Law does not emerge in the city out of genius, or great leadership.  It emerges through necessity and through the painstaking accumulation of experience, as expressed in case law and legislation.  In the city, the merchants need a culture that honors the idea of a contract, and that rewards trust and honorable dealings.  They also need quick and fair adjudication of their disputes, because time is money.  And they need a system that is more or less self-regulating.  The accumulated network of rules and precedents allows these needs to be met.  The very complexity of the city demands a legal framework.  The complexity and the volume of commercial transactions, the division of labor through the law of comparative advantage, these things cannot be hammered into place by crude power.  Rules for a commercial republic need to be delicately chiseled out with patience and craftsmanship.

The city needs law like a plant needs water.  Its need springs from the birth of reason in the Greek triumph of 500 BC and the retreat of the gods to the periphery of existence.  With Greek science began the age in which the natural world began to be experienced as regular and predictable, subject to natural laws and not governed by the spirits of the gods that dwelt in every tree and animal.  If the natural world is not governed by divine caprice, the power of the gods, but by divine law, the genius of an abstract God who sets the world in motion, then man is no longer a helpless pawn of heavenly power games—the stuff of mythology—but a calculating creature who can influence events by planning and action.  Life is no longer a circular treadmill of eternal return, but a linear, directed effort towards a goal.  And if the regularity of “laws” can be discovered in natural events through discursive reasoning, then it follows that law can be discovered in human events.

Besides, the city is too big and complex for its ruler to decide everything.  Rulers and bosses are everywhere beset by underlings who are hanging around waiting for a decision on something.  A power hierarchy is hopeless at dealing with complexity and change. Just to prove it, the Russians attempted in the twentieth century to run a modern economy on the boss principle.  The result was disastrous.  Every factory, directed by the central planners to produce a quota of product every year, tended towards autarky, because it could not contract with suppliers individually, and could not trust that needed goods would be delivered.  So every factory built its own machine shop so it could repair its equipment in-house, and every factory operated its own foundry so it could accomplish even the simplest tasks like replacing cast-iron manhole covers without having to rely on outside suppliers.  The Soviet economy failed because it had no law, no way for individual economic actors to bind themselves, their suppliers, and their customers into a web of contract and trust.  Lacking such binding agreements, each actor decided that they had to insure against non-performance of others by minimizing their reliance on others.  The economy was run by Soviet power, but power runs only up and down, not side-to-side.  Wealth and prosperity do not issue from power and autarky, but by specialization and cooperation.

The secret of prosperity is known to the world by the dull name of the law of comparative advantage.  It demonstrates why specialization works.  It says that in a world of two persons, one of which can do everything better than the other, the best strategy is for the brainiac to specialize on the tasks at which his superior skill creates the most value, and buy from the other person for the rest.  Thus the world’s best brain surgeon contributes most to the world by employing others to perform skull trepanning, and concentrates on the tricky work of removing tumors, even though he remains the world champion at trepanning.  But when people are specializing on their core competences and outsourcing the rest, they are bound to others by a web of contractual relationships.  When something goes wrong, or one of the parties to a contract defaults, then relief may only be available at law.  Such a system is the opposite of the top-down central plan with its orders from the top and its climate of mistrust and fear.

But law is not perfect.  There are enthusiasts of law that have forgotten that laws are made by humans, who are after all only too human, and easily confuse their personal interest with the general interest.  There are critics of law that condemn the whole edifice of law because it does not implement their vision of perfect justice.  These people miss the point.  Law does not end the endless struggle for existence, the clash of power, and the original sin of every living thing: that it lives by killing other living things.  What law does, and it is not a small thing, is to reduce the need for force in the resolution of conflict.  It sets up a theoretical framework of flawed human action.  It differentiates between the tort, the wrong direct, and mere negligence, the sin of omission.  It imagines the prudent man, and what precautions that worthy person might take against accident or the mistakes of others.  It differentiates between premeditated and unpremeditated action, as when the accused murderer acquires a settled intent before the actual commission of the murderous act rather than simply kill out of murderous rage.  Through the rules of evidence, it tries to develop a reliable method for admitting only the most reliable reports of past events as seen by many people from different directions.  Law encourages the individual to emerge from the safety of the group.  It saves the individual from the cost and humiliation of acquiring a powerful patron, and it reduces the scope of arbitrary power.  Perhaps, most of all, it reduces the need for private armies.  Taken all in all, the law is a miracle, a liberation from the dull thump of power, for it sets up a regime in which it pays to obey the rules.

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©2005 Christopher Chantrill