One other trait of the busybodies stood tall for all thoughtful folks to perceive: They were far too busy minding the business of all within their fiefdoms to mind their own business, to care for their own children, and to manage their own households.

Times are no longer simple and gentle and safe, but the busybody has not only survived but also prospered, become fruitful, and filled every crevice and cranny of the nation. Fifty years ago my father insightfully titled his speech to a San Francisco business gathering as I have this article. He observed that in the years following World War II, busybodydom had flourished like an obnoxious weed, threatening to crowd out the air and light of individual ideas and purposeful personal action, and in this manner destroy the nurture encouraged by stable and essential decisions. The past decades verified Jack Foley’s observation and warning and, unfortunately, we reside today in times dominated by throngs of busybodies.

Rules and regulations, orders and directives, all kinds and kindred of commands direct almost every avenue of our daily lives. Virtually all these directives emanate from busybodies and almost all of them are, or may be, enforced by the power of law; that is, the noncomplying person suffers a penalty, usually loss of liberty or property, occasionally the loss of his life. Our lives today are ruled by force writ large, a force that usually commands far less efficacious outcomes than would result from the free actions flowing from purposive and creative individual conduct.

When we consider legally compelled directives, we blandly think of the tripartite governmental structure of the federal government and the similar political construction of the several states, and we see in theory a legislative branch that enacts laws, an executive who administers those laws, and a judiciary that interprets rules and issues orders based on and about those laws. Myopically we do not see the whole regulatory blight that afflicts us because we overlook several obscured but essential components of law-making. Without limitation, consider the following busybody regulators.

Legislate and Delegate

First, state and federal legislators seldom enact detailed statutory law. Most often they pass broad policy statements and “delegate” detailed rule-making and enforcement powers to an administrative bureaucracy. The critical characteristic of this rule-making and law-enforcing apparatus is that it is unelected, usually unknown, and fundamentally untouchable and ungovernable. While the legislator theoretically oversees the detailed conduct of the administrator, in fact oversight is nonexistent in almost all instances. Hence the common retort to those who disagree with overwhelming and strangling legislation that “you can reject the legislators at the next election” is a sham and a chimera. Legislators come and go, normally after enhancing their own wealth remarkably, but the unelected bureaucratic rule-makers and rule-enforcers remain for a lifetime, ordinarily protected by compulsory civil service “safeguards” and most assuredly made wealthy by huge and untouchable pensions and other emoluments of the office.

Second, concentration on legislators obscures the rule-making and enforcement/enhancement of the executive. In federal terms the president often creates very real and effective restraints on individual rights and conduct by use of executive orders; to make matters worse, these orders are usually hidden from common view and secreted under some sort of “national security” or “rule of necessity” rubric. They may be printed and published but often remain cloaked in secrecy. Many governors possess and use similar powers.

Third, it is all too easy to overlook or forget the myriad municipal and quasi-municipal corporations that regulate the fiber of our lives. Busybodies abound and prosper in local improvement districts, school districts, sewer districts, government-owned and -operated utilities, park and recreation districts, and a Mongol horde of other quasigovernmental entities in addition to the more obvious and long-recognized city and county governments. Each and every one of these institutions possesses and exercises the power to enact and enforce rules that compel or constrain individual human behavior and, more odious, many of these rules are produced in the shadows and are difficult to locate until enforcement suddenly becomes an issue.

Fourth, the day of the judge as a limited dispute-decider has long passed. To a greater or lesser degree, federal, state, and local judges make regulatory law by purporting to “interpret” legislation in a manner not dissimilar to the rule-making and enforcement-enhancing activities of the administrative apparatus. Once again, many members of the judiciary serve for lengthy terms or for life and are seldom sanctioned by the voting public.

Root Causes

A search beneath the surface of this calamitous condition reveals at least two elemental causes. Reining in the busybody requires a brief analysis of each, neither of which is easily recognized nor fully appreciated.

To begin, people are inclined to be busybodies. No one should overlook or deny the infinite variety in human behavior; nonetheless permit some generalizations to illustrate my greater point. We humans tend to egotism, an ingrained belief that we can perceive a condition and prescribe a proper conclusion, and do so much more accurately and appropriately than any other person. In addition we tend to judge ourselves much less harshly than we do others, meaning we are more forgiving of our own mistakes than of the errors of our fellow man.

Busybodydom results from the conceit and concatenation of these everyday human traits. It causes perfectly ordinary—that is, flawed—persons to see what they perceive as a problem requiring a solution and to decide on the proper process by which to resolve the problem. More than that it encourages the observer to believe that his is the only suitable method and disposition, and it compels him to seek out others to join him in foreclosing any alternative process or solution by the force of law.

Rules and Orders

Second, one must appreciate the essential and elemental differences in types of legal commands, one of which encourages the current State’s incipient tendency toward busybodyness. Legal philosophers commonly divide legal commands into two categories: rules and orders. Such philosophers may disagree that rules and orders comprise the sum of human law, but these general categories illustrate the larger point of this essay.

In simple terms rules refer to statutory or regulatory enactments by legislatures and other similar governing bodies, which seek to identify a situation or condition, command by force of law an express outcome in all such and similar contexts, and prohibit and penalize any alternative individual or group action or outcome. On the other hand, orders simply refer to the legally enforceable decision by an arbiter of a dispute chosen by specified individuals or entities.

Even given the blurry line between rules and orders, appreciated only by the jurisprudential philosopher, this primary distinction illustrates one of the reasons that modern busybodies truncate human choice and inhibit productive individual action. Rule-making attempts to foresee most or all human interactions and to prescribe in advance all legally acceptable outcomes. Ordering conduct differs because it uses (or should use) the force of law only in a more limited fashion, purporting to decide a particular dispute between identified human beings or groups, and designing an outcome limited to those persons and others in direct relationship with them. The more limited the legal intrusion, the more open-textured the law. Orders tend to restrict creative human behavior less than do rules because orders arise in single instances (although English and American courts do tend to decide like cases in a similar manner under doctrines labeled by the quaint Norman-French-Latin phrases res judicata and stare decisis), where 1) discrete and specific facts can be assessed and evaluated and 2) only the individuals directly or closely affected (all of whom generally are able to participate in the proceeding) are governed and legally limited by the outcome.

Rules, to the contrary, attempt to forecast and prescribe limited permissible outcomes for all persons in all cases without the benefit of individual factual evidence and express relevant participation. Yet human beings are limited in their ability to forecast correctly; indeed we have trouble even figuring out how history has produced our current conditions. As a result, rule-making tends to stymie human action and the improvement of civilization by foreclosing individual choice.

In fact the beauty of the traditional Anglo-American common law lies in its primary reliance on orders and its reluctance to employ an abundance of rules. The open legal texture enabled creative individuals to compose new and untried outcomes that, in a given number of instances, resulted in a much better life not only for the persons directly affected but also for a multitude of other beneficiaries. Thus individual conceit and the surfeit of rules join and promote a more closed society. Consider the result: an obvious diminution of human freedom and restraint on free individual action to solve problems. Empirically, the busybody inhibits the improvement of the general human condition. Why does that happen? Simply because each competent actor is more able to make better decisions affecting his person and his future than is any other individual. Free and purposive human beings effect better results when they have something personal at stake, and no person is sufficiently foresighted and wise to recognize all aspects of a problem and all possible outcomes.

Further, the age of the busybody contains a moral component and induces a moral decline of the individual. One grows by choosing, by selecting between alternatives, and by enduring the burdens of his poor choices as well as enjoying the benefits of his better selections. The busybody foreordains decisions by rule of law and in so doing diminishes the choice-making opportunities and growth available to his fellow members of society. In this fashion the busybody stunts individual growth and deprives the larger society of the benefits of unfettered productive and constructive human action.

For those neophytes who have never heard of Spooner, let me simply quote Murray Rothbard’s description from the September 1974 Libertarian Forum: “[H]e was undoubtedly the only constitutional lawyer in history to evolve into an individualist anarchist,” and “of all the host of Lockean natural rights theorists, Lysander Spooner was the only one to push the theory to its logical—and infinitely radical—conclusion: individualist anarchism.”

The table of contents of Steve Shone’s book outlines the major areas of political philosophy and economics about which Spooner wrote: Natural Law, Private Mail, and Property; Poverty and Economics; Political Obligation; Jury Nullification; Slavery; and Religion, Morality, and the Legal Profession.

Spooner’s concern with natural law and justice manifested itself in his lifelong arguments against slavery; government monopolization of money, credit, and the post office; government licensure of lawyers and restrictions on juries; taxation; seizure and confiscation of private property; and government interference with the natural laws of intellectual property.

