Law Did Not Predate Commerce
Best quote I’ve seen today:
Law and commerce were indelibly linked in the thought of David Hume, who argued that it is commerce itself that gives rise to notions of justice between people and peoples. Although commerce is today typically seen as something which is proactively enabled by law, it is much more accurate historically to see law as something which emerges because of its vital importance in commerce – and particularly commerce involving foreigners. Within the Roman Empire, it was the ius gentium, the “law of nations,” derived from custom rather than legislation, and applying specifically to noncitizens, that governed most types of commercial transactions.The modern notion that law is inseparable from the will of a ruler or ruling body, antithetical to the idea of a universal natural law or a ius gentium, has, in parts of the world and during epochs where it has actually been applied, been devastating to economic development.
–Benn Steil and Manuel Hinds, Money, Markets, and Sovereignty
Hat tip: Don Boudreaux, Cafe Hayek
Comment by Steve Moffett on 8 August 2009:
I disagree wth the premise that law “emerges because of its vital importance in commerce.” I think it emerges because of its vital importance in communities. Communities cannot exist without some organizing principles to govern the way people interact with each other. Commerce is one of the ways people interact with each other, but not the only way.
Comment by Sheldon Richman on 10 August 2009:
While commerce isn’t everything, I believe you underrate its importance in the evolution of societies. Mises argues at length that it was the perceived prospects of gains from trade (the law of association) that created trust among strangers and led to the growth of groups beyond family. This is supported by historical studies.
Comment by Jacob Steelman on 11 August 2009:
For commerce rules of conduct are most important especially in the case of trade between businesses in locations far apart. Details of the transaction must be determined before one party parts with his goods and the other party parts with his money (or goods in the case of a barter). The parties can specify details of the transaction (the contract) but need to know that the contract can be enforced. As trade evolves into a routine parties take short cuts knowing that custom and routine government some part of their contractual relationship. This is what we often refer to as law or custom which has become codified by governments but could just as well exist as rules of a trade association or chamber of commerce. Internationally one of the prestige chambers is the private International Chamber of Commerce which offers form agreements and arbitration & mediation services. Not surpisingly its services are far superior to the services of government courts but fees for arbitrators are more expensive. Like anything in the market you get what you pay for.
Comment by Steve Moffett on 12 August 2009:
Sheldon, could you point me to Mises’ arguments on this topic? I would love to read them. Thanks in advance. — Steve
Comment by Sheldon Richman on 12 August 2009:
Steve, look at Human Action, Chapter 24, “Harmony and Conflict of Interest.” You can find it online here: http://mises.org/Books/humanaction.pdf.
Comment by Steve Moffett on 13 August 2009:
Awesome. Thank you!