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Customary law must be widely accepted and evolves for the better

After my long essay about customary “law” and the market of preferences, decency, and reputations in internet content providers, Tim Swanson posted a comment recommending The Enterprise of Law by the economist Bruce L. Benson. This book is about customary vs. governmental law and the market for law-enforcement services in a free society. I responded in a comment on his blag that, coincidentally enough, I had just ordered and received The Enterprise of Law from the Ludwig von Mises Institute the Friday before, and I was thinking about reading it soon.

I started reading it tonight, and I already like it, and I can see how the first chapter already relates to the points I tried to make in that essay about policies gaining widespread acceptance and the pressure to conform to popular standards of decency, so I have few paragraphs I thought I’d transcribe for your enlightenment and enjoyment:

Law can be imposed from above by some authority, such as a king, a legislature, or a supreme court, or law can develop “from the ground” as customs and practice evolve. Law imposed from the top—authoritarian law—typically requires the support of a powerful minority; law developed from the bottom up—customary law—requires widespread acceptance. Hayek explained that many issues of law are not

whether the parties have abused anybody’s will, but whether their actions have conformed to expectations which other parties had reasonably formed because they corresponded to the practices on which the everyday conduct of the members of the group was based. The significance of customs here is that they give rise to expectations that guide people’s actions, and what will be regarded as binding will therefore be those practices that everybody counts on being observed and which thereby condition the success of most activities.

Customary law is recognized, not because it is backed by some strong individual or institution, but because each individual recognizes the benefits of behaving in accordance with other individuals’ expectations given that others also behave as he expects. Alternatively, if a minority coercively imposes law from above, then that law will require much more force to maintain social order than is required when law develops from the bottom through mutual recognition and acceptance.

I suppose a large amount of the objection to libertarianism by minarchists and other Statists originates from the question of whether customary law is actually very likely to gain widespread recognition and acceptance “on its own” and how it’s supposed to be enforced “on its own.” I also suppose that’s a debate worth having, and I think a lot of the book will address this issue.

Reciprocities are the basic source both of the recognition of duty to obey law and of law enforcement in a customary law system. That is, individuals must “exchange” recognition of certain behavioral rules for their mutual benefit. …

Because the source of recognition of customary law is reciprocity, private property rights and the rights of individuals are likely to constitute the most important primary rules of conduct in such legal systems. After all, voluntary recognition of laws and participation in their enforcement is likely to arise only when substantial benefits from doing so can be internalized by each individual. Punishment is frequently the threat that induces recognition of law imposed from above, but incentives must be largely positive when customary law prevails. Individuals must expect to gain as much or more than the costs they bear from voluntary involvement in the legal system. Protection of personal property and individual rights is a very attractive benefit.
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Demsetz explained that property rights will be defined when the benefits of doing so cover the costs of defining and enforcing such rights. Such benefits may become evident because a dispute arises, implying that existing rules do not adequately cover some new situation. The parties involved must expect the benefits from resolving the dispute (e.g., avoiding a violent confrontation), and of establishing a new rule, to outweigh the cost of resolving the dispute and enforcing the resulting judgment, or they would not take it to the adjudication system.

Dispute resolution can be a major source of legal change since an adjudicator will often make more precise those rules about which differences of opinion exist, and even supply new rules because no generally recognized rules cover a new situation. If the relevant group accepts the ruling it becomes part of customary law, but not because it is coercively imposed on a group by some authority backing the court. Thus, good rules that facilitate interaction tend to be selected over time, while bad decisions are ignored.
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Carl Menger proposed that the origin, formation, and ultimate process of all social institutions (including law) is essentially the same as the spontaneous order Adam Smith described for markets. Markets coordinate interactions, as does customary law. Both develop as they do because the actions they are intended to coordinate are performed more effectively under one system or process than another. The more effective institutional arrangement replaces the less effective one.

Which is, perhaps, exactly why Statists accustomed to the societal status quo are put off and even a little frightened by the dynamic, fluid nature of libertarian legal, social, and economic structures, which they misinterpret as chaos.

Posted in Minarchism, Philosophy, Police/law enforcement, Property rights