Just one example will suffice to demonstrate Spooner’s unique interpretation of the U.S. Constitution and the natural right of human beings to use their property peacefully as they see fit. Before Spooner’s own private postal delivery company was harassed and put out of business by federal authorities in 1844, he published “The Unconstitutionality of the Laws of Congress Prohibiting Private Mails.” In it he noted that the Constitution did not grant Congress a sole and exclusive right to establish post offices and post roads. In other words, the power given to Congress did not allow it “to forbid similar establishments by the States or the people.”

Furthermore, Spooner noted that no branch of the government had ever questioned the right of American citizens to mint their own gold coins so long as they did not attempt to imitate current coins of the United States. Spooner argued it was just as much a common-law right to deliver private mail entrusted to one’s care as it was a right “to weigh and assay pieces of gold and silver, mark upon them their weight and fineness, and sell them for whatever they bring, in competition with the coin of the United States.”

Although the author bills his work as “the first full-length work devoted to the ideas of Lysander Spooner,” Spooner’s writings are so extensive and comprehensive that some of his most important commentaries are not mentioned. One, reminiscent of Spooner’s famous No Treason series, is the appendix to his 1852 book, Trial By Jury. This short, seven-paragraph addendum epitomizes Spooner’s outlook on the nature of government, even before the citizens of the southern states were beaten into submission by federal armies and navies. Spooner wrote:

It was a principle of the Common Law . . . that no man can be taxed without his personal consent. The Common Law knew nothing of that system . . . of assuming a man’s own consent to be taxed, because some pretended representative, whom he never authorized to act for him, has taken it upon himself to consent that he may be taxed. . . .

. . . Taxation without consent is as plainly robbery, when enforced against one man, as when enforced against millions; . . . Taking a man’s money without his consent, is . . . as much robbery, when it is done by millions of men, acting in concert, and calling themselves a government, as when it is done by a single individual, acting on his own responsibility, and calling himself a highwayman. Neither the numbers engaged in the act, nor the different characters they assume as cover for the act, alter the nature of the act itself. . . .

. . . The government’s pretence of protecting him, as an equivalent for the taxation, affords no justification. It is for himself to decide whether he desires such protection as the government offers him. If he do not desire it, or do not bargain for it, the government has no more right than any other insurance company to impose it upon him, or make him pay for it.

For anyone interested in the antecedents of contemporary libertarianism and individualism, Lysander Spooner: American Anarchist is a good place to start. Be prepared to meet a man whose ideas are radical.

These days the Fourth Amendment to the Constitution means next to nothing. Consider, for example, the choice offered a few years ago: surveillance under routine, easy “warrants” from the drive-through FISA Court or warrantless surveillance at the whim of George W. Bush and his allegedly boundless reserve of unitary-executive authority. A January 2006 Justice Department memo (“Legal Authorities Supporting the Activities of the National Security Agency . . .”) explained the executive’s claims in mind-numbing and unconvincing detail. But the memo at least suggested how far below any practical service to Americans’ liberty the Fourth Amendment has fallen, and did so by heaping up available (and rather bad) search-and-seizure precedents, many of which arose from the terminally futile war on drugs (pages 37–38). The result is something like “your Constitution on drugs”—with the searchers and seizers on steroids.

Turning to the Fourth Amendment itself, we read: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

This sounds pretty good, doesn’t it? And solid, like it might actually mean something. Alas, no such utopian state of affairs actually obtains. It is possible of course that my elementary school teachers just plain lied to us when they spun golden tales about American freedoms.

Yet surely there is more to it. But if so, what doom befell the Fourth Amendment? We might try looking at various eventful periods when governments—state and federal—felt unusually strong needs to arrest, search, and seize, such as the Civil War, Reconstruction, World War I, Prohibition (see Lacey, in works consulted below), World War II, the Cold War, and (naturally) the war on drugs. It seems, however, that long-running negligence, evasion, and misinterpretation have done more harm to the Fourth Amendment than have various short-run authoritarian panics. Central to this slow but continuous process was the rise of modern policing in the nineteenth century, creating a new institution not foreseen in American constitutions (state or federal) and therefore largely incompatible with them and unaddressed by them (see Roots).

Gradualism and crisis, always headed the same way, have yielded a constitutional trail of tears catalogued in American state and federal case law. The U.S. Supreme Court hardly noticed the Fourth Amendment until the twentieth century. In the Prohibition-era case Carroll v. U.S. (1925), the Court sanctioned searches of private automobiles on the rather forced analogy of ships at sea. (The next time cops pull you over and search your car, you may blame Chief Justice William Howard Taft.) But the amendment’s core meaning survived awhile longer in areas where it was thought to have always applied.

Meanwhile, emboldened by the Fourteenth Amendment, the Supreme Court undertook to supervise state police practices from the late 1940s on; it would decide if the states were following the Fourth and other amendments. This new project annoyed the states but did little enough for the public. Examining federal search practices in U.S. v. Rabinowitz (1950), the Court declared the word “unreasonable” the key to the Fourth Amendment. Henceforth the Court would philosophize on the “reasonableness” of searches (“in the circumstances”) and periodically announce our ever-waxing-and-waning rights on the accordion model of civil liberties. Warrants pretty much disappeared.

We have been saddled with this unsatisfactory outcome ever since. The subjectivity of judicial balancing acts, along with fluctuating judicial moods, has made the Court’s understanding of “reasonable” rather less stable than that of the Oxford English Dictionary. The war on drugs has rendered the Court (particularly “conservative” justices) unsympathetic to complaints about searches. The upshot is that the Fourth Amendment is now mostly just another empty marker at which American politicians, bureaucrats, and ideologues can wave when praising the precious freedoms that supposedly cause Americans to be hated.

Legal History vs. Politicized Originalism

In constructing the above account, I have relied heavily on the work of Thomas Y. Davies, professor of law at the University of Tennessee. (The rhetoric is mine.) In essays running from 1999 to 2007 Davies painstakingly reconstructed the late eighteenth-century context of the Fourth Amendment, accounted for its later reinterpretation, and thus described its effective demise. At the same time, he assessed conservative constitutional “originalism,” which he finds harmful.

For Davies the key to Fourth Amendment mysteries is the displacement of eighteenth-century common-law rules by later legal tinkering. As “judge-discovered” law, common law constituted a whole system (albeit uncodified) able to address almost any issue that could get into court, naturally or under a legal fiction. It centered on private prosecutions between parties, who were often large landholders, and its rules aimed at protecting their rights and “quiet enjoyment” of their property. (The radical historian Barrington Moore, Jr., has noted the aristocratic origins of our civil liberties.)

Of course common law adopted, or was forced to adopt, a number of royalist and Parliamentary premises perhaps not essential to its workings, in such matters of State concern as sovereignty, treason, customs, and revenue. Given its environment, common law also incorporated social prejudices regarding women, employees (“servants”), and other disfavored classes, and remained mired in semi-feudal verbiage. Common lawyers worked new content into their “feudal” categories in a way that eased the transition from “feudalism” (for lack of a better term) to English agrarian capitalism and from one form of State to another. In the hands of Whig justices like Sir Edward Coke (1552–1634), locked in battle against Stuart royal prerogative, the common law became a potential weapon for individual and popular rights against State abuses. Coke’s views were very influential in revolutionary America.

In the nineteenth century, though, the common law came to be seen as a barrier both to industrial capitalism and to further expansion of the modern state; for these and other reasons it was interpreted into nothingness or quietly abandoned.

Common-Law Arrest, Search, and Seizure

With common-law rules in view, Davies sees the whole point of the Fourth Amendment as control of warrants to be achieved by defining them strictly. In the common-law environment of the late eighteenth century, warrantless searches—or arrests—were rare and subject to strict conditions. Thus confined, these few warrantless actions hardly threatened public liberty. Let us see why.

First of all, no one—constable or freeman—could arrest or search someone merely for looking “suspicious.” Accusers (public or private) had to have a case before applying for any kind of warrant. To have a case, an actual crime had to have been committed already. An accusation also had to include sworn testimony of one or more witnesses asserting direct, personal knowledge supporting the belief that a named defendant had done the deed. Strung-out informants selling hearsay “evidence” about crimes that might occur in the future were not consulted, although hearsay could be admitted to establish background facts. Judicial action—indictment, issue of warrants—rested on the kinds of evidence described above. Arrest warrants did not normally issue for misdemeanors. The defendant remained at large but would be wise to attend his trial. A search warrant gave permission to look only for the specific things named.

