of student notes (Mahoney 2017, 228).[12]
Delivered at the University of Glasgow in 1762-1763, the lectures give
considerable insight into his theory of the rules by which civil government
ought to be directed.
In any event,
there is a wealth of contemporary writing in the works of William Blackstone,
Lord Mansfield, Lord Kames, Daines Barrington, Francis Hargrave, Richard Burn,
Adam Ferguson and others making it quite clear that the legal framework that
these thinkers of the time considered to be consistent with liberty (and which
guided Smith’s invisible hand) was the common law.
The 18th century
was a truly momentous time. Hanoverian England was growing out of its agrarian
past into both an industrial nation (in the reign of George II, England had
grown into the greatest manufacturing and commercial country in the world)
(Campbell 1849, 402-3) and the largest and most expansive empire seen anywhere
in the world since the mighty empire of Rome. From April 1775 until September
1783 the War of Independence was fought, leading to the establishment of the
United States. And from 1787, the rest of the century witnessed the French
Revolution.
In the legal
field, the “eighteenth century, according to the judgment of its current
historians, was England's century of law … elevated during this century to a
role more prominent than at any period of English history” (Lieberman 1989,
1). Adam Smith maintained that in no other nation had law achieved such “great
exactness” in execution (Smith 1978). Hume, when writing The History of
England, said that English history delivered “the most perfect and most
accurate system of liberty that was ever found compatible with government”
(D. Hume 1983, 525). Blackstone had, more successfully than any of his
predecessors in English common law history, drawn the numerous threads and
complexities of the common law cases into a coherent body of principles,
enshrined in his Commentaries on the Laws of England. Lord Mansfield sat as
Chief Justice in England, almost single-handedly developing the law merchant to
bring the common law into an age of industrialisation, commerce and global
trade. Lord Kames sat as Chief Justice of Scotland, making similar advances in
Scottish law and expounding on the inherent strengths of common law. Lord Hardwicke's twenty-year career in
Chancery from 1736 to 1756 also brought considerable advances in settling
equity as a system of case law, which marshalled it into a set of principles,
designed to temper its hitherto tendency to arbitrariness. US statesmen were
consulting with these common law intellectual giants on a constitution to guide
and protect the liberty of the newly minted United States of America (Mahoney
2017, 228).[13]
There was, at this
time, an important and fundamental discussion taking place on the rival claims
of common law and legislation within the English legal system (Lieberman 1989,
2). On the common law side were writers such as Smith, Blackstone, Kames and others.
On the side of legislation, Bentham emerged as the leading protagonist. We are
fortunate to have a detailed examination of this discussion in David
Lieberman’s ‘The Province of Legislation Determined’ (1989). What is surprising
is that there had been no recent survey of the general development of legal
theory in the age of Blackstone and Bentham until Lieberman (Lieberman 1989,
4). Lieberman succinctly summarised the impact of this: “our recent neglect
of the juristic setting in which the debate on legal change and law reform
first developed has greatly impoverished our notion of the "central
questions of Anglophone political theory," and generated intellectual
histories in which distinctive voices of English reform have been rendered
unnecessarily mysterious” (Lieberman 1989, 13).[14]
It is quite clear
that Smith, Blackstone and indeed the vast majority of juridical thinkers at
the time saw the common law as the legal framework consistent with, and
responsible for, England’s liberty (and its prosperity). Legislation, in the
private law arena, was regarded as antithetical both to liberty and to common
sense. The link drawn between the common law and liberty was, and had been for
centuries, quite explicit: “As Matthew Hale maintained, though the common
law was "more particular than other Laws" and therefore "more
numerous and less methodical," this still "recompenceth
with greater advantages: namely, it prevents arbitrariness in the Judge, and
makes the Law more certain." This belief in the relationship between
English liberty and the distinctive certainty of English justice was also
endorsed by more detached observers. Montesquieu, in the famous examination of
the English constitution which had "political liberty" as its
"direct end," stressed that the judgments of the courts were fixed
"to such a degree as to be ever conformable to the letter of the
law." Adam Smith concurred that “an
other thing which greatly confirms the liberty of the subjects in
England" was "the little power of the judges in explaining, altering,
or extending or correcting the meaning of the laws” (Lieberman 1989, 79).
The important
contrast in a judge’s role when dealing with interpretation of statutes was
also well understood: “The relevant distinction between authentic positive
law and the common law was carefully delineated by James Sedgwick in his
Remarks on the Commentaries. Sedgwick observed that "in the administration
of statutory law" the magistrate "has only to apply that law to the
affair under trial." "In common litigations," however,
"those general principles which are the essence of justice itself are to
be resorted to, and the adjudged cases consulted, with a view to their
application, so far as they are accordant with the spirit of equity, and not
for the mere dictatum of the adjudged case itself”
(Lieberman 1989, 85).
It is necessary to
put legislation in that period in context and Lieberman does this succinctly: “Parliamentary
statute was already a principal source of English law, and legal commentators
could point to past occasions, like the statutes of Edward I, when the legal
system had received extensive legislative addition. Few of the figures under
discussion here believed there to be any formal improprieties in the
eighteenth-century parliament's exercise of its legislative will. It is indeed
during this period that constitutional lawyers have traditionally fixed the
point at which parliamentary sovereignty came to be unambiguously identified
with legislative omnipotence. Notwithstanding the much-remarked
upon "swelling of the statute book," legal historians have long
concluded that this was still an era when "legislation played a tiny part
in the development of private law.” (Lieberman 1989, 16)
It is therefore
clear that legislation was not, at this point, pervasive. However, the battle
lines were being drawn: the legislature had been declared omnipotent, but just
how far should it go in wielding that power? “The sheer volume of the
legislation — at a scale, according to the tendentious estimate of the Lord
Chancellor, beyond the mastery of even the most experienced lawyer — raised
awkward implications for the standard "maxim of laws of England, that the
want of knowledge thereof shall not excuse a man..." … But what attracted the gravest concern was
the perceived qualitative failures of this legislation and the damage thereby
inflicted on the legal system overall.” (Lieberman 1989, 17)
2.1.1. Blackstone
Lieberman says
that: “[f]ew features of the Commentaries have
suffered such unfortunate neglect as Blackstone's stated aim that his work
should furnish guidance to "such as are, or may hereafter become,
legislators.” ... “The mischiefs that have arisen to the public from the
inconsiderate alterations in our laws are too obvious to be called in
question... For, to say the truth, almost all the perplexed questions, almost
all the niceties, intricacies, and delays (which have sometimes disgraced the
English, as well as other courts of justice) owe their origin not to the common
law itself, but to innovations that have been made in it by acts of
parliament.” (Lieberman 1989, 56)
He goes on to
observe that: “Blackstone claimed that parliament could build only upon
"the foundation of the common law," and there was no place in his
legislative science for "any great legislative revolution”. … “If, as
Dicey suggested, the Commentaries supplied an early and authoritative account
of parliament's legislative omnipotence, then what demands equal emphasis is
the profound uneasiness with which Blackstone perceived the practical
implications of this constitutional doctrine.” (Lieberman 1989, 66)
Blackstone was by
no means alone in this view. Both Mansfield and Kames “insisted on the
inherent superiority of the courts over parliament as a vehicle for developing
legal rules” (Lieberman 1989, 71). The common law was, at the time, being
particularly tested. Society in England was changing rapidly both because of
advances in commerce and with the extended empire. The
question was, rightly, being asked whether a law built in another age could
adapt.
2.1.2. Mansfield
The common law
developed dramatically under Mansfield, showing its ability to support
industrialisation and international commerce. Lieberman observes that: “[a]s
with so many other features of English legal development, the peculiar history
of the commercial law was largely the result of the resilience and durability
of the common law system.” (Lieberman 1989, 100) It is quite clear that these developments
came through the common law courts. “Not only had Mansfield founded a
“system of mercantile jurisprudence," but this had been effected without
major contribution from parliamentary legislation” (Lieberman 1989, 121). …
“Mansfield's efforts operated in legal territory largely unoccupied by
statute law. But he explained this by attributing to the Chief Justice the same
motives Blackstone had perceived in the reforming enterprises of earlier common
law judges. In his attempt to advance English law for "the concerns of a
trading population,” he had consciously avoided parliament. "Instead
of proceeding by legislation," Mansfield "wisely thought it more
according to the genius of our institutions to introduce his improvements
gradually by way of judicial decisions." (Lieberman 1989, 121) … “The success of Mansfield's court in refining
and settling England's commercial law provided a most forceful vindication of
the common law's continued capacity to develop legal remedies in response to
new social needs. English legal theory, as authoritatively elaborated by Hale,
explained how the incremental growth and steady process of correction in the
methods of common law had produced in England an unmatched legal fabric, one in
Blackstone's formula "now fraught with the accumulated wisdom of ages.”
