Volume 21, Issue 1-2 -

This essay will employ theoretical tools from the Austrian school of economics in order to study law as a social system and develop a more accurate comprehension of its functions and of the evolutionary processes to which it is subject. By building up from Hayek’s theories of institutions and complex phenomena, both of which emphasize the “spontaneous” nature of social phenomena vis-à-vis proposals of conscious “steering” by means of central planning, we’ll try to show how neoclassical approaches to legal theory are based on unrealistic assumptions about human cognition and, as such, turn out to be a subclass of the so-called “constructivist” thought, severely criticized by Hayek in his works. At the end of the article, we’ll discuss in passing some internal difficulties with the Hayekian approach itself.

This paper traces back the sources of our present legal system and of market economy to Medieval Europe which itself benefited from Hellenistic and Roman legal culture and commercial practices. Roman provinces placed Rome in the wider Greek cultural and commercial world. If Aristotle was already transcending the narrow polis-based conceptions of his predecessors, after him Hellenistic Civilization saw the emergence of a new school of philosophy: Stoicism. The legal thought in the Latin West will hence be characterized by Cicero’s writings and its Stoic sources. The Roman legal system was similar to the later northern European customary law and the English common law; Roman law was evolutionary and customary. The rise of Western individualism, whether it dates back to St. Augustine in the fifth century, or to the two Papal Revolutions of Gregory I (establishing the nuclear family as the core of individualism) and of Gregory VII, also played a crucial role in shaping the western legal tradition. The paper describes the main forces that led to this second (Gregorian) revolution. Monasticism is one of them. Benedictine monasticism plaid a leading role in the Peace of God Movement. Hence collective oath-taking by groups in the name of peace was essential in the founding of cities and in the formation of guilds. Europe’s economic resurgence in the Eleventh Century was on the basis of the creation of the rule of law by the Peace of God movement. This movement also allowed for Europe’s agricultural economy to progress. Indeed, the European Middle Ages is one of the major periods of technological innovation in the history of the world. The Gregorian Revolution itself was supported and financed by the Commercial Revolution: Italian bankers sustained Papal reformers against the Emperors. The independence of the Italian cities and provinces reveals one of the most important consequences of the Gregorian Revolution: the polycentricism of Western Europe. This Revolution also witnessed the first large number of political pamphlets in European history; the Gregorian clergy emphasizing a compact theory of government. Soon after, the order of Cistercians was founded (1098) and underwent spectacular growth during the next two centuries. The Cistercians accepted no rents or labor services from feudal donors but would take only full possession of land to do with it as they wished.These monasteries were the most economically effective units that had ever existed in Europe, and perhaps in the world, before that time. Finally, the Magna Carta (1215) that will be so influential on modern political thought can be seen as a direct consequence of the Gregorian Revolution.

This paper considers how Bryan Caplan’s concept of rational irrationality may manifest in various political institutional arrangements, building off the demand curve for irrationality. Mob democracy, anarchy, autocracy, and constitutionally constrained democracy are the governance structures addressed. While anarchy is strictly better than mob democracy, under certain conditions, democracy, anarchy, or constitutionally constrained democracy may yield the best outcomes depending on the circumstances.