Further, a defendant never appeared as a witness, but could, with or without counsel, impeach the evidence against him and cross-examine witnesses. Accordingly, the rule against self-accusation (self-incrimination) did not protect a defendant’s trial rights, but meant instead that his diary, calendar, papers, and effects—as extensions of himself—were not subject to general ransacking and fishing expeditions. The other side had to make its case without such modern conveniences. Only Parliament claimed to be able to license fishing expeditions (such as the “general warrants” that so nettled colonial Americans) and mainly in the narrow areas of “treason,” customs, and revenue. (The last two items came under admiralty law with its civil [Roman] law rules.) The Fourth Amendment sought to limit the ability of Congress to play such games.

There was a short list of warrantless arrests and searches allowed under common law. An officer or freeman who saw a misdemeanor underway in his presence (affray or breach of the peace) could make an arrest. Someone traveling at night could be detained overnight to account for himself. In “hot pursuit” of a fleeing felon who had committed an actual crime, an officer or freeman could “break” (into) a house. Here again is the combination of actual crime and personal knowledge. There were a few other complications, but they and the above-mentioned practices were rooted in common sense and had definite boundaries.

Under common-law rules arrests were few and far between. In a system based on enforcement by private parties (freemen), or by constables with few additional powers, defendants could sue for “personal trespass” anyone who brought a bad prosecution. Logically enough, a right to resist false arrest also existed. (Nowadays the concept of false arrest is nearly dead and resistance is not generally recommended.) Damages for bad prosecutions were a useful incentive for keeping peace officers and private prosecutors reasonably careful. Tightly drawn warrants, where required, actually protected officers from resistance or suit.

Since arrests were few and generally followed indictment—and that on real evidence—defendants not formally accused were seldom detained. Hence modern dilemmas involving interrogation seldom arose. Asking questions was a judicial function carried out at trial. Constables, who were considered judicial (not executive) officers, had little discretionary authority and few occasions for third-degree Q&A sessions in the back room. And of course common law had no plea bargaining, that ubiquitous, contemporary solution of “overworked” courts that Paul Craig Roberts and Lawrence M. Stratton refer to as a form of torture.

In the United States, federalism set further limits. Only a few matters fell under federal jurisdiction, fewer still under exclusive federal jurisdiction. At the state level special language in revolutionary-era state constitutions about the “law of the land” or “due process of law”—“terms of art”—protected and perhaps “constitutionalized” common-law rules of arrest, search, and seizure. (“Due course of law” referred to trial procedures.) At the federal level specific constitutional language in the Fourth and Fifth Amendments and elsewhere served a similar purpose. And in practice America avoided what Jeffersonians most feared: a federal claim to enforce the whole common law, which potentially reached everything under the sun. The objects of federal action were limited in number, and the claim of extreme federalists to general common-law jurisdiction failed. But the common-law rules (“due process,” “law of the land”) seemed well entrenched at both levels of government. Could courts and legislatures legally (“constitutionally”) throw away these protections? It is hard to say what informed legal opinion would have said on this point in 1790. Later, of course, courts and legislatures contrived to do exactly that.

Rise and Fall of the Fourth Amendment

The framers’ quest to establish certain common-law rights largely failed. The disjunction between the clauses of the Fourth Amendment encouraged the leap to a “reasonableness” standard. In fact, as Davies shows, the words “unreasonable searches and seizures” were Revolutionary-era rhetoric condemning British general warrants of the 1760s and 1770s as without reason (outside of reason) and therefore illegal and unconstitutional; they were not meant to license future judicial speculation. The core ideas of the Fourth Amendment were better expressed in the Massachusetts Constitution of 1780 and the Ohio Constitution of 1802. Davies speculates that James Madison’s innovative phrase, “probable cause,” was meant to allow a little leeway for customs and revenue enforcement, which already enjoyed partial exemption from common-law rules. (A warehouse, for example, did not enjoy the same immunities from search and seizure as a private dwelling.) Still, even Madison’s slightly weakened version meant something, although “probable cause” (taken by itself) had a big future as a means of reducing restrictions on power to a nullity.

In Davies’s view the Fourth Amendment unraveled for several reasons. Judicial and legislative amnesia undercut the common-law rules. With growing industrialization, capitalists feared workers, Protestants feared Irish immigrants, and most people feared property crime more than they feared the State. To allay these fears and address some genuine problems caused by overcrowding, urban elites created police forces in major American cities by the 1830s. In eighteenth-century terms these new bodies were “standing armies.” Their practices brought about pressure for revised rules of arrest, search, and seizure, and new rules encouraged the new police practices. Davies speculates that the rise of “relativistic and probabilistic notions of truth and proof,” diminished reliance on oaths, and fear of too few convictions also eroded the old common-law regime.

Finally, state and federal courts rather forcibly dragged “due process” into property law—rather notoriously in Dred Scott (1857), with its substantive due process for slaveholders—with a little left over for trial procedures. “Due process” of arrest, search, and seizure receded into the shadows. In search of improved ideas, American state courts looked to Britain, where since 1780 judges had been adjusting the rules in favor of industrialism and modern State practices. (Right-wing commentators who gripe about “foreign law” influences ought to investigate this connection.) For once the federal government was fairly innocent. Precedents that undermined the old common-law regime largely trickled up from the states, especially in the second half of the nineteenth century. The upward trickle was slow at first: Down to 1935 federal marshals still had to have proper warrants to make an arrest.

Here then is today’s Fourth Amendment as seen by a life-form afflicted with supreme-judicial eye syndrome:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

(As this ocular condition worsens, all but a few objects dwindle into dim grayness.)

On Davies’s argument the view that the Fourth Amendment came into its own from the mid-twentieth century forward, when reasonableness took center stage, puts the cart well before the horse. And yet the Fourth Amendment cannot really be recovered. This is where good legal history—concrete originalism—leaves us. Potentially beneficial constitutional provisions are of little use today, even when their meanings can be reconstructed in legal-historical context. We can’t go back, since “activist” judges and legislators have worked for almost 200 years to institutionalize a legal regime with only slight resemblance to any original plan.

Can Anything Be Done?

Oddly enough, nineteenth-century Anglo-American legal bragging about freedom crested at roughly the time when many common-law rules worth saving were on the way out. Common law had reactionary social biases, to be sure, but an accelerated “trickle-down”—to everyone—of important rights that common law protected might have been preferable to their elimination. Purging common law of its English royalist and absolutist accretions was precisely the goal of St. George Tucker’s annotated edition of Blackstone (1803). And there was no reason to stop with Tucker’s “republicanized” Blackstone. More right than wrong on this, Murray Rothbard wrote that the common law minus some “statist accretions” fairly approximated a libertarian law code. Thinkers outside the mainstream periodically rediscover the radical potential of English law: people like Gerrard Winstanley, John Lilburne, John Adams, Thomas Jefferson, Lysander Spooner, and others closer to our own time. They may not agree with one another, but their example is interesting.

This is the path not taken. Most arrests and searches today are without warrant, and getting a formal warrant is fairly easy. Concrete, sworn personal knowledge has yielded to vague (“reasonable”) suspicion or whimsy as a “standard.” Once we enjoyed rules that provided for concrete privacy. By the 1960s privacy seemed so imperiled that the Supreme Court with its usual jobbery was driven to invent an artificial “right of privacy” just to restore some balance. Later, “originalist” conservative justices wrathfully informed us that passage of a law by Congress is nine-tenths of “due process” (you voted, didn’t you?) and the rest is enforcement—stern law-and-order formalism indeed. Translated, conservative “due process” seems to leave us subject to arrest, search, or seizure at the whim of any functionary capable of forming a whim.

Americans have let themselves be systematically excluded from land, from effective political participation, and from effective legal participation. When collapse of the new-model system comes, as one day it must, we may perhaps give ourselves a new constitution. Where might we begin? Chapter XXIX of Magna Carta looks rather promising.

Works Consulted

Thomas Y. Davies, “Recovering the Original Fourth Amendment,” Michigan Law Journal (1999), and “Correcting Search-and-Seizure History: Now-Forgotten Common-Law Arrest Standards” [&c], Mississippi Law Journal (2007). (These two are essential. See also Davies in Wake Forest Law Review (2002), 239ff, Tennessee Law Review (2003), 987ff, Brooklyn Law Review (2005), 105ff, and Brooklyn Law Review (2007), 557ff.)
Morton Horwitz, The Transformation of American Law (1992).
Theodore B. Lacey, “The Supreme Court’s Fluctuating Reaction to National Prohibition in Fourth Amendment Decisions from 1920–1933” (Senior Thesis, Princeton University, 2005).
Roger Roots, “Are Cops Constitutional?” Seton Hall Constitutional Law Journal (2001).
St. George Tucker, “Of the Unwritten, or Common Law of England,” in View of the Constitution of the United States (1999 [1803]), 313–369.
(All the above except Horwitz may be found online.)