(Lieberman 1989, 122)
Mansfield’s
criticism of legislation was by no means limited to the arena of mercantile
law. More broadly, Lieberman tells us of “[t]he Chief Justice's often
critical attitude to parliamentary legislation”. … “In his arguments in Omychund
v Barker, the future Chief Justice insisted upon the superiority of common law
over legislation as a mechanism for developing the rules, there presenting an
argument that was later received as a classic pronouncement on the wisdom of
the common law. On the bench Mansfield supplied further observations on the
failures of parliamentary legislation. Many of these took the familiar form of
complaints against the careless drafting and technical flaws in many acts of
parliament. In a ruling of 1767, though, he returned to the broader issue of
the rival claims of common law and statute, and again presented the record of
the past as a clear demonstration of the superiority of common law”
(Lieberman 1989, 124). … “Mansfield conceived the common law to be a system
of legal usage which also encompassed among its sources the law of nature and
nations and which, when properly " looked into," revealed its
foundations " in equity, reason and good sense." (Lieberman 1989,
131) … “As for Blackstone, both law
and equity were equally settled systems of legal art, where precedents served
as evidence of law and where the application of settled rules was not suffered
to violate the principles of reason and justice” (Lieberman 1989, 132).
2.1.3. Kames
In Scotland, Kames
shared Mansfield’s views on the superiority of common law and the weaknesses
inherent in legislation. Again, Lieberman does an admirable job bringing
together the written record of the time. I can do no better than to set out
some of his key observations and I hope the elucidation, and clear links they
provide to Smith’s legal thinking, will allow the reader to excuse me for their
length.
Scotland’s legal
landscape was, at the time, going through perhaps even more dramatic changes
than England, and Kames was a strong advocate for a judicial, rather than
legislative, route to support that change: “The legal writings of the
Scottish judge and philosopher, Henry Home, Lord Kames, contain, amongst much
else, one of the eighteenth century's most ambitious and articulate programs of
judicial law reform. Kames's elaborate defense of the judicial route to legal improvement,
as well as his more general approach to legal theory, owed much to the
specifically Scottish setting in which he trained and professionally served,
and no account of his career and corpus could afford to neglect this Scottish
context” (Lieberman 1989,
144).
Like Smith, Kames
looked at the world from a broad frame of reference. By 1781, “he had
assembled a massive, if rather prolix, corpus of over twenty volumes that could
serve as an index to nearly all of the intellectual pursuits of the Scottish
Enlightenment, encompassing such topics as morals, religion, law, government,
natural philosophy, political economy, education, aesthetics, and of course
history” (Lieberman 1989, 146).
It is also clear
that Smith and Kames strongly influenced each other in their thinking and their
views. Lieberman tells us that Kames “… effectively promoted the academic
fortunes of Adam Smith …” and Adam Smith in turn observed that “we must every
one of us acknowledge Kames for our master ….” (Lieberman 1989, 146) In
fact, Kames was patron not just to Adam Smith, but also to a number of the
other most influential thinkers of the time, including David Hume and John
Millar.
Kames is credited
for having described the ‘four-stage’ advancement of society, from
hunter-gatherer to herder, then agricultural and finally commercial society.
This model was fundamental to the legal debate that was going on at the time.
(It is just as important to the debate that is now taking place, as we move
into a fifth stage, a technology driven society where we must reassess our
relationship with social platforms and complex AI-driven, semi-autonomous
systems). In the first two stages, no laws were considered necessary save for
those issued by the family, clan or tribe head. The agricultural stage
introduced new occupations and made the work of those individuals valuable to
others, requiring the law to develop principles to guide these new relationships.
The age of commerce (and, for the English, empire) created even more complex
societal relations, requiring significant developments in the law to support
these changes. Kames, like Mansfield, dismissed legislation as incapable of
resolving these challenges and believed that the only effective solution lay in
the development of the common law.
While “Kames
presented one of the first published versions of the "four stages"
theory of societal development … Meek argued that … he probably learned the
theory from Smith's lectures on jurisprudence” (Lieberman 1989, 149, fn 25, Meek 1976, 102-7). Indeed, the links between Kames
and Smith went much further than this and their views on law and jurisprudence
were at the centre of their thinking: “As in the case of other contemporary
Scottish philosophers, jurisprudence provided the disciplinary context and much
of the structure for Kames's explorations in social theory. It was in his
essays on law that he first revealed many of the same general sociological
interests displayed by Adam Smith in his Lectures on Jurisprudence or by John
Millar in The Origin of the Distinction of Ranks. The distinctive concern of
this body of eighteenth-century legal speculation, according to the testimony
of John Millar in his An Historical View of English Government was the attempt
to reformulate the natural law jurisprudence of Grotius and his successors as a
"natural history of legal establishments." To this end,
"speculative lawyers" were led to examine the formation and growth of
"civil society," the "cultivation of arts and sciences,"
the "extension of property in all its different modifications," and
their combined influence "upon the manners and customs, the institutions
and laws of any people." In Millar's judgment, the leading practitioners
of this genre of "natural history" were Montesquieu, Smith and Kames
- Montesquieu having first "pointed out the road" and Smith
representing "the Newton" of "this branch of philosophy.”
(Lieberman 1989, 147)
Kames, like his
contemporaries, emphasised that the strength of the common law came from the
process: “Unlike the legislature, Kames explained, the courts only arrived
at "a general rule" through the "induction of many cases,"
each "adapted to particular circumstances." Through
such a steady and gradual process of legal growth, customary law achieved a
standard of excellence unavailable in other forms of law-making. According
to the frequently invoked formulas of English common lawyers, by such means
England's unwritten law (in Mansfield's words) "work[ed] itself pure"
by refining rules "drawn from the fountain of justice." And the
natural result was a body of common law "superior to an act of
parliament.” (Lieberman 1989, 162)
It is important to
recognise that this was not a singularly English phenomenon. As Lieberman tells
us: “… it would be a mistake to limit its relevance to the English legal
tradition. An eighteenth-century Scottish lawyer, for example, would have
encountered much the same doctrines in Stair's Institutions. There
Stair likewise stressed the superior virtues of legal custom "wrung out
from... debates upon particular cases,” in which “the conveniences and
inconveniences thereof, through a tract of time, are experimentally seen.” And
as Kames was later to do, Stair immediately contrasted this with the situation
in statute law, where “the law-giver must at once
balance the conveniences and inconveniences,” and therefore “may, and often
doth, fall short.” (Lieberman 1989, 162-63)
Lieberman
concludes: “For Kames, no less than for Bentham, utility featured as a
critical principle of legal modernization. But, the
reformers to whom Kames directed the principle were enlightened judges and not
scientific legislators. Kames reminds us how in this
period a commitment to the methods and institutions of customary law need not
be taken to indicate any lack of commitment to law reform. Indeed, for
Kames as for so many of his English contemporaries, the most important and
recently confirmed lesson of English law was the clear superiority of the
courts over the legislature in orchestrating legal development. It was this
lesson which made Lord Mansfield, the period's most illustrious judicial
reformer, the proper figure for Kames to invoke at the outset of the Principles
of Equity. And it was this lesson which, in turn, suggested that the judges of
the Court of Session were the ideal agents for lifting Scots law into the
modern order of commercial society. This was a lesson in the wisdom of the common
law that scarcely could be lost on a philosopher-judge whose devotion to
improvement, in John Ramsay's apt phrase, "was almost apostolical."”
(Lieberman 1989, 175)
2.1.4. Mackintosh
Mackintosh, in
1799, published ‘A Discourse on the Study of the Law of Nature and Nations’
(Mackintosh 1835). It continues to this day to be regarded as one of the
seminal post-Classical works on international law. What is less observed is the
views Mackintosh expressed on the common law and legislation. He emphasised the
traditional common law view that liberty is “the object of all government”
and observed that in “most civilised states the subject is tolerably
protected against gross injustice from his fellows by impartial laws, which it
is the manifest interest of the sovereign to enforce” but that “some
commonwealths are so happy as to be founded on a principle of much more refined
and provident wisdom … the will of the sovereign is limited with so exact a
measure, that his protecting authority is not weakened. Such a combination of
skill and fortune is not often to be expected, and indeed never can arise, but
from the constant though gradual exertions of wisdom and virtue, to improve a
long succession of most favourable circumstances” and in “unmixed forms
of government, as the right of legislation is vested in one individual or in
one order, it is obvious that the legislative power may shake off all the
restraints which the laws have imposed on it. All such governments, therefore,
tend towards despotism, and the securities which they admit against mis-government are extremely feeble and precarious.”
(Mackintosh 1835, 62)
Mackintosh clearly
embraced the common law tradition. For him, there was not “in the whole
compass of human affairs, so noble a spectacle as that which is displayed in
the progress of jurisprudence; where we may contemplate the cautious and
unwearied exertions of a succession of wise men through a long course of ages;
withdrawing every case as it arises from the dangerous power of discretion, and
subjecting it to inflexible rules; extending the
dominion of justice and reason, and gradually contracting, within the narrowest
possible limits, the domain of brutal force and of arbitrary will.” —
"The science of jurisprudence, the pride of the human intellect, which,
with all its defects, redundancies, and errors, is the collected reason of ages
combining the principles of original justice with the infinite variety of human
concerns."
In his Discourse,
Mackintosh exemplified the “progress of law, and illustrate those principles
of universal justice on which it is founded, by a comparative review of the two
greatest civil codes that have been hitherto formed—those of Rome and of
England” (Mackintosh 1835, 77).
2.1.5 Hume
The reference by
Mackintosh at this point to Rome and England is not surprising to those versed
in David Hume’s great History of England. Hume wrote this 6 volume work from
1754–62, with the object of tracing the history of law and liberty. Perhaps
most well known today as a philosopher, by his contemporaries, he was regarded
as one of the finest historians of his generation. His work on the history of
law was of particular importance.
