Today, early in the new year, I would like to comment on our so-called justice system in the USA. I am not going to present a list of cases where innocent people went to jail or a list of cases where the system protected the cops who had abused their power; but rather, I want to look at the system itself. I am neither a lawyer nor a historian, but I have read that the common law of England, the Law Merchant, and Roman law were decentralized systems that were formed in large part by thousands of individual judicial decisions. It turns out that the law just evolved as judges, arbitrators, and jurists discovered legal principles applicable to specific factual situations. The law just built up on legal principles that were previously used. The law was not “enacted” but rather was “discovered”.
That idea is hard for many of us moderns to understand since today we think of law as statutes passed by legislatures. No legislation, no law, is the way we think it works. The law is legislation. But that is not how it worked throughout much of history and is a rather recent development. The modern legislation-based systems do not develop law compatible with a free society but rather law for allowing the central government to control the society and for politicians rewarding their cronies with special favors and privileges.
We know from economics that business activity needs certainty to flourish. It is hard for the leaders of business to make plans for the future in the face of uncertainty. For this reason one might expect that business would welcome legislated law as more certain. It may be surprising to you but there is more certainty in decentralized law than in legislated law. The law changes very slowly when thousands upon thousands of cases make it up but the law can change with blinding speed when one legislated rule change can disrupt the working of the law by changing everything. With legislatures, one day your product is legal and then next it is a felony to sell it. (as an example) When the legislature has the ability to change, in a day, the law from the present, familiar form to something else, then no one be sure what rules will apply tomorrow.
The common law system (decentralized law) is different than our present system in ways that make it much more compatible with liberty and prosperity. The common law judge only makes decisions when interested parties bring a case before him and his decision only effects the parties before him. His decision has to take into account the precedents of similar cases that have been decided in the past that are pertinent to the case before him. These constraints upon the common law court leads to the public having more certainty about what a court will decide — much more certainty than our system today.
Politicians will write laws that interfere with agreements that courts would otherwise have enforced which makes any parties to contracts less certain what those contracts ultimately mean if there is a dispute. This causes all sorts of costs that otherwise would be unnecessary as humans try to insure themselves against the unexpected. All of this makes planning for the future much more difficult and costly which naturally means that the “time preference” that economists talk about will shift from the natural to the artificially induced by virtue of the intervention into the market by politicians and legislatures.
In addition to raising costs because of the uncertainty we also find that higher time-preference rates caused by the government intervention into the legal system will lead to increased crime. As a person becomes more oriented to the present he becomes less concerned about uncertain punishment in the future and hence deterrence is reduced. All of this is in addition to the fact that the relatively few politicians in relation to the vast population can not come close to legislating the will of all the people even if they wanted to do so as they can never know what the “will of the people” is or even if there is a “will of the people”. The decentralized common law system does the will of the people by working one case at a time and the “will” builds up over time as case after case is decided. These facts mean that there will be a feeling of unfairness and a disregard towards the state imposted law which leads to disrespect for the law. Legislature law is a top down system while the decentralized common law system is a grass-roots system.
Decentralized common law type systems are much like laissez-faire free markets in that a natural order arises unplanned by any government committee. We also would see far less impact of lobbyists and money on the system since with common law there is no central legislative body to lobby to enact a law that changes everything to the lobbyist’s benefit.
And so today we see that the central government and our oppressive ‘democratic’ system has made our lives worse by the very legal system that so many use as a reason for the government in the first place. It is time to return to the legal system that puts the power in the hands of all the people working together — the common law system.