Each of the ten essays is an estimable work, but some are likely to be of particular interest to Freeman readers. I’ll focus on four.

At the top of that list, I would place Peter Leeson’s essay, “Do Markets Need Government?” Most free-market advocates assume that “the rules of the game” must come from and be enforced by the government. Leeson, however, argues that market participants may do a better job than the State, writing, “The long-standing existence of vibrant markets under conditions of real or quasi-statelessness suggests that private ‘rules of the game’ must be possible without  government.” In commercial transactions, he points out, the participants have a lot at stake in the performance of contractual obligations.

That led them to develop commercial law completely independent of government, as well as tribunals to adjudicate disputes. Those tribunals did not have enforcement powers, but the need to maintain a good business reputation minimized flouting of their decisions. Violators were apt to face ruinous ostracism. Adam Smith’s “invisible hand” worked remarkably well.

Leeson goes on to show that the spontaneous order of the market also devised mechanisms to deal with criminal conduct. After reading his essay, it’s evident that the Hobbesian notion that society would be chaotic violence without a powerful state is untenable.

Another particularly valuable contribution is the late Norman Barry’s essay, “Economic Rights,” in which he laments that “for most of the time, in all countries, economic rights have been at the mercy of legislatures . . .with little or no protection from the courts or written constitutions.” He attributes this unfortunate state of affairs to the abandonment of the Enlightenment concept of the unity of liberty. In this concept, economic liberty is integral to an overall concept of liberty; most modern thinkers, by contrast, conclude that some aspects of liberty are important and others are not. They say they can tell wheat from chaff, with property rights and economic liberty being chaff. “There is scarcely any recognition of the connection between economic rights and other, more fashionable notions,” Barry writes.

He concludes that nations would reap huge productivity gains if they would steer away from “welfare rights” and regulatory intervention, and instead allowed people to produce and trade as they choose.

Julian Morris also merits special mention for his essay, “Private Versus Public Regulation of the Environment.” He takes issue with the presumption that the State alone is capable of solving environmental problems: “The reader may be surprised to learn that many environmental problems have in fact been caused by governments, sometimes in spite of attempts by private industry or businesses to stop them.”

I’ll mention one more essay, Cento Veljanovski’s “The Common Law and Wealth.” In it Veljanovski looks at this intriguing question: What kind of legal system is apt to contribute more toward a nation’s ability to produce wealth—common law or civil law? He notes that Gordon Tullock, among others, has observed that common law tends to be “untidy,” with duplicative costs, inefficient methods of ascertaining facts, and great latitude for wealth-destroying judicial activism. Other scholars, however, such as Richard Posner, maintain that since common law is premised on the legality of the status quo, it places a restraint on the use of law to redistribute wealth. This is an interesting debate with no resolution in sight.

Scholars who are interested in the field of law and economics will want to have this book on their shelves, and professors teaching a variety of law, economics, and political science courses will find in it a good many supplemental readings to get sharp students thinking about questions that mainline textbooks almost always overlook.

“Unlike all other property paper,” de Soto writes, “derivatives are not required by law to be recorded, continually tracked and tied to the assets they represent. Nobody knows precisely how many there are, where they are, and who is finally accountable for them.”

Hence: “Government’s main duty now is to bring the whole toxic environment under the rule of law where it will be subject to enforcement.”

I largely agree with de Soto’s diagnosis of the problem, but not his solution. When I worked in the financial sector in early 2007, my boss said his associates in New York were getting nervous because nobody knew how much leverage their trading partners had. It was thus pointless to run the standard “value at risk” and other calculations they teach finance grads, because no individual participant—even a large hedge fund or investment bank—could see the big picture in deals involving complex derivatives. Indeed, after everything blew up, I talked to one credit analyst at an insurance company who said, “Have you ever actually tried to read one of these credit default swap contracts? Nobody really knew what they did.”

Free Markets Don’t Mean Omniscient Entrepreneurs

I bring up these anecdotes to bolster my view that the market critics are probably (at least partially) correct to blame the financial bust on overextended firms that horribly miscalculated the risks they were assuming. I would be willing to go even further and say that innovative financial products that appeared to mitigate risk at the individual level might have paradoxically made the entire system more vulnerable.

But the market critics and de Soto go wrong in concluding that only governments can fix the problem. These advocates of increased regulation fail to realize that the case for the free market does not rely on omniscient entrepreneurs. Fans of the market should not be embarrassed to admit that sometimes even well-established companies screw up royally and lose billions of dollars.

Or at least, that’s what would happen in a true profit-and-loss system. The self-regulation of the market only works when profits and losses are allowed. When trying to make sense of why so many large firms were so careless with their investments, we can’t ignore the perverse incentives the government had created in a multitude of ways.

For example, the ratings agencies didn’t need to worry that they would be ruined if their AAA ratings on mortgage-backed securities turned out to be absurd. If any private-sector actors can be directly blamed for the financial debacle, it would be S&P, Moody’s, and Fitch. Yet these rating agencies are still in business because government regulations require banks and other institutional investors to hold bonds and other securities with a certain rating, and (of course) the regulations cartelize the rating industry. Specifically, SEC regulations require that institutions receive their (legally mandated) ratings from a “nationally recognized statistical rating organization” (NRSRO). But lo and behold, it is very difficult for any outsiders to attain this exalted NRSRO status. Since the big three agencies have a guaranteed demand for their services, is it any wonder that they were careless in granting the desired ratings to the complex securities being pushed by their big clients during the boom years? And let’s not forget the government-induced shaky mortgages at the foundation of those derivatives.

The fundamental problem with de Soto’s analysis is that he thinks politicians and bureaucrats can be trusted to improve financial transparency. This is the height of naiveté. Has de Soto flipped through the U.S. tax code recently? Doesn’t he realize that seemingly every week Treasury Secretary Geithner announces another convoluted plan to use tax dollars to encourage leveraged investment in precisely these “toxic” assets?

Markets Produce Laws

Apparently, de Soto thinks the virtue of Western governments over the centuries has been to create an orderly body of laws within which the free market can flourish. I would argue that it was the relative impotence of Western governments that allowed a market-driven law to emerge, which these governments then codified.

Economists such as Bruce Benson, David Friedman, and Edward Stringham have thoroughly documented the spontaneous development of legal customs and financial rules without any enforcement from the state. The entire body of English common law, too, was not centrally designed by legislatures, but instead emerged out of myriad individual rulings given by judges, as did the Law Merchant, the early modern global commercial law. 

Had the government minded its own business, the private financial sector would have learned from its mistakes during the housing boom. There is no reason to suppose that Geithner or anyone else employed by the government can come up with a solution that private analysts couldn’t discover. Quite the contrary. In fact, every move the government has taken during the crisis has expanded its power over the private sector and its ability to shower literally trillions of dollars on powerful beneficiaries. Doesn’t de Soto see the immense scope for corruption if the government gains more discretionary power over financial transactions?

Ironically, it is the government’s response to the initial crisis that has led to less transparency not more. Had the troubled firms been allowed to fail, bankruptcy proceedings would have ascertained which companies were holding which assets and how they should be valued. But at least since December 2007, the Federal Reserve has artificially propped up insolvent firms by accepting their “toxic” assets as collateral on short-term loans. In this environment, of course the most leveraged firms will string their investors along and carry derivatives on their books at inflated values.

Regardless of what caused the crisis, government efforts to regulate derivatives will only lock in undesirable aspects of the current market and ensure that politically connected players reap artificial gains. It is absurd to ask politicians to promote financial integrity and sound accounting. They are the worst violators of these principles on the planet.

Thus far the typical libertarian response to the growing clamor has been to challenge the science behind it. Now it really is the scientific consensus that global warming occurred during the twentieth century. What is not so obvious is that (1) humans caused this warming and (2) this warming is necessarily bad.

Although it is interesting to explore the question of whether science has been perverted in the cause of environmentalism, there is a danger for libertarians in pinning their entire case on this strategy. After all, every serious student of science knows that when it comes to empirical claims, we never achieve certainty. For example, even if today one thinks that there are insurmountable problems facing the theory of manmade global warming, one still must accept the possibility that new evidence or theoretical advances could indicate that the environmentalists are perfectly right. Another possibility is that there is some other, similar disaster lurking unsuspected.

For these reasons, I believe it is crucial to accept provisionally, for the sake of argument, the scientific claims behind the case for manmade global warming. In the present article I will demonstrate that it still would not follow that the taxes and other regulations typically proposed by greens are the best way to address the problem. Just as the free market is still the optimal economic arrangement, regardless of how many citizens are angels or devils, so too does the free market outperform government intervention, regardless of the fragility of Earth’s ecosystems.