For Hume, society
reached its pinnacle about the age of Augustus (around 27 BC), as Rome
transitioned from Republic to Empire. From that point, it went into decline. “The
irruption of the barbarous nations, which soon followed, overwhelmed all human
knowledge, which was already far in its decline; and men sunk every age deeper
into ignorance, stupidity, and superstition; till the light of ancient science
and history had very nearly suffered a total extinction in all the European
nations. ... The period, in which the people of Christendom were the lowest
sunk in ignorance, and consequently in disorders of every kind, may justly be
fixed at the eleventh century, about the age of William the Conqueror... ”
(D. Hume, The Progress of English Liberty 1761).
However, Hume
writes that: “there was no event, which tended farther to the improvement of
the age, than one, which has not been much remarked, the accidental finding of
a copy of Justinian’s Pandects, about the year 1130,
in the town of Amalfi in Italy.” This is, of course, a reference to what is
often referred to as the Codex Justinianus, codified by Emperor Justinian in
the Byzantine Empire in a process starting in 529 AD: the written record of
Roman law, lost to history during the Dark Ages and then rediscovered.
Rome’s law started
with a code (the twelve tables) around 449 BC, and it ended in a code,
Justinian’s Pandects, compiled in Byzantium from
529-565AD. Roman law now forms the basic framework for civil law, which is the
most widely used legal system today. However, the important point is what
happened in Rome in the thousand years between 449 BC and 529 AD. In the period
between about 201 to 27 BC, Rome developed a highly sophisticated common law
system, which further developed over the next 250 years, as Roman common law
reached its highest levels of development.
It was only many
hundreds of years later, when the Empire was in the late stages of decline,
that this body of common law was codified by Justinian, then, following the
collapse of the Empire, eventually lost. Europe plunged into ignorance,
lawlessness and superstition. This is what Hume is explaining to us. When
rediscovered in Amalfi by Roman Catholic priests in the 1100s, the discovery
dragged Europe out of its decline, and set western society on a path to
increased liberty and prosperity.
However, Europe
and England took very different paths. While Europe adopted a codified,
legislation led system, based on Justinian’s Pandects,
England developed its common law system. In Hume’s words: “though the close
connexion, which without any necessity they formed between the canon and civil
law, begat a jealousy in the laity of England, and prevented the Roman
jurisprudence from becoming the municipal law of the country, as was the case
in many states of Europe, a great part of it was secretly transferred into the
practice of the courts of justice, and the imitation of their neighbours made
the English gradually endeavour to raise their own law from its original state
of rudeness and imperfection”.
This supported
England through the Agricultural Revolution, a critical first step out of the
Dark Ages. But England was rapidly changing in the 18th Century, becoming the
most industrial and commercialised centre in the world, with extensive
territories and foreign commerce. This is what led England, at this point, to
adapt the common law system. This puts in context the debate about whether
England should legislate for these changes in society. Blackstone, Smith, Kames
and, importantly, Mansfield, who was England’s Chief Justice at the time,
having this perspective on Roman history, rejected legislation as clumsy,
ineffective and arbitrary.
2.1.6 Smith’s
Wealth of Nations and the common law
For Smith,
regarded as the “Newton” of this branch, Hume’s work helped to frame his view
on the superiority of common law and it was this
framework within which he contextualised England as he wrote the Wealth of
Nations. Hume had shown how the discovery of Justinian’s codex pulled Europe
out of the Dark Ages, giving Europe codified systems of law built on the Roman
common law experience. Life in Europe was most certainly improved by this
discovery. However, Smith would have been acutely focused on how the principles
from Roman common law had been secretly infused into English common law,
helping England to pull ahead of Europe and the rest of the world.
There was no such
thing as a free market in Smith’s mind. English society functioned, and
achieved accumulation of wealth, through the highly sophisticated application
of a legal system so far superior to legislation that it propelled England into
the Industrial Revolution.
Adam Smith
famously said in the Wealth of Nations: “But though the profusion of
government must undoubtedly have retarded the natural progress of England
towards wealth and improvement, it has not been able to stop it. The annual
produce of its land and labour is undoubtedly much greater at present than it
was either at the Restoration or at the Revolution. The capital, therefore,
annually employed in cultivating this land, and in maintaining this labour,
must likewise be much greater. In the midst of all the exactions of government,
this capital has been silently and gradually accumulated by the private
frugality and good conduct of individuals, by their universal, continual, and
uninterrupted effort to better their own condition. It is this effort,
protected by law, and allowed by liberty to exert itself in the manner that is
most advantageous, which has maintained the progress of England towards
opulence and improvement in almost all former times, and which, it is to be
hoped, will do so in all future times.” (Smith 1828, 153).
3. Bentham and
Legislation
The legislature
did not heed the warnings from Smith, Blackstone, Mansfield, Kames and others.
Indeed, following the publication of the Commentaries, the pace of legislation
increased and its use, ultimately, became pervasive across the common law
world, with an exponential acceleration from the end of the 19th century.
Lieberman goes through the debates that ensued at the time as to potential
statute consolidation. For interested readers, there is a wealth of
information. However, my focus is on what was happening in the conflict between
the common law and legislation, and so we turn to Bentham.
It was in the
1770s that Bentham started looking at the rival claims of common and statute
law. Lieberman tells us that he was, at that time, entering a “well rehearsed argument. For him, as for Blackstone and his
contemporaries, the relationship between common law and legislation represented
a basic problem for legal theory, and a focus for more practical questions
regarding the appropriate instruments for legal improvement in England”
(Lieberman 1989, 219).
The arguments may
have been well rehearsed. However, Bentham’s position was radical. He claimed
that common law did not even exist. “It was only the existence of statute
law which made it possible to conceive of common law in misleading terms as a
body of laws: ...there is no possible means of explaining what it is that shall
be understood to make up an article of Common Law of a given description, but
by imagining some corresponding article of Statute Law that shall represent it.
The Common Law is but the Shadow of the Statute Law, although it came before
it. Before the appearance of the Statute Law even the word " Law"
could hardly have been mentioned... As a system of general rules, the Common
Law is a thing merely imaginary: and the particular commands which are all that
(in the way of command) there ever was of it that was real, can
not every where, indeed can seldom, be
produced... Once more, to give a gross idea of it, what is the Common Law?
What, but an assemblage of fictitious regulations feigned after the images of
these real ones that compose the Statute Law. Bentham reached this conclusion
on the basis of his positivist legal doctrines, which characterized law,
properly so called, as a command issued by a sovereign will.” (Lieberman
1989, 222)
Bentham’s theory
is striking. The concept of liberty is absent and, for
Bentham, the object of law is not to reflect just outcomes in consensual
interaction of individuals in society or to respect the customs that had grown
and been recognised through centuries of examination by judges of the rights
and wrongs in cases that came before the courts. Rather, the object is to
subject them to commands from a centralised legislature to reflect ‘Sovereign
will’.
In this way
Bentham turned people from individuals with the power of self-determination
into vassals of the legislature to be commanded how to act and what objectives
to seek. In Lieberman’s words: “Bentham believed that once the legal
positivist position was disclosed, it became possible to dismiss pre-emptively
a wide range of " pseudo-laws " under the simple formula that "every thing that is not
a Command therefore is not a Law." (Lieberman 1989, 223) … “As with
common law, the case against natural law generally began by invoking the
positivist premise that all authentic law was a species of command. The laws of
nature could not be genuine laws since a "real Law is a command, a
command...an expression of the will of some person, and there is no person of whose will the Law of Nature can be said to be the
expression." (Lieberman 1989, 225)
The references to
positivist and natural law theory are familiar to modern jurisprudence.
However, in modern commentary and academic debate, the attack made by Bentham
has generally been mischaracterised. It was not just an attack on natural law
theory, but an attack on the common law system itself. In Lieberman’s words: “Bentham's
hostility to natural jurisprudence comes as no surprise, as Benthamic
legal positivism is regularly received in Anglo-American jurisprudence as the
historically decisive response to natural law theory. What has been less
observed is the extent to which Bentham's critique of natural law formed a part
of the attack on common law”
(Lieberman 1989, 224).
Lieberman
concludes: “For Bentham, there was one fundamental solution for this
philosophical and moral bankruptcy in English law. What was required was
"to mark out the line of the subject's conduct by visible
directions," which could only be achieved "by transforming the rule
of conduct from Common Law into Statute Law” (Lieberman 1989, 239-40).[15]
4. History lost, and
then found
It is surprising
how quickly the notion caught popular support, and how the memory of the common
law view expressed by Blackstone, Smith and their contemporaries faded into
history. When writing his introduction to the first English translation of
Cicero’s Political Works (comprising his Treatise on the Commonwealth and his
Treatise on the Laws) in 1842, Francis Barham said: “… we cannot help
lamenting that the science of jurisprudence or universal law, properly so
called, should be so little studied in our British state at present. When we
look into the history of literature, we find times have been, in which men of
the most consummate genius devoted that genius with the most ardent
perseverance and the most mathematical precision, to the study of jurisprudence
in its very loftiest and widest bearings. They hesitated not, through many
years in incessant labour, like Grotius abroad and Seldon at home, to study the
vast system of moral obligations. In order to make themselves jurisconsults
worthy of the name, they studied the divine laws handed down in Scripture, and
developed in the ecclesiastical policy, ancient and modern. They studied the
law of nature and nations, as explained by its oriental and classic
commentators. They studied the civil laws of all states and commonwealths, and
by a kind of comparative analysis, elicited the spirit of laws among all
peoples, and confirmed just regulations by examples derived from the catholic
experience of men in all ages and countries, and defeated the blunders of legislation,
by showing their pernicious consequences, under every variety of circumstances.
