From Custom to Law – Hayek revisited

Rossi, Guido and Spagano, Salvatore (2014): From Custom to Law – Hayek revisited.

Abstract

The present paper combines legal history with economic theory so to explain the passage from custom to law. Economists have usually explained the shift from customary to statutory law (that is, from spontaneous to formal rules) either in terms contractualism or evolutionism. In the first case, law is the only efficient solution for a Hobbesian-like immanent social conflict. In the second case, customs do create an efficient enough equilibrium. Law comes on a later stage just to formalise an already accepted rule, vesting the custom with a formal status. Neither theory, however, is fully able to explain the transition from custom to law. One struggles with the very acceptance of customs in the first place. The other fails to provide a satisfactorily explanation of the passage from custom to law. The present work seeks to reconcile the two theories by looking at the economic advantages of statutory law over custom. Unlike the first theory, it does not deny that customs may produce a relatively efficient status, but it seeks to explain why, at a certain point, customs were considered as inadequate and statutory law became more desirable. Our answer lies in the publication of written rules, for the presumption of knowledge it entails. Presumption of knowledge of the applicable rules is one of the elements that (oral) customs could not provide to contracts. Although somewhat neglected in many studies on customs and legislation, publication is a crucial element for our understanding of the passage from spontaneous custom to positive law. The work shall first introduce the passage from customary to statutory law in both legal and economic theories. Then, it will analyse the deep symmetry between the number of agents involved and the number of transactions on the one hand and the progressive replacement of customs with statutes on the other. The conclusions of such an analysis will be used to prove the crucial role played by the presumption of knowledge, which is perhaps the missing link between different economic theories on customs and law.

• Item Type: MPRA Paper
• Language: English
• Keywords: Evolutionary Economics, Constitutional Law
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B25 - Historical ; Institutional ; Evolutionary ; Austrian; H - Public Economics > H1 - Structure and Scope of Government > H10 - General

References

Aoki, M. (2007), Endogenizing Institutions and Institutional Changes, Journal of Institutional Economics, 3, 1-31.

Axelrod, R. (1986), An Evolutionary Approach to Norms, The American Political Science Review, 80, 1095-1111

Baker, J., (2001), The Law’s Two Bodies, Oxford: Oxford University Press.

Bederman, D. (2010), Custom as a Source of Law, Cambridge: Cambridge University Press.

Binmore, K. (1998), Game Theory and the Social Contract (Vol II): Just Playing, Cambridge (MA): MIT Press.

Binmore, K. (2001), Evolutionary Social Theory: Reply to Robert Sugden, The Economic Journal, 111, 244-248.

Borrello, C. (1621), De Magistratuum edictis, Francofurti ad Moenum, typis Hartmanni Palthenii, sumptibus haeredum Zachariae Palthenii.

Braudel, F. (1966), La Méditerranée et le Monde Méditerranéen à l'époque de Philippe II (2nd edn.), Paris: Colin.

Buchanan, J. M. (1990), The Domain of Constitutional Economics, Constitutional Political Economy, 1, 1-18.

Buchanan, J. M. (2006), The Limits of Liberty. Between Anarchy and Leviathan. Chicago: University of Chicago Press,

Buchanan, J. M. – Tullock, G. (1965), The Calculus of Consent, Ann Arbor: University of Michigan Press.

Coronas Gonzales, S. (1984), La Ordenanza de Seguros Marítimos del Consulado de la Nación de España en Brujas, Anuario de historia del derecho español, 54, 385-407.

Cromartie, A. (2007), The idea of Common Law as Custom, in A. Perreau-Saussine, J.B. Murphy (Eds.), The Nature of Customary Law, Cambridge: Cambridge University Press, pp. 203-227.

de Ruysscher, D. (2012), From Usages of Merchants to Default Rules: Practices of Trade, Ius Commune and Urban Law in Early Modern Antwerp, Journal of Legal History, 33, 3-29.

Elias, T. O. (1956), The Nature of African Customary Law, Manchester, Manchester University Press. Genard, P. (1882), Jean-Baptiste Ferufini et les Assurances Maritimes à Anvers, Bulletin de la Société de Géographie d'Anvers, 7, 193-268.

Gintis, H. (2000), Game Theory Evolving, Princeton NJ: Princeton University Press.

Goris, J. (1925), Etude sur les Colonies Marchand es Meridionales à Anvers de 1488 à 1567, Louvain: Uystpruyst.

Guiard y Larrauri, T. (1972), Historia del Consulado y Casa de Contratacion de la Villa de Bilbao, vol. I, Bilbao: La Gran Enciclopedia Vasca.

Hayek, F. von (1983), Law, Legislation and Liberty, vol. I, Chicago: University of Chicago Press. Hodgson, G. M. (2003), Darwinism and Institutional Economics, Journal of Economic Issues, 37, 85- 97.

Hoebel, E. A. (2006), The Law of Primitive Man, Cambridge MA: Harvard University Press.

Howard Bloch, R. (1977), Medieval French Literature and Law, Berkeley: University of California Press.

Hume, D. (1978), A Treatise of Human Nature, Oxford: Clarendon Press.

Ibbetson, D. (2007), Custom in Medieval Law, in A. Perreau-Saussine, J. B. Murphy (Eds.), The Nature of Customary Law, Cambridge: Cambridge University Press, pp. 151-175.

McCormick, R. – Tollison, R. (1981), Politicians, Legislation, and the Economy – An Inquiry into the Interest-Group Theory of Government, Boston: Kluver.

Ostrom, E. (2000), Collective Action and the Evolution of Social Norms, The Journal of Economic Perspectives, 14, 137-158.

Poudret, J.-F. (1987), Réflexions sur la Preuve de la Coutume devant les Jurisdictions Royales Françaises aux XIIIe et XIVe Siècles, notamment le Rôle de l’Enquête par Turbe, Revue Historique de Droit Français et Étranger, (4th series), 65, pp. 71-86.

Richerson, P. J. – Boyd, R. (2005), Not by Genes Alone: How Culture Transformed Human Evolution, Chicago: University of Chicago press.

Smith, A. (2006), An Inquiry into the Nature and Causes of the Wealth of Nations, Coln St Aldwyns: The Echo Library.

Sugden, R. (1989), Spontaneous Order, The Journal of Economics Perspectives, 3, 85-97.

Sugden, R. (2001), Ken Binmore’s Evolutionary Social Theory, The Economic Journal, 111, 213-243.

Verlinden, C. (1947a), Codigo de Seguros Maritimos segun la Costumbre de Amberes, Promulgado por el Consulado Español de Brujas en 1569, Quadernos de Historia de Hispaña, 7, 146-193.

Verlinden, C. (1947b), Codigo de Seguros Maritimos segun la Costumbre de Amberes, Promulgado por el Consulado Español de Brujas en 1569, Quadernos de Historia de Hispaña, 8, 159-193.

Verlinden, C. (1950), Code d’Assurance Maritimes selon le Coutume d’Anvers, Promulgué par le Consulat Espagnol de Bruges en 1569, Bulletin de la Commission Royale des Anciennes Lois et Ordonnances de Belgique, 16, 38-142.

Voigt, S. (1997), Positive Constitutional Economics: A Survey, Public Choice, 90, 11-53.

Voigt, S. (2001), Positive Constitutional Economics II - A Survey of Recent Developments, Public Choice, 146, 205-256.

Waelkens, L. (1985), L’Origine de l’Enquête par Turbe, Tijdschrift voor Rechtsgeschiedenis, 53, 337- 346.