When trying to determine if the free market is to blame for possibly dangerous carbon emissions, a logical starting point is to list the numerous ways that government policies encourage the very activities that Al Gore and his friends want us to curtail.

The U.S. government has subsidized many activities that burn carbon: it has seized land through eminent domain to build highways, funded rural electrification projects, and fought wars to ensure Americans’ access to oil. After World War II it played a key role in the mass exodus of the middle class from urban centers to the suburbs, chiefly through encouraging mortgage lending.

Every American schoolchild has heard of the bold transcontinental railroad (finished with great ceremony at Promontory Summit, Utah) promoted by the federal government. Historian Burt Folsom explains that due to the construction contracts, the incentive was to lay as much track as possible between points A and B—hardly an approach to economize on carbon emissions from the wood- and coal-burning locomotives. For a more recent example, consider John F. Kennedy’s visionary moon shot. I’m no engineer, but I’ve seen the takeoffs of the Apollo spacecraft and think it’s quite likely that the free market’s use of those resources would have involved far lower CO2 emissions. While myriad government policies have thus encouraged carbon emissions, at the same time the government has restricted activities that would have reduced them. For example, there would probably be far more reliance on nuclear power were it not for the overblown regulations of this energy source. For a different example, imagine the reduction in emissions if the government would merely allow market-clearing pricing for the nation’s major roads, thereby eliminating traffic jams! The pollution from vehicles in major urban areas could be drastically cut overnight if the government set tolls to whatever the market could bear—or better yet, sold bridges and highways to private owners.

Of course, there is no way to determine just what the energy landscape in America would look like if these interventions had not occurred. Yet it is entirely possible that on net, with a freer market economy, in the past we would have burned less fossil fuel and today we would be more energy efficient.

Even if it were true that reliance on the free-enterprise system makes it difficult to curtail activities that contribute to global warming, still the undeniable advantages of unfettered markets would allow humans to deal with climate change more easily. For example, the financial industry, by creating new securities and derivative markets, could crystallize the “dispersed knowledge” that many different experts held in order to coordinate and mobilize mankind’s total response to global warming. For instance, weather futures can serve to spread the risk of bad weather beyond the local area affected. Perhaps there could arise a market betting on the areas most likely to be permanently flooded. That may seem ghoulish, but by betting on their own area, inhabitants could offset the cost of relocating should the flooding occur. Creative entrepreneurs, left free to innovate, will generate a wealth of alternative energy sources. (State intervention, of course, tends to stifle innovations that threaten the continued dominance of currently powerful special interests, such as oil companies—for example, the state of North Carolina recently fined Bob Teixeira for running his car on soybean oil.)

Private insurers have a strong incentive to assess the potential effects of global warming without bias in order to price their policies optimally—if they overestimate the risk, they will lose business to lower-priced rivals; if they are too sanguine about the dangers, they will lose money once the claims start rolling in. Individuals finding their homes or businesses threatened by rising sea levels will find it easier to relocate to the extent that unfettered markets have made them wealthier. Industrial manufacturers, as long as they are held liable for the negative environmental effects of their production processes—a traditional common-law liability from which state policies intended to “promote industry” have often sought to shield manufacturers—will strive to develop technologies that minimize the environmental impact of their activities without sacrificing efficiency. Government interventions and “five-year plans,” even when they are sincere attempts to protect the environment rather than disguised schemes to benefit some powerful lobby, lack the profit incentive and are protected from the competitive pressures that drive private actors to seek an optimal cost-benefit tradeoff.

If the situation truly becomes dire, it will be free-market capitalism that allows humans to develop techniques for sucking massive amounts of carbon out of the atmosphere, and to colonize the oceans and outer space. Beyond these futuristic possibilities, the obvious responses to global warming—such as more houses with AC, sturdier sea walls, and better equipment to evacuate flooded regions—are again only feasible when the free market is unleashed.

It is the poorest people and nations that stand to suffer the most if the worst-case scenario for global warming is realized, and the only reliable way to alleviate their poverty, and thus help protect them from those effects, is the free market.

Can the Market Meet the Threat Head-On?

In the first section I summarized some of the ways governments inadvertently contribute to the very activities that allegedly cause dangerous global warming; in the second I sketched some of the ways that free markets allow humans to better adapt to climate change. However, I haven’t really tackled the problem directly. Am I conceding that with a worldwide problem the market—which is just dandy for one-on-one interactions—can’t match the concerted “will of the people” working through their elected representatives for a common solution?

Of course not. Even when economic transactions generate so-called negative externalities (activities that shower harms on third parties), I still contend that the free market is the best institution for identifying and reducing the problems.

One way negative externalities can be addressed without turning to state coercion is public censure of individuals or groups widely perceived to be flouting core moral principles or trampling the common good, even if their actions are not technically illegal. Large, private companies and prominent, wealthy individuals are generally quite sensitive to public pressure campaigns.

To cite just one recent, significant example, Temple Grandin, a notable advocate for the humane treatment of livestock, asserts that McDonald’s is the world leader in improving slaughterhouse conditions. While many executives at the fast-food giant genuinely may be concerned with the welfare of cattle, pigs, and chickens, undoubtedly a strong element of self-interest is also at work here, as the company realizes that corporate image affects consumers’ buying decisions.

But that self-interest does not negate the laudable outcome of the pressure McDonald’s has applied to its suppliers to meet the stringent standards it has set for animal-handling facilities. Similarly, to the degree that the broad public regards manmade global warming as a serious problem, companies will strive to be seen as “good corporate citizens” that are addressing the matter. And this isn’t ivory-tower speculation on my part—I can see the “green friendly” ads already.

Critics of libertarianism sometimes denigrate it as a political program of “market fundamentalism” that, if put into practice, would reduce all human values to the price they can fetch as mere commodities. But that is a caricature of the social arrangements advocated by any sensible libertarian. The great figures of classical-liberal and libertarian thought have always recognized the vital contributions that nonmarket institutions, such as churches, families, charities, social clubs, communities of scholars and their students, art foundations, conservation groups, neighborhood associations, and youth athletic leagues, make to the healthy functioning of a free society. What libertarians offer as an alternative to statism is not a social order that judges every human interaction solely on a miserly calculation of profit or loss, but a society in which every desirable form of voluntary association is allowed to flourish, free from coercive interference by the state.

Customary Law

Besides the samples listed above, most libertarians recognize private or customary law as another important, nonmarket source of social order. A historical case in point is the Anglo-American common-law tradition in which legal norms evolved spontaneously from the customs of the people to whom it applied, rather than through legislation and state planning deliberately aimed at achieving some “public good.” The many centuries during which the common law sustained civic order in the face of inevitable divergences between individual citizens’ own interests demonstrate that a successful legal order does not inevitably require state sponsorship. The common law has shown itself to be fully capable of dealing with a number of issues that, while not exhibiting the worldwide scope of global warming, are still similar to our present concern in arising from the cumulative effects of many individual actions, each of which, regarded in isolation, appears to be unproblematic and not subject to legal sanction. For instance, the salmon-fishing streams of Scotland are a valuable natural resource, and the communities along them have developed quite successful institutions for ensuring the value of the streams is maintained, including private policing and legal penalties for overfishing and for polluting the water.

The many cases in which voluntary solutions to problems of collective choice have worked pose an empirical embarrassment for those who argue that “public goods” must be provided by the government. Most advocates of compulsory solutions to pollution abatement, for example, would assert that voluntary efforts will be vitiated by “free riding.” If individuals are not forced to contribute their fair share toward addressing these problems, this argument runs, each person rationally will hold back and hope others will pay for the proposed solution, since any free riders would gain the benefits (such as clean air) anyway. Since almost no one likes to be “the sucker,” it follows that the amount of resources devoted to the provision of the public good will fall woefully shy of the total that would be available if each person gave the amount he’d be willing to give if only he could count on everyone else pitching in equally. The sole solution that can be imagined is for the members of a society to create a “social contract” by which they are forced to pay for pollution abatement.

However, Anthony de Jasay notes in his book The State that this argument is severely flawed. If people cannot solve public-goods problems through voluntary cooperation, how can they rely on politicians’ promises to do so? There is no external authority to enforce those promises. There is only public opinion, the same thing that would enforce voluntary solutions. Moreover, government is itself a “public good” in the sense that free riders benefit from the efforts of those who try to get the government to produce public goods such as clean air.

Is Temperature a Public Good?