Such men still appear occasionally in Europe and
America. A few may still grace the colleges, and the inns of court, or the open
walks of literature; but their number has become deplorably limited.” (Barham 1841-42, 16-17)
4.1.
Leoni
It took nearly 160
years for the debate about legislation and the common law to re-surface in the
mainstream and, in that time, the growth in legislation had been exponential,
to such an extent that the concept that private law should (or could) be
discovered in the court room would now be met by most people with disbelief, or
even ridicule.
In 1958, three of
the leading free market thinkers of the time - Milton Friedman, Frederick von
Hayek and Bruno Leoni - delivered a series of lectures at what is now Claremont
College in California. The importance and subsequent influence of these lectures
cannot be overstated. They laid the foundation for Friedman’s ‘Capitalism and
Freedom’, Hayek’s ‘The Constitution of Liberty’ and Leoni’s ‘Freedom and the
Law’ (Leoni 1991).
It is the third of
these books, Freedom and the Law, that picks up on the debate about
legislation’s role in a free society. Hayek would also, after much discussion
with Leoni, later publish ‘Law, Legislation and Liberty’, in a revision to the
views he expressed in The Constitution of Liberty. What is striking about these
books is both the common theme of superiority of the common law over
legislation, but also the apparently limited reference to the debate on this
issue that had taken place in the 18th century, when Smith was publishing the
Wealth of Nations and his Theory of Moral Sentiments.
Leoni had a very
simple, but immensely important proposition: the source of our laws determines
whether markets are 'free'. Leoni started with the now well-established
proposition that “... a centralised economy run by a committee of directors
suppressing market prices and proceeding without them does not work because the
directors cannot know, without continuous revelation of the market, what the
demand or the supply would be ...” (Leoni 1991, 19). The case for this
conclusion has been admirably made by economic theorists since Smith first
published the Wealth of Nations.
What set Leoni
apart was that he went on to say that this “conclusion may be considered
only as a special case of a more general realization that no legislator would
be able to establish by himself, without some kind of continuous collaboration
on the part of all the people concerned, the rules governing the actual
behaviour of everybody in the endless relationship that each has with everybody
else.” (Leoni 1991, 20) To put it
another way, the question, for Leoni, is not how to get good legislation or
avoid bad legislation. The question is
much deeper than that. In Leoni’s terms,
“[i]t is a question of deciding whether individual
freedom is compatible in principle with the present system centred on and
almost completely identified with legislation” (Leoni 1991, 11).
Leoni built his
argument convincingly, but mainly by reference to historical examination of the
common law system that was the foundation of the great Roman Empire. Leoni
certainly drew parallels with the English common law, but it does not appear to
have been the mainstay of his arguments.
Leoni started by
considering one of the critical fallacies in legislation, that it gives legal
certainty. Certainty is often conceived of as connected with the idea of a
definitely written formulae - the idea that we write our laws down so they must
be certain. But this overlooks the question whether we are looking for
certainty over the short or the long run. As Leoni put
it: “The certainty of the law, in the sense of a written formula, refers to
the state of affairs inevitably conditioned by the possibility that the present
law may be replaced at any moment by a subsequent law. The more
intense and accelerated is the process of law-making, the more uncertain will
it be that the present legislation will last for any length of time. Thus the certainty of the law in this sense
could be called the short-run certainty of the law.” (Leoni 1991, 80)
So in one sense, written laws are certain. We
can read the words. But it is a short run sense of certainty. There is no
guarantee that the rules in place one day will be there the next. This makes
business planning over the longer term extremely challenging. Leoni is, of
course, in looking at legal certainty in this way, also echoing the views of
the great English common law jurists and focusing on what they saw as one of
the key foundations of law: "The great object" in "mercantile
law," Mansfield frequently declared, "is certainty," and this
required that "the grounds of decision be precisely known."
(Leoni 1991, 115)
Roman private law,
like English common law, was not a written legal system for the most part.
Whilst public law (the body of rules that regulates the administration of
government) was legislated, private law (i.e. the law that governs private
activity of people in their interactions with each other in society) did not
rely on legislation.
Some people might
find this a startling proposition. But for students of Roman law, it is no
surprise. It is often said that Rome’s law started with a code (the Twelve
Tables) and ended with a code (Justinian’s Corpus Juris). However, the point
that is important is what happened in the intervening period. Legislation in
the private law arena when Rome achieved its most spectacular success was
practically unknown. In fact, Leoni says, and he is perhaps right in this, the
most useful thing that a student of Roman legal history can take from his study
of that great system, is this one salient point: "We probably are so
used to thinking of the Roman legal system in terms of Justinian's Corpus
Juris, that is in terms of a written law book, that we fail to realise how
Roman law actually worked. A large part of the Roman
rules of law was not due to any legislative process whatever." (Leoni 1991, 81)
Even when
Justinian started his massive process of codification in AD529 he was not
seeking to re-write the private law, but rather to bring together in codified
form the various propositions that had emerged from discoveries of the Roman
jurists over the centuries of the Republic and the Empire.
This had an
enormous impact on the concept of legal certainty. As
Leoni put it: “The Romans accepted and applied a concept of the certainty of
the law that could be described as meaning that the law was never to be
subjected to sudden and unpredictable changes. Moreover, the law was
never to be submitted, as a rule, to the arbitrary will or the arbitrary power
of any legislative assembly or of any person, including senators or other
prominent magistrates of the state. This is the long-run concept, or, if you
prefer, the Roman concept of the certainty of the law.” (Leoni 1991, 83-84)
4.2.
Hayek
Hayek provides
probably the most comprehensive contemporary review of the debate on common law
and legislation since the time that Smith was writing. He notes the way that
the modern economists’ defence of liberty has failed to be framed in legal
terms: “The economists … at least after the time of David Hume and Adam
Smith, who were also philosophers of law, certainly showed no more appreciation
of the significance of the system of legal rules, the existence of which was
tacitly presupposed by their argument.” (Hayek 2012, 68) And he is critical
of the purported appeal to economic considerations and laissez-faire used to
justify the turn to legislation: “… when we examine the reason regularly
given by the lawyers for the great changes that the character of law has
undergone during the last hundred years. Everywhere,
whether it be in English or American, French or German legal literature, we
find alleged economic necessities given as the reasons for these changes.” … “These accounts invariably speak of a
past laissez-faire period, as if there had been a time when no efforts were
made to improve the legal framework so as to make the market operate more
beneficially or to supplement its results” (Hayek 2012, 68).
Hayek, like the
juridical thinkers of the 18th century, was quick to highlight the dangers of
legislation, but also to note how recent was the conception that a sovereign
could legislate to command society: “Legislation,
the deliberate making of law, has justly been described as among all inventions
of man the one fraught with the gravest consequences, more far-reaching in its
effects even than fire and gun-powder. Unlike law
itself, which has never been 'invented' in the same sense, the invention of
legislation came relatively late in the history of mankind. It gave into the hands of men an instrument of great power
which they needed to achieve some good, but which they have not yet learned so
to control that it may not produce great evil. It
opened to man wholly new possibilities and gave him a new sense of power over
his fate. The discussion about who should possess this power has, however,
unduly overshadowed the much more fundamental question of how far this power
should extend.” (Hayek
2012, 72)
Hayek traced the
evolution of the debate on common law and legislation, from the earliest
debates in classical Greece, through to Rome and explained how it was that
England nurtured its much-cherished liberty under common law as Europe adopted
its civil law system built of the Justinian codes.
