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Why I Favor Limited Government, Part 5


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Among the most popular examples of anarchy cited by anarchy proponents is what is known as the “law merchant,” a body of law and custom that developed during the Middle Ages. Anarchists point to the widespread commercial transactions that took place between traders, both domestic and international, often without governmental involvement, as evidence that anarchy really can work. They point out, for example, that people would voluntarily honor their contracts, often out of fear of social ostracism and so that people would continue to do business with them. Therefore, anarchists say, the development of the law merchant in medieval times shows that government is unnecessary when it comes to commercial transactions.

Anarchists, however, gloss over an important factor in the development of the law merchant — that it took place within the structure of government. They speak as though that factor is simply irrelevant or immaterial and just assume that the law merchant would have developed in the same manner without the structure of government.

But the fact is that it was the institution of government that provided the necessary framework for the development of the law merchant and, for that matter, the development of the common law, another area of interest to which anarchists sometimes point in support of the anarchy paradigm.

The reader will recall that in part 1 of this essay, I pointed out that in most instances people are peaceful, harmonious, and law-abiding. One can walk into any shopping mall in the country on any given day and see thousands of people engaging in commercial transactions with each other. When people purchase things, they pay for them rather than grabbing them and running away with them. Disagreements between buyers and sellers and between employers and employees, are almost always resolved amicably.

One could easily see all those peaceful and harmonious transactions in a shopping mall and ask, “What do we need government for? Everybody gets along fine without it.”

Except for one thing: Not everybody does. Recall that in part 1 I pointed out that while most people in life are peaceful and respectful of the rights of others, there are inevitably going to be those who are violent or aggressive — i.e., the murderers, rapists, thieves, robbers, and the like. I hypothesized in part 1 that the violent group consists of 2 percent of the people in society. That’s why we need government — to go after the 2 percent who aggress against the 98 percent.

The same principle applies in the civil law. Most commercial transactions are fulfilled without any problems at all. That is especially true in face-to-face transactions such as those that take place in shopping malls and which also took place at fairs during the Middle Ages. It’s also true in most long-distance transactions, such as those involving the Internet, credit cards, bills of exchange, or letters of credit. Anarchists are right when they say that most people traditionally do honor their contracts, partly because they feel it’s the right thing to do and partly out of concern for their reputation and their wish that others will continue to do business with them.

The problem isn’t with people who honor and fulfill their contractual obligations in the marketplace. The problem instead is with people who don’t. Anarchists gloss over that fact, implying that it’s nothing to be concerned about because, they say, “In an anarchist society, people will work things out.”

Go to the following entry in Wikipedia: “National Reporter System.” There you will see a list of “state reporters” and “federal reporters.” The state reporters are a compilation of all the published judicial opinions that have been issued by the courts of appeals and supreme courts of every state in the union. The federal reporters are a compilation of judicial opinions that have been issued by U.S. District Courts, the various federal Courts of Appeals, and the U.S. Supreme Court.

You will find millions of judicial opinions since the founding of the United States. What is the significance of those judicial opinions? Each one represents an actual court case in which the litigants did not “work things out” before trial. And by not settling their differences before trial, they ended up rolling the dice and letting a judge or jury decide the winner and the loser.

Law-merchant custom

As Emily Kadens, the Baker and Botts Professor of Law at the University of Texas School of Law, stated in an article published in the Texas Law Review entitled “The Myth of the Customary Law Merchant” (vol. 90, page 1153), that is precisely what happened during the era of the law merchant. Kadens’s article, which is a highly critical analysis of The Enterprise of Law, by Bruce Benson, Law and Revolution, by Harold J. Berman, and other works that are often cited by libertarian anarchists, argues that traders didn’t always operate in the harmonious, cooperative manner that anarchists claim. Differences over customs and practices often arose that were not amicably resolved between the parties, and when they did, the litigants resorted to the government’s judicial system to resolve the issues. Thus, as Kadens documents in detail in her article, the law, as established by judicial decisions involving traders who were litigating against each other within a governmental framework, became an integral part of establishing what law-merchant custom actually was and what parts of it would be enforced.

Kadens points out that in 1278 a buyer sued a seller in an English court for fraudulently selling him wool of substandard quality. In ruling on the case, the judge had to decide contested issues relating to custom.