Another consideration is that the earth’s temperature isn’t such a public good after all. That is, certain people really do have more at stake, particularly if the warming is moderate. For example, if Manhattan became submerged because of rising sea levels, that calamity would not affect every human being equally. The residents of Manhattan and the owners of its skyscrapers would be hurt far more than people living in inland China. Because all the various potential dangers of global warming affect particular people more intensively than others, it is these groups that (in a free market) would have the incentive to reduce CO2 concentrations. For example, if rising sea levels would cause $10 trillion in damage to a comparatively small group of wealthy individuals, that’s a huge “pie” that the wealthy can offer others to motivate them to reduce emissions.

Despite my optimism about the potential to deal with environmental problems through voluntary means, I don’t wish to be misunderstood: If the official global-warming story is true, it presents a serious problem that humanity will find difficult to solve through voluntary means. But this isn’t a strike against voluntarism—of course a difficult problem will be difficult to solve! By the very same token, the government doesn’t do a terrible job at collecting stray dogs, because that’s a very simple task. When it comes to harder assignments, such as stopping terrorism or reducing teen pregnancy, the government’s record is quite a bit worse.

The very features of the official global-warming scenario that hamper purely private solutions would apply equally to government efforts. For example, even if the U.S. government passed draconian measures at home, that alone wouldn’t be enough if China and India don’t follow suit. And just as private companies in a free market may have an incentive to pollute if they can get away with it, so the state, under the influence of special-interest groups and run by leaders always tempted to ignore the public good in favor of increasing their own power and wealth, can have incentives to allow more pollution than is optimal. (It should be clear the “best” amount of pollution is not zero, because even using fire to cook generates some pollutants, and I doubt that anyone but the most misanthropic, fanatical nature worshippers want to reverse all of the last 40,000 years of human progress.)

As in all debates over public versus private choice, it’s inappropriate to measure a realistic free-market response to global warming against an idealized government program. We must try to envision what real people would do if their property rights were respected and compare that scenario with the probable outcome of actual politicians in today’s world being given a blank check in the name of saving the earth.

Government programs don’t ameliorate world poverty or sickness, and no libertarian would deny that these are serious problems. So even if manmade global warming is a real threat, why should we expect governments to get it right on this issue?

There is little left of the conventional protections for individualism in the modern world. Whatever theoretical virtues there may be in democracy (and there aren’t many¹), in practice it has disintegrated into a struggle among self-regarding interest groups, mediated by government, over wealth that is exclusively created by private individuals. The Constitution has proved to be little more than a parchment protection against legislative predators. Federalism, which once offered the possibility of exit from more burdensome states, has ceased to be an escape route because the U.S. Supreme Court, in upholding virtually every act of centralization since Franklin Roosevelt, has turned the states into mere agents of Washington, D.C.

The law itself seems to offer little solace. The common law, which is a product of judges’ proceeding case by case, for example, in tort and contract, has ceased to be as predictable as it once was. Judges have now become creative: they don’t preserve an ongoing legal order; they shift it in politically fashionable directions.

Because of this change in the common law, I began to look for the security of a written legal code (or civil law) against the arrogance of lawyers with a social mission. I was the first to admit that neither the common law nor a written code had been able to resist the intrusion of statute into the order of general (end-independent) rules in the twentieth century. But surely a code system had a slightly better chance of preserving liberty? Historically, code writers had been less influenced by interest groups. After all, the codes were not originally the product of mass democracy. There is indeed a logical difference between a code and a statute, and this is another instance of F. A. Hayek’s famous distinction between “law” and “legislation.” Furthermore, a code system, in principle, does not suffer from the vagaries of judge-made law. In a difficult case, the judges go back to the code rather than use their own discretion; and is that not better than having a judiciary pretending that it is “discovering the law” when it is really advancing a social agenda? Hayek himself had respect for the nineteenth-century German code.

But I soon realized that something was going wrong with my thinking. I had not understood that the common law was, in principle, acceptable if politicians left it alone. There was a close historical connection between the common law and the market economy. Contract, which was entirely judge-made law, had been an essential servant of the private property, capitalist order, and tort, which protected individuals from possible harms, had emerged independently of statute.

Ironically, the problem in America came from the fact that it has always had a kind of code, the Constitution, superimposed on the spontaneous order of common law. This code, because it has been subject to creative interpretation, has licensed an attenuation of rights and property, which would not have occurred under pure common law. The latter had always recognized equality (it was an eighteenth-century court decision that disallowed slavery in England), so did we really need the Fourteenth Amendment, which, among other divisive things, brought us affirmative action?

Even now there is still a feature of the common law that works reasonably well precisely because it is more or less unaffected by the code (the Constitution). If we look at the common law we don’t find any ringing declaration of property, yet it has quietly protected one person’s possessions against damage by another. It was celebrated by Sir William Blackstone: “The . . . absolute right, inherent in every Englishman, is that of property: which consists in a free use, enjoyment and disposal of his acquisition, without any control or diminution, save only by the laws of the land.”² By that “control,” Blackstone meant the law that had emerged from judicial decision-making. The major depredations of property came later from statutes emanating from a sovereign parliament, which he acknowledged with regret. Of course, he lived in advance of mass democracy.

Still, the Blackstone approach lives on, and, as we shall see, common-law solutions to, say, externality problems (such as pollution) are quite effective. We shall compare its approach with the Napoleonic Code (1804), Article 544, which declares sonorously of property “the right to use and dispose of a thing in the most absolute way.” But since judges have little say in its interpretation, the Code has to be altered every time some contingency occurs. Private property, despite the Gallic flourishing, turns out to dependent on myriad rules and regulations, all of which lead to increased centralization and the dominance of public law. The French early recognized the problem of externalities but instead of seeing the problem as soluble by judges’ determining appropriate property rights, they “transferred to administrative agencies all collective interests threatened by industrial development.”³

Law of Nuisance

In contrast, the English common law developed the law of nuisance. This was not the product of some rationalistic planner but the outcome of myriad private cases, where one person brought an action against another who had damaged his property. By not referring to a code, the judges can be pragmatic in their solution to a problem. Most important, they talk of “reasonableness” when adjudicating whether a nuisance had been committed, and their evaluation of its seriousness often encompasses the economist’s notion of utility.

What was crucially important was the invention of the common-law remedy of injunctive relief. In any legal dispute a litigant could go to court with an action, say, a tort under the law of nuisance, and secure an injunction (backed by the crime of contempt of court) compelling his opponent either to desist from or to perform an action. Once granted, an injunction allows the possibility of negotiation between the parties to reach an agreement that satisfies both. Thus if two parties have a dispute about whether one has the right to cause an obnoxious smell on his own property that also adversely affected others, the court would in effect decide the property rights and issue an injunction. The loser can then buy out that right through a contractual agreement. Both parties are better off.

The injunction is essentially forward-looking or utilitarian; it looks to future well-being. Actions for damages, however, are essentially backward looking; they are concerned with correcting past wrongs.

Code law, because of its concern with physically separate property, seems to have a greater affinity with the freedom philosophy. If someone’s property rights have been clearly undermined, actions for damages are appropriate. But only recently have code systems developed techniques to deal with the problems where rights are in dispute (such as in environmental issues), the very thing the injunction has always handled. Although codes have remedies for dealing with externalities, or incompatible uses, they still tend to rely on the finality of damages, or the coercion of public law with no possibility of negotiation. There is now, belatedly, a law of nuisance in France, and it is conceded by defenders of legal codes that the common-law method protects property better than the grandiose declarations of a code.⁴

The common law is pragmatic and can produce a variety of solutions. But they are not always satisfactory. In the precedent-breaking New York case Boomer v. Atlantic Cement Co. (1970), although the plaintiffs were victims of a nuisance (cement manufacture is unpleasant), they were denied an injunction, which would have closed the plant and eliminated hundreds of jobs. Instead, the victims were awarded damages. This overturned the traditional interpretation of nuisance, which would have called for cessation of the offending activity. Perhaps the worst aspect of the case was the award of permanent damages, since once they were paid the aberrant company was relieved of any duty. If temporary damages had been awarded, the plaintiffs could have kept coming back for more and this would have given the perpetrator an incentive to fix the problem.

A further example of the pragmatism of the common law is the defense of “coming to the nuisance.” If a person has been causing a nuisance for a long time and nobody has complained, a newcomer to the area would probably lose any action he brought against the creator of the nuisance. Again, there are clear advantages to this, for many businesses would not survive a rigorous application of the law of nuisance. The doctrine is sometimes called “first come, first served,” and it could be said that the original person had established the “right” to engage in the activity. Of course, there are dangers in this because the courts might be effectively granting a monopoly to the “offender.” What if someone wanted to develop a residential area, which depends for its viability on the absence of noxious smells? “Coming to the nuisance” is not always an effective doctrine.