In respect of
Greece, he said: “… we find in the Athenian democracy already the first
clashes between the unfettered will of the 'sovereign' people and the tradition
of the rule of law; and it was chiefly because the assembly often refused to be
bound by the law that Aristotle turned against this form of democracy, to which
he even denied the right to be called a constitution. It is in the discussions
of this period that we find the first persistent efforts to draw a clear
distinction between the law and the particular will of the ruler.” (Hayek
2012, 82)
As with Leoni,
Hayek focused on how Rome was built on the common law and the obfuscation of
this important fact that has come from undue focus subsequently on the
codification of Rome’s common law by Justinian: “The law of Rome, which has
influenced all Western law so profoundly, was even less the product of
deliberate law-making. As all other early law it was
formed at a time when 'law and the institutions of social life were considered
to have always existed and no-body asked for their origin. The idea that law
might be created by men is alien to the thinking of early people.' It was only
'the naive belief of later more advanced ages that all law must rest on
legislation.' In fact, the classical Roman civil law, on which the final
compilation of Justinian was based, is almost entirely the product of
law-finding by jurists and only to a very small extent the product of
legislation. By a process very similar to that by which later the English
common law developed, and differing from it mainly in that the decisive role
was played by the opinions of legal scholars (the jurisconsults) rather than
the decisions of judges, a body of law grew up through the gradual articulation
of prevailing conceptions of justice rather than by legislation. It was only at
the end of this development, at Byzantium rather than at Rome and under the
influence of Hellenistic thinking, that the results of this process were
codified under the Emperor Justinian, whose work was later falsely regarded as
the model of a law created by a ruler and expressing his 'will'.” (Hayek
2012, 82-83)
Hayek's review of
England and how it preserved and built on the ancient concept of common law is
important for at least two reasons. He convincingly demonstrates the connection
between common law and liberty. Importantly, he also draws out the distinction
between England’s concept of natural liberty and the natural law theory of
Europe which was the primary target of the positivist attack: “The only
country that succeeded in preserving the tradition of the Middle Ages and built
on the medieval 'liberties' the modern conception of liberty under the law was
England. This was partly due to the fact that England escaped a wholesale
reception of the late Roman law and with it the conception of law as the
creation of some ruler; but it was probably due more to the circumstance that
the common law jurists there had developed conceptions somewhat similar to
those of the natural law tradition but not couched in the misleading
terminology of that school. … England avoided the fate of Europe under its
highly centralised absolute monarchs. What prevented such development was the
deeply entrenched tradition of a common law that was not conceived as the
product of anyone's will but rather as a barrier to all power, including that
of the king-a tradition which Edward Coke was to defend against King James I
and Francis Bacon, and which Matthew Hale at the end of the seventeenth century
masterly restated in opposition to Thomas Hobbes. … The freedom of the British
which in the eighteenth century the rest of Europe came so much to admire was
thus not, as the British themselves, were among the first to believe and as
Montesquieu later taught the world, originally a product of the separation of
powers between legislature and executive, but rather a result of the fact that
the law that governed the decisions of the courts was the common law, a law
existing independently of anyone's will and at the same time binding upon and
developed by the independent courts; a law with which parliament only rarely
interfered and,, when it did, mainly only to clear up doubtful points within a
given body of law.” (Hayek 2012, 84-85)
The distinction
that Hayek draws between the natural law theory of Europe and the English
concept of natural liberty based on common law helps put into context
Lieberman’s observation as to how it has been generally overlooked that Bentham
was attacking not just (the predominantly European concept of) natural law
theory but also the common law and, within that, the English concept of
liberty.
4.3.
Sartori
Sartori, like
Hayek and Leoni, was very focused on explaining the inherent superiority of
common law over legislation. Sartori astutely observed, writing in 1976, that
political freedom does not ensure other freedoms: “... we ought to resist
the temptation to treat political freedom as if it were, in itself, a complete
liberty ... If we have so often failed in our search for liberty, the main
reason is that we have expected more from participation than it can give”
(Sartori 1976, 11). For Sartori, responsive government is important
but he is quick to highlight that political freedom does not translate to
juridical freedom.
Sartori starts by
examining the nature of political freedom: “Political freedom is
"absence of opposition," absence of external restraint, or exemption
from coercion. Whenever man asks or has asked for political liberty (outside of
a small community like the polis, he means that he does not like constraint,
and specifically the forms of constraint associated with the exercise of
political power. In other words, political freedom is characteristically
freedom from, not freedom to” (Sartori 1976, 8-9).[16]
Sartori then moves
to consideration of the role of the law and, within
this, what is meant by the rule of law. “What we ask of political freedom is
protection. How can we obtain it? In the final
analysis, from the time of Solon to the present day, the solution has always
been sought in obeying laws and not masters. As Cicero so well phrased it, legum servi sumus
ut liberi esse possimus, we are servants of
the law in order that we might be free. And the problem of political freedom
has always been interwoven with the question of legality, for it goes back to
the problem of curbing power by making it impersonal” (Sartori 1976, 8-9).
He then traces the
way in which these principles developed through Athens, Rome and, finally
England and the United States (Sartori 1976, 14).[17] Sartori
observes that the Greeks understood the need not to be ruled by tyranny but
that they made the mistake of placing popular sovereignty above the law. In his
view, that “is the reason why our juridical tradition is Roman, not Greek”
(Sartori 1976, 15). The Roman Republic was never a democracy of the Athenian
kind and so “did not make a direct contribution to the specific problem of
political freedom” but, in Sartori’s view, it “did make an essential
indirect contribution by developing the idea of legality whose modern version
is the Anglo-Saxon rule of law” (Sartori 1976, 15). His focus then turns to
the third juridical solution, the English, which “found its most successful
written formulation in the Constitution of the United States, and is expounded
in the theory of "constitutional garantisme"
and, in this sense, of the Rechtsstaat, the State
based on law” (Sartori 1976, 15).
It is at this
point that Sartori turns his focus to the critical distinction between common
law and legislation: “The originality and value of the approach of classical
liberalism can be seen if we compare it with previous attempts to solve the
problem. Basically, the legal solution to the problem of freedom can be sought
in two very different directions: either in rule by legislators or in the rule
of law.” (Sartori 1976, 15-16) … “Rousseau's aim was to free man from
his bonds by inventing a system that would obstruct and curb legislation. And
this was because he felt that the solution of the problem of securing freedom
lay exclusively in the supremacy of law, and, furthermore, in a supremacy of
law concerned with avoiding the legislative outcome of the Athenian democracy,
that is, the primacy of popular sovereignty over the law.” (Sartori 1976,
24) … “There is an essential condition that qualifies Rousseau's formula,
namely that the people are free so long as they do not delegate the exercise of
their sovereignty to legislative assemblies.” (Sartori 1976, 25).
Sartori was well
aware of the command theory that lay at the centre of Bentham’s support for
legislation: “It seems to us perfectly normal to identify law with
legislation. But at the time when Savigny published his monumental System of
Actual Roman Law (1840-1849), this identification still was inacceptable to the
chief exponent of the historical school of law. And we can appreciate its
far-reaching implications today very much more than was possible a century ago.
For when law is reduced to State law-making, a
"will conception" or a "command theory" of law gradually
replaces the common-law idea of law, i.e., the idea of a free lawmaking process
derived from custom and defined by judicial decisions” (Sartori 1976, 37).
In Sartori’s view,
this move to a legislative model has led to a massive inflation in legislation,
but also, echoing the views of the 18th century common lawyers, to bad quality
laws because “… legislators are poor lawmakers, and this is because the
system was not designed to permit legislators to replace jurists and
jurisprudence.” (Sartori 1976, 37)
This escalation in legislation undermines certainty, calling to mind for
Sartori what happened in Athens, where "laws were certain (that is,
precisely worded in a written formula) but nobody was certain that any law,
valid today, could last until tomorrow.” (Sartori 1976, 38) Perhaps of even more concern is how
legislation changes they way people think and behave:
it “accustoms those to whom the norms are addressed to accept any and all
commands of the State … It follows from this that the passage from liberty to
slavery can occur quietly, with no break in continuity - almost unnoticed.”
(Sartori 1976, 39-40)
5. Quantitative
observations
Natural law theory
may, as Mahoney observes, have fallen out of fashion in modern times, but the
common law is most certainly still in fashion, and very much sought after. If
any quantitative analysis of the sort favoured by empirical economists could usefully
be brought to the issue, it might be deployed on an analysis of how common law
economies have fared compared to others.
The common law
demonstrably drives growth and the generation of wealth. It is no coincidence
that the two largest and most sustained empires in the last two and a half
thousand years, Rome and England, were built on common law. As observed
earlier, England had, under the common law, developed by the end of the 18th
century into the greatest manufacturing and commercial country in the world.
While the start and end date are heavily debated, many would say the Industrial
Revolution took place from 1760-1840. It needs to be
remembered that, until the 1820s, it was a singularly English phenomenon and
many of the technological and architectural innovations were of English origin.
As Paul Kennedy
has observed: "The root cause of these transformations, it is clear,
lay in the staggering increases in productivity emanating from the Industrial
Revolution. Between, say, the 1750s and the 1830s the mechanization of spinning
in Britain had increased productivity in that sector alone by a factor of 300
to 400, so it is not surprising that the British share of total world
manufacturing rose dramatically—and continued to rise as it turned itself into
the “first industrial nation.” When other European states and the United States
followed the path to industrialization, their shares also rose steadily, as did
their per capita levels of industrialization and their national wealth"
(Kennedy 1987, 148).
As the effects of
the Industrial Revolution spread from its birthplace in England around the
world, the results were dramatic. Economic historian Angus Maddison, at the
University of Groningen, spent his life estimating gross domestic product
(“GDP”) figures for the world over the past two millennia. The conclusion is
startling: “Between 1800 and 1900, GDP per person per year rose from $1,140
to $2,180. In other words, humanity made over twice as much progress in 100
years as it did in the previous 1,800 years. In 2008, the last year in
Maddison’s final estimates, average global income per person per year stood at
$13,172. That means that the real standard of living rose by more than tenfold
between 1800 and 2008” (Maddison, 2023).
Niall Ferguson, in
his book Empire, carried out a detailed historical examination of what it was
that underpinned the success of the British Empire (and, by extension, the US
colonies, subsequently the United States). He identified six key aspects, with England’s
laws and institutions being key (N. Ferguson 2004, 303).