Kadens also refers to a 16th-century case heard by the English Court of Admiralty in which “one set of insurers — trying to wriggle out of paying on a claim — asserted that an insurance policy good for one year should use the common law method of determining the length of a month as twenty-eight days despite the fact that the chiefest merchants in London, Englishmen, Italians, Frenchmen, Dutchmen, Spaniards [and others] testified that according to custom twelve months meant a calendar year.” The court ruled in favor of the twelve months, thereby integrating the law with the custom.

Another case over custom arose in a court in Bruges, Belgium, in 1439. The parties disagreed over how to apportion damages arising from the shipment of goods. The court’s ruling in the case necessarily became an integral part of the custom in those types of cases.

In 1628, a suit was brought in Paris over whether a “grace period” in a bill of exchange constituted 10 days or 8 days. The court heard testimony from various witnesses regarding the local custom and ultimately ruled in favor of 10 days, another example of where the judicial system worked to establish and fortify what custom actually was.

Needless to say, there were countless other such cases. The judicial systems that existed within a governmental framework provided the means by which businessmen could peacefully — that is, without war and bloodshed — litigate their differences in those instances where they were unable to arrive at a mutually beneficial agreement.

There is something else that is important to note: The judgments entered by those courts were not simply advisory opinions. They were enforceable through the power of the state. If a litigant prevailed, for example, in a claim for damages and the losing side still refused to pay, the winning side could employ the assistance of the state to collect the money, much as the bank that I talked about in part 4 used sheriff’s deputies to collect a $10,000 judgment against a jewelry-store owner who had refused to comply with a money judgement that had been entered against him by a court of law.

Even when the litigants during the era of the law merchant used private resolution methods, such as arbitration, the losing side would sometimes refuse to comply with the arbitration decision. In such cases, the winner would file suit in the government court to secure enforcement of the arbitration ruling. Kadens emphasized the importance of government courts in the development of the law merchant in “The Medieval Law Merchant: The Tyranny of a Construct,” published in the Journal of Legal Analysis: “In addition, public courts played an important role in arbitration. Once the arbitral decision had been rendered, the parties proceeded to have it enrolled and confirmed by the local court and read into its record in order to obtain the court’s power of enforcement.”

That’s precisely what happens in the United States today. As I pointed out in part 2 of this essay, parties are free to use private, competing means of dispute resolution, including arbitration, but must file suit in a government court to enforce the privately issued judgment. In fact, as I have also previously pointed out, most of the judicial systems, both criminal and civil and state and federal, that Americans have here in the United States are the evolutionary and developmental outgrowth of the judicial system of England, including competing private judicial systems and the development of the law merchant and the common law.

There was another important factor in the widespread economic activity that developed during the Middle Ages, especially at fairs: The king’s forces were committed to keeping the peaceful and law-abiding populace safe and secure from marauders, thieves, robbers, murderers, and the like. Naturally, the greater the protection of the 98 percent from the 2 percent, the greater the extent of peaceful and harmonious economic activity, including trade and the accumulation of capital, which are key to a rising standard of living.

Of course, the prosecution of the 2 percent gradually gave rise to the procedural protections that ultimately made their way into the U.S. Constitution and the Bill of Rights, including due process of law (a phrase that stretches back to Magna Carta in 1215), right to counsel, habeas corpus, trial by jury, and many others.

By the time the 1700s arrived, the English people had developed a very sophisticated judicial system in both criminal and civil law, one that involved countless judicial opinions that provided precedence and guidance. All of this was setting the stage for the Declaration of Independence, the U.S. Constitution, the Bill of Rights, a free-enterprise economic system, the Industrial Revolution, and the most advanced and sophisticated judicial system in history.

Existing anarchist systems

Now, compare English society in 1700 with the anarchist society that developed in North America under Native American tribes. In North America, where there was no government and where there was only a rudimentary system of private property, society was pretty much where it was centuries earlier. That is, there was no established judicial system, no concept of rights, no trial by jury, habeas corpus, due process, or trial by jury, no law merchant and common law, and a very low standard of living. While England had progressed from trial by combat and trial by ordeal to trial by jury in criminal matters, the Native American tribes had not progressed beyond the former. Moreover, while people in England had become accustomed to resolving their differences in court, the Native American tribes were still going to war against each other to resolve their disputes.