Unlike a code system, where the judge is reduced to the mechanical interpretation of the law, under common-law the judge is looking for policy-based solutions. But this flexibility and pragmatism must not be misinterpreted: it is not a license for the judge to make the law reflect personal whims and ideological fancies. There are restraints, such as the overriding obligation to preserve a predictable order, established expectations, and conventional legal rights. Ironically, the greatest threat to legitimate expectations and rights has occurred in that part of American law which most resembles a code—the Constitution. Here the record of property-rights protection is at best mixed and at worst bitterly disappointing.

Some Progress

Undoubtedly property owners have achieved some legal protection against government “takings” through important decisions in the past ten years. For most of the twentieth century the judiciary had been supine before voracious legislatures that gobbled up property on behalf of the “public good.” Rightly or wrongly, government in the United States has always had the power to take private property, but always subject to the Fifth Amendment proviso that the power should be exercised only for “public use” and with “just compensation.” All Western legal systems theoretically permit takings, implying that the property owner should not bear the full costs of a “public project.”

In America the judiciary had been reasonably assiduous in abiding by the Fifth Amendment when the physical seizure of property occurs. But in blatant violation of the Constitution, the government never paid compensation for regulatory takings, that is, the prohibition through regulation on certain uses of one’s land. (This is still the case in European code law.) Yet an owner surely suffers a loss if certain activities are forbidden just as if his land had been grabbed.

For example, there is a very tenuous case for zoning law, upheld in the 1920s, that specifies what can be built and where. Presumably, the argument here is that attractive residential areas would decline if industrial development were to be allowed to continue unabated. But Houston has no zoning laws, and nobody seriously suggests that its ambience has suffered as a result. Indeed, it has always been the case that in a free, rule-governed society, private owners, worried about the preservation of their fine surroundings, have been able to protect these through restrictive covenants. Threats to rural beauty have come from unrestrained public development rather than private.

After decades of protest and formidable argument against regulatory takings, progress was made in the 1990s. In the famous Lucas v. South Carolina Coastal Council case(1992), David Lucas had bought two beachfront properties on a barrier island for $1 million dollars in the hope of building two houses there. But his plans were frustrated by the Council, which denied the permits under authority of beachfront-management legislation passed two years after Lucas bought the properties. This wiped out the value of Lucas’s investment. He claimed this constituted a “taking” and warranted compensation. After failing to win in the state Supreme Court, Lucas went to the U.S. Supreme Court, which ruled that compensation is due under some circumstances and sent the case back to the state for determination. Eventually, the state paid Lucas $1.5 million for the properties, and later sold them to another developer.

Although the principle that investment-backed expectations should be protected was conceded, the Court’s decision was narrowly drawn around the fact that Lucas had suffered virtually a total loss of use. While later cases did establish the principle that partial takings should also be compensated,⁵ that position can hardly be regarded as secure, given the ease with which precedent can be overturned.

The New Threat to Liberty and Property

But while this progress was being made an even more insidious threat to property rights was emerging: the power of eminent domain began to be used not for “public use,” but to maximize private interests. Considering the clarity of the Fifth Amendment’s takings clause, it surely cannot be used on behalf of private persons, can it?

Well, it can, according to the courts, the guardians of our liberty and property. For more than 20 years legislatures have got into the habit of handing private homes and stores over to big private developers. Sometimes they declare the condemned area as “blight.” But not always. The classic case was Poletown Neighborhood Council v. City of Detroit (1981). In this Michigan case the city, citing the need for jobs, condemned a thriving ethnic neighborhood on behalf of General Motors, which had threatened to leave the area unless it got the 450 acres, at a bargain price, for a Cadillac plant. The residents and business owners fought the takings in court—and lost.

All sorts of arcane arguments can be tricked out of the chicanery that is modern welfare economics. Maybe there was a holdout problem (the last person could have demanded an enormous price), or the holdings were contiguous and had to be developed in one package—and, no doubt, General Motors would bring vast employment to the area. But these are specious arguments: the market would have produced a solution satisfactory to everyone involved. Nothing can hide the fact that the whole exercise was an involuntary transfer. That it resulted from a decision by elected representatives is no justification. Aren’t law and property supposed to protect us from the rapacity of democratic institutions?

Notes

1. See Norman Barry, “What’s So Good about Democracy?” Ideas on Liberty, May 2003.
2. William Blackstone, Commentaries on the Laws of England (London: Sweet, 1844 [1768]), p. 134.
3. Quoted in Ugo Mattei, Basic Principles of Property Law (Westport, Conn.: Greenwood Press, 2000), p. 17.
4. Ibid., pp. 155–56.
5. See Bernard Siegan, Property and Freedom (New Brunswick, N.J.: Transaction Publishers, 1997), chapter 5.

Law and economics, or the economic analysis of law, is a relatively new discipline. It was launched in the late 1950s and early 1960s and has grown in importance and in the number of its practitioners ever since. It uses key principles of economics—such as self-interest, rationality, efficiency, and externalities—to predict the intended and unintended effects of different legal rules and to explain why we have the particular legal rules we do and why some legal rules might be considered better than others. Aaron Director and Ronald Coase, to whom the book is dedicated, and Judge Richard Posner, to whom the author refers in several chapters, have been major contributors to the field.

David Friedman is an economist and a professor of law at the University of Santa Clara School of Law. This book is one of his best efforts. His style makes it great fun to read, and it is filled with intriguing insights. Because of its comprehensive scope, it could easily be used as a text in an introductory course in law and economics. For example, it includes a chapter on antitrust law that I wish Joel Klein and Judge Thomas Penfield Jackson had read before they proceeded to punish Microsoft for being too effective a competitor.

Friedman’s early chapters explain basic economic concepts vital to understanding law. A transition chapter explains the structure of the American legal system, and the later chapters apply economics to the analysis of such things as criminal law, tort law, contract law, and marriage, sex, and babies. One especially interesting chapter is devoted to a law-and-economics analysis of three alternative legal systems—saga-period Iceland, eighteenth-century England, and Shasta County, California.

Law’s Order is more than an introductory text, however. For example, in Chapter 5 Friedman goes far beyond the usual exposition of the Coase Theorem. He illuminates the differences between property rights and liability rights and how the choice of efficient rules depends on such things as the free-rider problem among joint buyers and holdouts among joint sellers. A reader is well advised to read this chapter carefully, with pencil and paper at hand since it is basic to much that comes later.

Friedman introduces each new concept with an actual or hypothetical example that puts the reader in the center of the issue. Frequently, he comes to what seems a reasonable conclusion and in the very next paragraph he explains why it is wrong. In one case, the issue of whether, on efficiency grounds, we need criminal law at all, he goes through seven rounds of arguments changing his answer each time. He offers this “as evidence of how risky it is to go from the existence of an argument for the efficiency of some particular rule to the conclusion that the rule is in fact efficient.” It is also an effective expository device because it engages the reader. I tried to anticipate the arguments in each round before I read them. I was often wrong, but I learned something useful every time.

Judge Posner is famous for his conjecture that the common law, which develops over time through judicial precedents and decisions, consists of legal rules that are, for the most part, economically efficient. Friedman gives many examples—for example, the negligence doctrine in torts—consistent with Posner’s conjecture, but he also gives a few—such as product liability rules—that aren’t. Posner’s great contribution, according to Friedman, has been to direct attention to the question of economic efficiency in the law. “We do not know whether the law is efficient. We do know that the question ‘What is the efficient legal rule?’ converts the study of law from a body of disparate doctrines into a single unified problem.”

The book is filled with elegant, instructive arguments. Consider just one. Burglary, Friedman argues, should be a tort rather than a crime, and denting a fender should be a crime rather than a tort. The basis of those startling assertions is the incentive for potential victims to undertake efficient preventative measures. In tort law, successful plaintiffs are made whole through compensatory damages. In criminal law, victims do not receive compensation. If the penalty is a fine, it is the state that receives the money, not the victim. If the penalty is imprisonment, the victim suffers an additional loss in taxes to pay for the incarceration. Therefore, potential victims of crimes are more likely to undertake efficient prevention measures than are potential victims of torts. Preventative measures are more effective for dented fenders than burglaries. Under the general rule that incentives should be placed where they do the most good, denting a fender should be a crime, and burglary a tort.

Finally, the book has no footnotes and very few references. Friedman and his publisher have set up a Web site for his readers to obtain the missing information online. Friedman chose this option to make the book more user-friendly for the intelligent layman who will read it for general information and entertainment rather than as an academic resource. Icons in the margins of the hard copy point to corresponding online icons. I think this bit of entrepreneurship will pay off and thus become widely imitated.