Even today, as
common law systems have been so degraded by the intrusion of legislation into
the private law arena and, in the UK’s case, even further by its integration of
European law after it joined the European Union, there seems to be general
coalescence of opinion that common law jurisdictions are a preferred legal
system for commerce. It is no coincidence that the top three finance centres in
the world - London, New York and Hong Kong - are common law jurisdictions. To
attract business and establish itself as a business hub in the Middle East, the
UAE set up an economic area using common law. It is not the only one. Tom Bell
has, in a recent review of common law zones, pointed to four such initiatives
(Bell 2021). China also flirted with the idea in Shenzhen when establishing the
Qinhai Free Trade Zone, contemplating a common law
system based on Hong Kong law. The 2023 Fraser Institute Economic Freedom of
the World Annual Report is consistent with this view. It is notable that eight
of the ten top ranked jurisdictions in 2023 were common law jurisdictions
(Gwartney, Lawson and Murphy 2023).
Not only has
Ferguson looked at what built the British Empire. He has more recently written
about what is tearing it down. In his book, The Great Degeneration, he says “…
the causes of our stationary state … is inspired by Smith’s insight that both
stagnation and growth are in large measure the results of ‘laws and
institutions’. Its central thesis is that what was true
of China in Smith’s day is true of large parts of the Western world in our
time. It is our laws and institutions that are the problem. The Great
Recession is merely a symptom of a more profound Great Degeneration.” (N.
Ferguson 2014, 10) The law that Ferguson is referring to is the common law, in
the sense that it was understood by Smith and his contemporaries: “And these
pillars of the English rule of law, as A. V. Dicey had pointed out in 1885,
were the products of a slow, incremental process of judicial decision-making in
the common law courts, based in large measure on precedents. There were no
‘grand declarations of principle’, just the interplay of judicial memory and
statutory innovations by Parliament.” (N. Ferguson 2014, 81)
The statutory
innovations Ferguson references should not be misunderstood. He is not
referring to a legislation-led system. For “Blackstone, the process [of
development of England’s liberty] had depended throughout on Parliamentary
interventions in support of the common law, and its history could be charted
through a series of momentous enactments - Magna Carta; the Charter of Forests;
the Petition of Right; and especially the legislation that accompanied the
Restoration of the Stuart monarchy, such as the statute abolishing military
tenures and the Habeas Corpus Act (which together formed ‘a second magna
carta’), the Triennial Acts and the Test and Corporation Acts” (Lieberman
2006, 11). However, this view was not without its critics. Daines Barrington’s
Observations on the More Ancient Statutes (1766) reminds us, through his
research, of the damage done to English law in this period by legislation. A
key focus for Ferguson is the modern basket of issues that are attributed to
legal systems that are considered more likely to support growth and, as we see
increasing polarisation in world politics, to what is being referred to as the
‘rules based order’.
6. The modern-day
basket of issues
In the opening
paragraphs, I referred to two principal ways in which liberty generally appears
to be viewed in contemporary thinking. The first, the economic view, I have
already discussed. It is time to now turn to the ‘basket of issues’.
Here, as in so
many other aspects, Sartori again provides us with a frame of reference. After
reviewing the political and legal systems of Athens, Rome, England and the US,
Sartori turned to an examination of the direction being taken by modern common
law jurisdictions. Sartori plainly saw continuing differences in common law and
civil law systems: “There are, to be sure, many significant differences
among our constitutional systems. If we refer to the origins, the unwritten
English constitution was largely built upon, and safeguarded by, the rule of
law; the American written constitution formalized and rationalized British
constitutional practice, thereby still leaning heavily on the rule of law;
whereas written constitutions in Europe, for want of common law, were based from the outset on the legislative conception of law.”
(Sartori 1976, 16) However, he clearly anticipated Ferguson’s Great
Degeneration when he observed that: “… these initial differences have been
gradually reduced, since there is at present a general trend -even in the
English-speaking countries-in favor of statutory law.”
(Sartori 1976, 16)
Despite Sartori’s
obvious concern about this move to legislation, he did see a glimmer of hope.
He went on to say: “Despite this trend, however, we cannot say as yet that
present-day constitutions have lost their raison d’etre
as the solution that combines the pros and obviates the cons of both the
rule-of-law and the rule-of-legislators techniques. … Even though our
constitutions are becoming more and more unbalanced on the side of statutory
lawmaking, so long as they are considered a higher law, so long as we have
judicial review, independent judges, and, possibly, the due process of law: and
so long as a binding procedure establishing the method of lawmaking remains an
effective brake on the bare will-conception of law-so long as these conditions
prevail, we are still depending on the liberal-constitutional solution of the
problem of political power.” (Sartori 1976, 16)
In this, we start
to see the modern basket of rights that many now associate both with the common
law and the broader concept of liberty: an effective system of judicial review
to ensure the Executive branch acts within the power given by legislators, independent
judges to give faith in the integrity of the judicial process, and due process,
which is found in common law rules of procedure and echoed by jurisdictions
around the world that have signed up to the Universal Declaration of Human
Rights and the International Covenant on Civil and Political Rights (ICCPR) and
within the US Constitution.
Tom Bell has
sought to identify what he regards as various core values in common law
systems, focusing on "judicial independence, individual rights and the
rule of law" (Bell 2021, 60).
Ferguson makes reference to what he refers to as the “seminal’ 1997
article, in which La Porta, Lopez-de-Silanes, Shleifer and Vishny argued that
common law systems offer greater protection for investors and creditors. “Summarizing
their theory of the determining role of legal origins, the authors write: Legal
investor protection is a strong predictor of financial development . .. [as
well as] government ownership of banks, the burden of entry regulations,
regulation of labour markets, incidence of military conscription, and
government ownership of the media . . . In all these spheres, civil law is
associated with a heavier hand of government ownership and regulation than
common law . . . [These are in turn] associated with adverse impacts on markets
such as greater corruption, larger unofficial economy, and higher unemployment
. . . Common law is associated with lower formalism of judicial procedures . .
. and greater judicial independence . . . Common law stands for the strategy of
social control that seeks to support private market outcomes, whereas civil law
seeks to replace such outcomes with state-desired allocations . . . Civil law
is ‘policy implementing’, while common law is ‘dispute resolving’.” (N.
Ferguson 2014, 85-87) He then concludes: “This brings us back to where we
began, with the notion that there is greater ‘flexibility of judicial
decision-making under common law’, because ‘common law courts [can] use broad
standards rather than specific rules.” (N. Ferguson 2014, 87-88)
Ferguson argues
based on examples such as the 1854 case, Hadley v Baxendale, that common law
could adapt and that this was, and is, one of its core advantages for modern
common law economies. He says it is: “the authentically evolutionary
character of the common law system … rather than any specific functional
difference in the treatment of investors or creditors, that gave the English
system and its relatives around the world an advantage in terms of economic
development”. The conclusion resonates with what we have seen in the
example Lord Mansfield provided us in the mid 18th
century. Adaptability was a strength of the common law as he and, in Scotland,
Lord Kames revolutionised the common law and developed the law merchant to
adapt to an age of commerce and global trade. What is not immediately apparent
from Ferguson’s review of the common law’s adaptability (which is set 100 years
later) is the debate that was raging in Mansfield’s time about whether
legislation could play any useful role and the dramatic shift to a more
legislation-driven system that had taken place by the 1850s. Nevertheless,
‘flexibility’ is seen as another ingredient in the modern basket.
If we step back a
degree from these primarily economic assessments and look at the broader modern
concept of liberty, the Cato Institute’s Freedom Index is a good example,
perhaps one of the most comprehensive, setting out the perceived basket of
rights. Cato has done an admirable job trying to identify the key components
that drive freedom. These include: rule of law,
security and safety, size of government, legal systems and property rights,
freedom to trade, breadth of regulation, sound money and civic rights such as
freedom of religion, association and expression.
The index is
certainly an informative gauge as to general trends in freedom. However, the
structure, categorisations and, importantly, critical omissions in the index
mean that the over-arching issue that defines liberty is clouded and obscure.
The starting point is in the concept of the rule of law which, for 18th century
jurists, including Smith, was coextensive with the common law. The modern
conception is more politically focused on separation of powers (and
independence of the judiciary). Linked to this is a lack of focus on the
dangers inherent in legislative systems and the omission of any tracking of the
extent of legislative intrusion into the common law. In this way, the index
compilers have fallen into the trap Sartori warned of, in placing too much
emphasis on democracy and, incidentally, no apparent emphasis on other forms of
responsive government of the sort, for example, that drove Hong Kong’s
spectacular success after the 2nd World War.[18] In this
regard, the index runs headlong into the awkward inconvenience of Hong Kong
being an ‘exception’, ranked for many years as the freest society in the world,
but somehow achieving that without democracy. But as the old saying goes, the
exception should prove the rule. Ferguson observed some years ago, “If the
rule of law, broadly defined, is deteriorating in the United States, where is
it getting better? I have already mentioned the marked improvement in
institutional quality in Hong Kong.” (N. Ferguson 2014, 102)
Ferguson
identifies a list of six factors. He also makes reference
to the economic historian David Landes who drew up a list of measures which
‘the ideal growth-and-development’ government would adopt (N. Ferguson 2004,
307): “Such a society would … for example,
1.
