Freedom and the Law

2. Law and Economy in the Making

Law_201-250.indd 4 10/27/09 8:09 AM 2 LAW AND ECONOMY IN THE MAKING General studies on the nature of economic science are rather rare. The same can be said, by and large, of general studies of legal science. This is probably a good reason why we lack studies worth mentioning comparing the nature of the law-making process with the nature of the economic process and, specifically, with the nature of the market process. But this is certainly not the only reason for that shortage. In our era of specialization, few economists are also lawyers, and few lawyers are also economists. We do have a few outstanding examples of economists who are trained in law, for example, Professor Mises and Professor Hayek. Some economic or legal advisers of great industries or federations of industries are lawyers trained in economics. (I could mention, in this respect, my good friend Arthur Shenfield, who is both a lawyer and an economist and serves presently as the Chief Economic Adviser for the Federation of British Industries.) People who are both willing and able to delve into the comparative study of both processes are extremely rare. I do not pretend to be one of those persons. Still, being a lawyer by profession, and also being keenly interested in the theory and practice of economics, I have always considered it very important for lawyers and economists to have a clear idea of what these processes are, of what their main aspects are as compared with each other, and, finally, of what the theoretical and practical relationships are between these two processes. 204 Law_201-250.indd 5 10/27/09 8:09 AM LAW AND ECONOMY IN THE MAKING 205 The importance of an inquiry of this kind is not merely theoretical . Whether politicians feel entitled or not to adopt some policies in view of some ends they try to reach in the economic field depends to a large extent on the ideas they have concerning the respective aspects of each process, and of their reciprocal relationships. Whether the man in the street demands or approves or simply tolerates those policies depends to a great extent on those ideas. I do not think that politicians and the man in the street are necessarily conditioned by their own political ideologies in their ideas about the relationships between the law-making process and the economic process. On the contrary, I suspect that, in many cases, their own political ideologies may be conditioned by their own more or less clear ideas about the nature and relationships of the law-making process and, respectively, of the economic process. I shall start from an attempt to describe the main kinds of lawmaking processes as we know them, at least in the history of the West. We shall see later that all of these kinds of processes may be traced back to a more general, though less apparent, way of producing law, of which I shall speak in the end. I wish to summarize my argument by saying that there are three main ways or methods of making law, which emerge with independent features, though not each independently and to the exclusion of others, all through the history of the West, from the ancient Greeks to the present day. They are: 1) the production of the law through the opinions of a special class of experts called juris-consults in Rome, ]uristen in Germany in the Middle Ages, and lawyers in Anglo-Saxon countries. These people produced a kind of law that is called from its origin "lawyers'-law," or as the Germans say, Juristenrecht. 2) The production of law on the part of another special class of experts called judges. The English expression "judge-made-law" implies exactly what I have in mind concerning this kind of law. 3) The production of the law through the legislative process. This is a process that has become so frequent in present days that in many countries the man in the street cannot even imagine another kind of production of what we call the law. Legislation is conceived as the product of the will of some people called legislators, the underlying idea being that Law_201-250.indd 6 10/27/09 8:09 AM 206 THE LAW AND POLITICS what the legislators will is ultimately to be considered as the law of the country. Legislation differs profoundly from the...