Anarchists sometimes point to the “Wild West” as an example of an anarchist society, but the judicial system that arose in the Wild West was not the type of society that anarchists describe when they talk about their system. That is, there were never any competing courts and police systems that arose in the Wild West. When someone was accused of cattle-rustling or horse thievery, no one ever asked what defense agency he belonged to because there weren’t any competing defense agencies. Instead, the 98 percent would appoint a posse to pursue the suspected criminal and bring him to justice. In other words, under anarchy in the Wild West, people chose to operate in a quasi-governmental manner.

Often, however, without the benefit of government in the Wild West, justice was carried out in a very unjust way — that is, without the procedural protections that were incorporated into the federal Constitution and the state constitutions. Rather than bring the suspected malefactor in for trial, the posse would sometimes try him on the spot, convict him, and hang him from a tree until dead. This is what became known as “vigilante justice,” a term that one can Google to explore the many instances where this type of unjust conduct took place. (Or see “Frontier Justice” at Wikipedia.)

When anarchists imagine what a genuinely anarchistic society would look like, they inevitably imagine the type of civil society and judicial systems under which we live here in the United States — minus all governmental structures. In reality, a true anarchist system would inevitably devolve into one of gangs or tribes whose success would turn on how powerful they are. People would naturally gravitate toward the tribes or groups that would be most apt to protect their lives and interests. That’s because violent fights would inevitably break out in matters where the tribes or groups could not peacefully resolve their differences.

Drugs and zombies

A good real-life example of this phenomenon is the drug trade that has arisen in the context of the drug war. When drug gangs have differences over turf or over the murder of a competing gang member, the aggrieved party obviously can’t sue in a government court. While sometimes the gangs are able to peacefully resolve their differences, inevitably there are cases where they are simply unable to arrive at a meeting of the minds. At that point, the gang that has been aggrieved has a decision to make — whether it’s worth it to go to war over the matter or just let bygones be bygones. Other times, however, as we have especially seen in Latin America, the gangs do go to war against each other, which brings about considerable death, injury, and destruction. The same principles, of course, apply in other criminal activities, such as those of organized crime both now and in the past.

Thus, what ends up happening under anarchy is not a peaceful, civilized, sophisticated system of competing courts and police systems but rather a system of gangs or tribes who are competing in the provision of force. The more powerful gangs and tribes are the ones that are going to be successful and they’re the ones who are going to have the most “customers.”

The film industry has captured this phenomenon in the popular television series The Walking Dead. In that series, government has disappeared. America is a purely anarchist society, one in which people are besieged by zombies. Does a peaceful, harmonious society come into existence where people are working together to protect themselves from the zombies and, in the process, develop the sophisticated system of competing courts and police forces that anarchists envision?

On the contrary, in The Walking Dead, society quickly devolves into a collection of competing gangs or tribes, with no one trusting anyone else and with groups warring against each other. The more powerful the gang or tribe, the greater the chance it’s going to survive the mayhem.

Anarchists sometimes lament that we don’t have a real-life example of an anarchist society today so that people could see how it really would turn out. But we do. We have, for example, Libya, where Muammar Qaddafi was, for all practical purposes, the Libyan government. When he was killed in a U.S. regime-change operation, the Libyan government ceased to exist. The result has not been a sophisticated system of competing courts and police but rather an all-out war between competing gangs, each one, not surprisingly, trying to restore and grasp the reins of government power.

Another recent example of an anarchic society is Somalia, where there was an absence of government for several years. While much of the society carried on in a peaceful and harmonious society, Somalia was also besieged by violent gang warfare. In the absence of government to prosecute criminals, some of the gangs made kidnapping of people on the high seas a lucrative business. Moreover, Somalia continued to be a nation with an extremely low standard of living, in large part because of the difficulty in accumulating large amounts of capital owing to the violence and instability arising from the gang warfare. Even though many U.S. proponents of anarchy praised Somalia as a great example of an anarchist society, to my knowledge not one of them ever moved there, no doubt because of the violence and instability that wracked the country. As it turns out, anarchy didn’t last very long in Somalia either. The country now has a government.

The natural question arises: “Jacob, if limited government is so good, then why did it last for only 150 years?” We will address that question in the final segment of this series.

This article was originally published in the July 2016 edition of Future of Freedom.

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    Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.