Secure
rights of private property, the better to encourage saving and investment.
2.
Secure
rights of personal liberty—secure them against both the abuses of tyranny and
private disorder (crime and corruption).
3.
Enforce
rights of contract, explicit and implicit.
4.
Provide
stable government, not necessarily democratic, but itself governed by publicly
known rules (a government of laws rather than men). If democratic, that is,
based on periodic elections, the majority wins but does not violate the rights
of the losers; while the losers accept their loss and look forward to another
turn at the polls.
5.
Provide
responsive government, one that will hear complaint and make redress.
6.
Provide
honest government, such that economic actors are not moved to seek advantage
and privilege inside or outside the marketplace. In
economic jargon, there should be no rents to favor and position.
7.
Provide
moderate, efficient, ungreedy government. The effect should be to hold taxes
down, reduce the government’s claim on the social surplus, and avoid
privilege.”
Ferguson and
Landes both observe that, although by no means perfect, the British Empire, in
its heyday, came closer than any alternative to providing these essentials.
Ferguson has also, more recently, highlighted how Hong Kong moved ahead as the
US has continued to fall behind: “Evidence that the United States is
suffering some kind of institutional loss of competitiveness can be found not
only in Porter’s work but also in the World Economic Forum’s annual Global
Competitiveness Index and, in particular, the Executive Opinion Survey on which
it is partly based. The survey includes fifteen measures of the rule of law,
ranging from the protection of private property rights to the policing of
corruption and the control of organized crime. It is an astonishing yet
scarcely acknowledged fact that on no fewer than fifteen out of fifteen counts,
the United States now fares markedly worse than Hong Kong.” (N. Ferguson
2014, 100)
Many economists
and other commentators generally fail to consider the central importance of the
legal aspect. However, I would like to suggest that it cannot be a coincidence
that Hong Kong’s success coincided with a strong commitment to the common law under
a responsive government.
Hong Kong was
fortunate to inherit a common law legal system, one that focused on long-run
legal certainty. This was an accident of history. However, beyond that stroke
of good luck, the design of its legal institutions was no accident. Various
people who had a defining role in the development of Hong Kong’s policy through
the last century knew Bruno Leoni and Frederick von Hayek, or took counsel from
people who knew them - people such as Milton Friedman. Hong Kong’s policy
reflected this. Hong Kong’s judiciary was, as in other common law
jurisdictions, independent of government and bound by centuries of tradition.
However, unlike other post war common law jurisdictions, which pursued
industrial planning driven by extensive and expanding legislative mandates,
Hong Kong saw the cornerstone of private law in its reliance on common law.
Hong Kong consciously adopted a policy of minimal regulation and sought to keep
bureaucracy (legislation and other regulations) to a minimum.
Neil Monnery, in his historical account of this remarkable city
sums up the effects (Monnery 2017, Foreword): “At
the end of World War II, Hong Kong lived up to its description as 'the barren
island '. It had few natural resources,
its trade and infrastructure lay in tatters, its small manufacturing base had
been destroyed, and its income per capita was less than a third of that in its
mother country, Britai n. As a British colony it fell to a small number
of civil servants to confront these difficult challenges, largely alone. But by the time of the handover of Hong Kong
to China in 1997, it was one of the most prosperous nations on earth. By 2015 its GDP per capita was over 40 per
cent higher than Britain's. How did that happen? Around the world, post-war
governments were turning to industrial planning. Keynesian deficits and high inflation to
stimulate their economies. How much did the civil servants in Hong Kong adopt
from this emerging global consensus? Virtually nothing. They rejected the idea
that governments should play an active role in industrial planning, instead
believing in the ability of entrepreneurs to find the best opportunities. They rejected the idea of spending more than the
government raised in taxes, instead aiming to keep a year's spending as a
reserve. And they rejected the idea of high taxes, instead keeping taxes low,
believing that private investment would earn high returns, and expand the
long-term tax base.”
An observer from
the law and economics school looking at this summary would see economic success
driven by minimal government intervention and a commitment to free markets and
trade. An observer looking at this same summary through the eyes of Adam Smith
and other 18th century juridical thinkers would agree. However, they would also
see a society that had a much higher commitment to the rule of law as it was
traditionally understood, with effective constraints on the degradation of
common law by legislation. Putting it another way, in the post-World War II
period, Hong Kong’s success was certainly driven by a commitment to minimal
government intervention and free trade. However, that success was underpinned
by a stronger commitment to its common law system than was seen in other common
law jurisdictions, including the UK and the US.
The modern basket
of issues identifies rule of law as a fundamental criterion of free societies
but does not identify within that the relevance of the common law and seems to
misunderstand that common law and the rule of law were seen as synonymous in 18th
century England. The contrasting point has also been lost, that systems built
on legislation were seen as antithetical to the rule of law. In this context,
it is important to remember that Europe, as it joined the Industrial Revolution
in the 19th century, generally derived its rule of law from using
codified civil law systems build on Justinian’s codification of Roman common
law. So, although a codified system, it had inherent strengths deriving from
the common law. In this way, the modern basket, as with the economic approach
to liberty, fails to identify the fundamental importance of juridical freedom.
As legislative
bodies increasingly intrude into every aspect of life in common law
jurisdictions around the world, we see Smith’s conception of the rule of law
being degraded at an alarming rate. I do not have the confidence Sartori
appeared to have in the power of independent judges and judicial review to hold
back the tide. History over the course of thousands of years shows us that our
society and our institutions will inevitably degrade, the further we move away
from the common law system. Inevitably, the legal arena will also become more
politicised, particularly in democratic societies, as the contest to control
law-making, and thereby to command and impose one’s own legislative will
becomes more heavily contested.
7. Conclusion
As Smith and Kames
developed their theory of the ‘four-stage’ advancement of society, from
hunter-gatherer to herder, then agricultural and finally commercial society,
England was emerging as the leading commercial centre in the world. They saw
the debate about whether legislation could effectively drive that transition as
the central question of their time. They had a clear view, informed by the
study of thousands of years of human history. For them, the common law was
vastly superior. England’s role as the
seat of the Industrial Revolution and the subsequent success of the US, with a
constitution tailor-made to enshrine these principles, suggest that they were
right.
The world is now
transitioning into a fifth stage of society, heavily technology driven, where
we must reassess our relationship with social platforms, virtual reality and
complex AI-driven, semi-autonomous systems. This transition is prompting
renewed debate about whether our existing laws remain fit for purpose and the
legal framework that should drive that transition.
For jurisdictions that seek to position themselves as
drivers of the world’s leading technologies, fostering innovation and
increasingly cutting-edge technology driven solutions, history suggests that
the legal system most capable of delivering on these goals is the common law,
not legislation.
It is no surprise
that the European Union, a union of jurisdictions
that has, in modern history, been predominantly legislation-led, decided on a
legislative model, with its recent introduction of digital markets and AI
regulation.
The EU is pushing
for other jurisdictions, including common law
jurisdictions around the world, to follow their legislated approach. However,
other jurisdictions may ask themselves whether that model will deliver the
greatest benefits to their own economies. There is much in the jurisprudential debate that took place as
England transitioned to a commercial society, to advocate that the common law
should be left to adapt the guiding principles in the same way that it
successfully developed the common law to support England’s, and later the
world’s, move into the Industrial Revolution and global commerce. Arguments
were being made in Smith’s time that common law was too slow to manage the
rapid change that was taking place in society. This argument is, again, being
made today. However, the inherent limitations in legislated solutions have not
been resolved and the features of the common law that allowed it to drive the
Industrial Revolution remain unchanged, including flexibility to adapt as
technology changes, minimal just restraints so as to give liberty to invent and
the wisdom of cases built on ages of experience and careful reflection by
impartial judges.
This is one of the
most important issues facing the world as societies decide what legal
framework(s) will regulate humanity’s move into a digital society and the
efforts to discover and invent the technologies that will support us on that
journey. The technology that we are talking about can deliver more effective
healthcare, treat disease and disabilities that are beyond our current
expertise, wean the world off fossil fuels, reverse environmental degradation
and solve many more pressing challenges the world faces. However,
as Elon Musk has observed, it is not inevitable that we will keep advancing.
Invention and technological advancement are only possible “if a lot of people
work very hard to make it better” (Musk 2017).[19] The
challenge facing us, one which has been profoundly ignored since the Industrial
Revolution, is what legal framework gives societies the freedom to do that. For
Smith as he was writing the Wealth of Nations, the answer was very clear: it is
the common law.
Funding
Conflicts of interest
The author(s)
states that there is no conflict of interests.
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[1] In fact, the Industrial Revolution was a uniquely English event for 5 or 6 decades until, finally, in the 1820s, it started to spread to Europe, first in Belgium then Germany, France and elsewhere.
[2] On Bentham's role in the move to legislation and the administrative state, see, for example, (Brebner 1948, 61) in which Brebner describes Bentham as "the archetype of British collectivism" [at 61] and "the formulator of state intervention for collectivist ends" [at 61]. See also (L. J. Hume 1967, 361-75) : "… two broad issues have been raised … the influence of Bentham's ideas, their impact on contemporaries and ultimately on legislation and administration … [and] the question of how far Bentham, in the Constitutional Code, provided a 'blueprint' for a collectivist or administrative state".