Charles Baird, a professor of economics and the director of the Smith Center for Private Enterprise Studies at California State University at Haywood, is a quarterly columnist for Ideas on Liberty.

But a funny thing happened on the way to the demise of freedom of contract—its defenders arose to rescue it from oblivion. Over the last three decades, law and economics scholars have staged an intellectual counterattack showing from many different angles the superiority of freedom of contract and the counterproductivity of governmental interference. In The Fall and Rise of Freedom of Contract, F. H. Buckley, a professor at the George Mason University Law School, discusses the rescue operation. The book is a collection of papers given at a series of colloquia at the George Mason University Law and Economics Center and brings together some of the sharpest thinkers in the field.

The attack on freedom of contract was rooted in the same mundane intellectual errors that plague us in so many ways. The critics overestimated the problems associated with freedom and underestimated (or entirely ignored) the costs of interference with freedom. As Buckley observes, “Consumers are not as helpless as they were made out to be; and intrusive legal rules designed to protect them not infrequently left them worse off.” But legal theorists, like politicians, enjoy the luxury of making rules that sound good but mainly affect other people. The common-law rules of contract were an easy target for them: Why stick with musty old legal principles when ingenious and compassionate thinkers could devise better, fairer ones?

A crucial question that occupies Professor Buckley in his introduction is how best to defend freedom of contract. He discusses three approaches: neo-formalism, which is based on the objection that the enemies of contract have politicized the law; Kantianism, the positing of a human right to freely enter into contracts; and consequentialism, the argument that freedom of contract leads to better outcomes than intervention. Buckley, like his contributors, believes that the most powerful and convincing arguments for freedom of contract are consequentialist, and perhaps he’s right. While readers of Ideas on Liberty may see freedom of contract as a moral issue and regard it as unnecessary to demonstrate that interference has bad consequences, for many other people the case will not stick unless bolstered with consequentialist arguments.

There is too much in this volume to cover in a short review. It is like trying to tell a friend what’s on the menu at a terrific restaurant. So here are some of the outstanding items. The redoubtable Richard Epstein leads off with “Contracts Small and Contracts Large: Contract Law Through the Lens of Laissez-Faire.” His essay is an extended rebuttal to four notorious critics of freedom of contract, arguing that they simply beat up on a few peripheral problems and then announced that they had killed off the case for contractual freedom. Epstein cuts their arguments to ribbons, exactly as anyone familiar with his legal and economic acuity would anticipate.

In his essay “In Defense of the Old Order,” Timothy Muris argues that standard form contracts, far from being an assault on consumers by big business, enhance efficiency and give consumers benefits that would probably never be realized by most if they had to “bargain from scratch.”

Essays by Professors Paul Rubin and Robert Cooter explore the boundary between tort and contract, suggesting that consumers would be better off if they were allowed to contract out of tort, leaving their remedy against a seller to the terms of the bargain and/or ordinary contractual remedies.

Zoning and land-use restrictions are another area where we have placed mistaken faith in government and would benefit from greater reliance on contract. Professor Robert Nelson’s “Zoning by Private Contract” demonstrates that the putative goals of zoning could be realized through contract, without the coercion and favoritism with which zoning is so rife.

For the rest of the menu, visit the restaurant.

Early in the summer of 1969, the Cuyahoga River caught fire. Piles of logs, picnic benches, and other debris had collected below a railroad trestle, which impeded their movement down the river. These piles only lacked a spark to set them afire. A passing train with a broken wheel bearing probably provided that spark, igniting the debris that, in turn, lighted the kerosene-laden oil floating on top of the river.

The fire burned only 24 minutes—too short a time for the Cleveland Plain Dealer to catch a photo—and at first it attracted little attention. However, in the following months the fire became a symbol of a polluted America. It helped galvanize the environmental movement. Even today, the idea of the burning river remains a symbol of industrial neglect of the environment.

A few things have been ignored in the legend surrounding the Cuyahoga fire:

• The Cuyahoga, which flows through the city of Cleveland into Lake Erie, had caught fire at least two times before (in 1936 and 1952). The earlier fires burned much longer and caused much more damage.
• While oil on the river burned, most of the fuel was not industrial but, rather, logs, debris, and household waste washed downstream by the periodic storms that roil the deep, fast-moving river many miles above Cleveland.
• Most important for our understanding of environmental problems, the fire came about because political control replaced the emerging common-law rule of strict liability. Had that doctrine been allowed to hold sway, there would probably not have been a fire in 1969.

The industrial stretches of the Cuyahoga River were indeed polluted in 1969 and had been for many years. In the 1930s, for example, the people of Cleveland had clean drinking water from Lake Erie. So municipal authorities left the Cuyahoga River alone—allowing firms along its banks to discharge into it at will.

Not everyone was content with that policy. In some cases Cuyahoga water was too polluted even for industrial use. In 1936, a paper manufacturer on Kingsbury Run, a tributary of the Cuyahoga, sued the city of Cleveland to stop it from dumping raw sewage into the stream.

The city responded by saying that it had used the stream as a sewer since 1860 and that therefore it had a “prescriptive right” to use it that way. The Ohio court agreed with the city. It stated that when part of a stream “being wholly within a municipal corporation, so that none but its residents are thereby affected, is generally devoted to the purposes of an open sewer for more than 21 years . . . it becomes charged with a servitude authorizing its like use by other riparian owners” (City of Cleveland v. Standard Bag & Paper Co.).

So much for protection of riparian rights in 1936! However, that attitude changed rapidly. By 1948, the doctrine of strict liability was taking hold. Another Ohio court decision states that “one may not obtain by prescription, or otherwise than by purchase, a right to cast sewage upon the lands of another without his consent” (Vian v. Sheffield). Other rulings were similar.

Concern About Pollution

Incomes were rising, and concern about industrial wastes was mounting. Pollutants were corroding sewage treatment systems and impeding their operation. In another part of the state, the Ohio River Sanitation Commission, representing the eight states that border the Ohio River (which runs along Ohio’s southern border), developed innovations to reduce pollution. The municipalities and the industries along the Ohio began to invest in pollution control technology.

Unfortunately, this progress soon ended. The evolving common law and regional compacts hit a snag in 1951 when the state of Ohio created the Ohio Water Pollution Control Board. The authorizing law sounded good to the citizens of Ohio. It stated that it is “unlawful” to pollute any Ohio waters. However, the law continues: “except in such cases where the water pollution control board has issued a valid and unexpired permit.”

The board issued or denied permits depending on whether the discharger was located on an already-degraded river classified as “industrial use” or on trout streams classified as “recreational use.” Trout streams were preserved; dischargers were allowed to pollute industrial streams. The growing tendency of the courts to insist on protecting private rights against harm from pollution was replaced by a public body that allowed pollution where it thought it was appropriate.

During the 1960s, attempts were made to revive the application of common-law rights to stop pollution of the Cuyahoga. Those complaints were redirected to the state or local agency in charge of managing water quality, with one exception. In 1965, Bar Realty Corporation sued the city and the board to compel them to enforce the city’s pollution control ordinances against industrial polluters. The judge agreed, and directed the city and the board to stop pollution of the Cuyahoga. However, the Ohio Supreme Court overturned the ruling because Cleveland’s ordinances were in conflict with state statutes. Management by permit continued to dominate other institutional arrangements on the Cuyahoga.

Cleveland Mayor Carl Stokes, who helped draw attention to the Cuyahoga fire, criticized the state for letting industries pollute. “We have no jurisdiction over what is dumped in there . . . . The state gives [industry] a license to pollute,” the Cleveland Plain Dealer quoted him as saying (June 24, 1969). Stokes was not far off the mark. However, he thought the solution was to move to federal regulation rather than back to the guidance provided by court decisions.

The famous fire illustrates the unfortunate history of pollution control in the United States. Growing citizen concern about pollution was leading to voluntary cleanup, but the emerging common-law rule of strict liability was abandoned in favor of a political process that allowed continuing pollution of certain segments of the state’s waters.

By catering to special interests, Ohio’s regulatory scheme stopped the emergence of a doctrine that would have spurred cleanup. It also helped propel the nation toward national legislation and its costly technological specifications. The Clean Water Act of 1972 may have led to change on the Cuyahoga, but it also stifled innovation in pollution control and wasted vast sums of money, both industry’s and the taxpayer’s. (See Bruce Yandle, Common Sense and Common Law for the Environment [Lanham Md.: Rowman & Littlefield Publishers, 1997], pp. 76-77.)

In sum, the Cuyahoga fire, which burns on in people’s memory as a symbol of industrial indifference, should also be viewed as a symbol of the weaknesses of public regulation.