[3] Indeed, significant policy initiatives have been driven in recent decades by a belief that people who have economic freedom will naturally demand, and get, broader freedoms. This thinking appeared to guide the US as Bill Clinton, serving as the 42nd President of the US at the time, opened the door to China’s accession into the WTO, stating: “By joining the W.T.O., China is not simply agreeing to import more of our products; it is agreeing to import one of democracy's most cherished values: economic freedom. The more China liberalizes its economy, the more fully it will liberate the potential of its people — their initiative, their imagination, their remarkable spirit of enterprise” (Federal News Service 2000).
[4] Adam Smith did, it seems, use an English equivalent of the expression laissez-faire in lectures in 1749, (Viner 1927, 200). The term laissez-faire was coined by the French Physiocrats, including Quesnay, who some say adopted it from the Chinese concept of wu wei (無為).
[5] The authors state, in summarising the theorem: “There exists a k
>0 such that, for k ≤ k distinguishing of precedents is on average
beneficial. As a result, at every π , k = 0 is socially preferred to k =
∞ .Irrespective of judicial polarization π , judicial activism
(i.e., a low k) renders legal change desirable on average. To see why judicial
activism (and thus legal change) is beneficial even in the presence of biased
judges, compare the ex-ante social loss attained at k = 0 with that attained at
k = ∞ . If k = 0 , judges are so activist that they always distinguish
any initial precedent A i , thereby leading to a
second period expected loss of A i 2 + (1 − A i ) 2 E j Λ( A j ) . Averaging such losses across all
paths of legal change (i.e., across initial precedents), we find an ex-ante
loss of: (16) If instead k = ∞ , judges are passive and never distinguish
the initial precedent, thereby leading to an ex-ante loss of E i [Λ ( A i )] . Since E i A i 2 + (1 − A i ) 2 ≤ 1 , legal change is beneficial at every level
of judicial polarization and k = 0 is socially preferred to k = ∞ . This
is because the introduction of d into the law brings an informational benefit
that on average overpowers the cost of bias. This result vindicates Cardozo’s
intuition for the presence of a “technological” force driving the evolution of
precedent toward efficiency despite the vagaries of individual judges.”
[6] For an interesting discussion of the application of efficiency to legal assessments and the attempt to reconcile efficiency with laissez-faire, see (Friedman 2000). See also (Hayek 2012, 64) : “The myopic view of science that concentrates on the study of particular facts because they alone are empirically observable, and whose advocates even pride themselves on not being guided by such a conception of the overall order as can be obtained only by what they call 'abstract speculation', by no means increases our power of shaping a desirable order, but in fact deprives us of all effective guidance for successful action.”
[7] Viner (1927, 220): “From his examination of the operation of self-interest in specific phases of the economic order and of the consequences of government interference with the free operation of self-interest, Smith arrives at an extensive program for the extension of the system of natural liberty through the abolition of existing systems of governmental regulation, though he nowhere brings the several items in that program together.” … “But was not government itself a part of the order of nature, and its activities as "natural" as those of the individuals whom it governed? Smith is obscure on this point, and an adequate answer to this question, if possible at all, would require a detailed examination of Smith's position in the evolution of political theory, especially with respect to the origin of government and the character of the state of nature in the absence of government. It is clear, however, that to Smith the activities of government in the maintenance of justice are an essential part of the order of nature in its full development, and that such activities are not interferences with the system of natural liberty.”
[8] As Hayek noted ( (Hayek 2012, 62)): “Laissez-faire was never more than a rule of thumb. It indeed expressed protest against abuses of governmental power, but never provided a criterion by which one could decide what were the proper functions of government. Much the same applies to the terms 'free enterprise' or 'market economy' which, without a definition of the free sphere of the individual, say little.”
[9] Mahoney (2017, 228): “In Europe, Bentham won his point. Smith’s and Blackstone’s mixed methodology appeared much less attractive than Bentham’s utilitarianism, and their substantive views about English law suffered the same fate. Positivism became the dominant school of thought in English jurisprudence. Under the contentious but influential views of John Austin, any reference to natural justice marked an unsophisticated thinker unable to distinguish “is” and “ought.” At the same time, utilitarianism made possible a vision of political economy in which experts could advise governments how to improve on market-generated outcomes for the greater benefit of the whole society, making Smith’s system of natural liberty seem equally naive.”
[10] Mahoney (2017, 228) : “Smith’s influence lasted longer in the United States than in his native land. Nevertheless, belief in the existence of natural rights and their importance to the common-law method ultimately gave way in America, as it had in England, to the claims of reformers who pushed successfully for active legislative involvement in social and economic life.”
[11] Some asked the question, yet few appeared to see the answer. See, for example, Viner (1927, 223): “Smith assigned to government also "the duty of establishing an exact administration of justice." Unfortunately, Smith never succeeded in carrying out his original plan of writing a treatise on jurisprudence, and the scattered materials in the Wealth of Nations and the meager outline in the Lectures are insufficient to give us a trustworthy judgment as to what he would include under "justice."” This despite the fact that Viner did note the influence of various jurists on Smith’s thinking, at [3]: “The Roman jus naturale, through Grotius and Pufendorf, strongly influenced Smith's thinking. The Renaissance emphasis on the individual, the naturalistic philosophy of Shaftesbury, Locke, Hume, Hutcheson, the optimistic theism of the Scotch philosophers, the empiricism of Montesquieu, were more immediate and more powerful influence… Smith's major claim to fame, as I have said, seems to rest on his elaborate and detailed application to the economic world of the concept of a unified natural order, operating according to natural law, and if left to its own course producing results beneficial to mankind.”
[12] Mahoney (2017, 228) : “Because of the lapse of time and the fact
that the most complete version of the Lectures saw publication only in the
1970s, scholars overlooked Smith’s contributions.”
[13] Mahoney (2017, 228) : “Smith strongly influenced American legal
and political thought during the founding era (Fleischacker 2002). Early
American legal thinkers also looked to Blackstone for instruction on the common
law and the natural rights of Englishmen (Waterman 1933).”
[14] Lieberman (1989, 2): “The
background to the body of theory to be examined … lies in a surprisingly
neglected consequence of the consolidation of parliamentary government in the
years following the 1688 Revolution. Accompanying the establishment of a
regular, annual parliamentary session was the dramatic increase of the
King-in-Parliament's exercise of its constitutional powers to make law.” At
14, he went on to observe: “At mid-century, Blackstone noted that the
English statute law had "swelled to ten times a larger bulk" since
the time of Sir Edward Coke; at the end of the century, John Huntingford reported that the statute book had "nearly
doubled in bulk" since the time of Blackstone. Nowhere was the growth of
legislation more striking than in the area of penal policy.”
[15] Lieberman (1989, 239-40) “In his call for a common law Digest
Bentham had stood the English legal tradition on its head. Underlying much
eighteenth-century legal speculation was the broad consensus that the primary
defect in English law was parliamentary statute. Reforming the law was a matter
of controlling legislation, and most often the arguments for such reform were
advanced by contrasting statute law's failures with common law's triumphs. As
Bentham observed of Blackstone, " he magnifies Common Law at the expense
of Statute. " Bentham likewise recognized the defective state of the
statute book, perhaps in a manner more comprehensive than any of his
contemporaries. But in terms of the broader question regarding the relationship
between common law and statute, Bentham starkly repudiated the conventional
wisdom. Not only was common law bad law, it was
"not law." The common law's presumed rival, legislation, was its true
savior: The truth is, take [common law] all together,
it is not yet in a condition to be known. The business is to put it into such a
condition. To do this it must be digested by authority: the Common Law must be
digested into Statute. The fictitious must be substantiated into real.”
[16] Sartori (1976, 8-9): “Let this point be very clear: (i) To speak of political freedom is to be concerned with
the power of subordinate powers, with the power of the power-addressees, and
(ii) the proper focus to the problem of political freedom is indicated by the
question: How can the power of these minor and potentially losing powers be
safeguarded? We have political liberty, i.e., a free citizen, so long as
conditions are created that make it possible for his lesser power to withstand
the greater power that otherwise would or at any rate could- easily overwhelm
him. And this is why the concept of political freedom assumes an adversative
meaning. It is freedom from, because it is the freedom of and for the weaker.”
[17] Sartori (1976, 14): “There is, then, a very special connection
between political freedom and juridical freedom. But the formula "liberty
under law," or by means of law, can be applied in different ways. The idea
of protection of the laws has been understood, by and large, in three ways: the
Greek way, which is already a legislative interpretation; the Roman way, which
approaches the English rule of law; and the way of liberalism, which is
constitutionalism.”
[18] Readers interested in more details on Hong Kong’s success may refer
to Neil Monnery’s excellent account: (Monnery 2017).
[19] Musk (2017): “We’re mistaken when we think that technology just
automatically improves. It does not automatically improve. It only improves if
a lot of people work very hard to make it better. And actually
it will, I think, it by itself degrade actually. We look at great civilizations
like ancient Egypt and they were able to make the pyramids
and they forgot how to do that. And the Romans they built these incredible
aqueducts. They forgot how to do it.” Available at https://electrek.co/2017/05/01/elon-musk-on-boring-company-semi-truck-mars-ted-talk-transcript/.