2012

Some thoughts on Leonis Freedom and the Law

LEGISLATION, MAJORITY RULE AND MARKETS

Ergis Sefa

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The making of law and market

Fundamental Concern

Leoni starts his book asserting a concern that was common (and still is) among the neoliberal thinkers of his age: the relationship between the market and the state (as represented by political power). Nevertheless, his main contribution is that he wanted to tackle the issue from a different angle. Leoni draws attention to the relation between the market (economics) and the law. He challenged the assumption accepted by free-market economists that it is the duty of government/state to enable and enact laws. Such scholars argue that the individual should be free to choose in relation to his/her economic alternatives without an external organization (such as the state) coercing him to do so. Yet, they fail to allow him/her equal freedom in relation to legislation. They have addressed the issue by concluding that the best way is to have a set of general legislative rules as opposed to the decision of a bureaucracy or administrative law (Hayeks proposition). Leoni directed attention to the fundamentals that make possible the existence of this set of legislative rules. Is it enough to have a general set of rules applicable to everyone without questioning whether such rules themselves may violate freedom?

The making of the law

Historically there have been three main ways of making the law in the western tradition. The oldest was through the opinions of a special class of experts, whom were called jurisconsults in ancient Rome, lawyers in the Anglo-Saxon world or turisten in Germany. The opinions of this class constituted what is called lawyers -law. The second method was, again, through a class of experts called judges. Their rulings and decisions for the matters brought forward to them constituted the law. The third method was through the legislative process. This last is what dominates our world since the 19th century. This last method was a radical departure from the two preceding ones. Lawyers and judges form, produce, the law conditioned by the case or matter they are working on. The materials of that specific case affect their decision and

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opinions, which later becomes law. On the other hand, the legislator tries to form law without being conditioned by any particular case. S/he tries to generalize its content since the beginning of the process trying to gather as much support as he can. In a certain sense, he surrenders his will and interest to the common good of society trying to gather as many votes around his proposal as he can. This is what Max Weber called politics as a vocation, as a profession. This is parliamentary democracy, both republican and monarchical. The law may be conceived as an object of choice, i.e. political choice (Leoni, 1961).

Approaching politics from an economic point of view

Since the law is a political choice, it seems quite similar to the market choices. That is what

neo-liberal decision-making theories start. The law is a decision made by someone who tries to gather other to support it. All the features of economic choice seem present even in political choice: order of values, assessment of probabilities, choosing strategies, calculating outcomes, etc. Furthermore, the concept of equilibrium seems to fit perfectly to both of them. In economics, it represents the meeting point of demand/supply. In politics, it represents the choice of one proposal instead of the other by means of voting (Leoni, 1961). However, individuals do not take only competitive decisions, but also cooperative for the benefit of the group. The neo-liberal approach has the individual at its universe center. Yet, it recognizes that when it comes to group decisions the individuals perspective seem to be altered somewhat. Lack of unanimity within a community is not a strange phenomenon. How do they overcome such situation? They do it by forming a simple majority through the process of voting.

Majority rule versus market choices

Free-market economics scholars have defended the simple majority formation process as the closest resemblance of market choice in politics. However, they fail to properly explain the

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un-weighted balance of voting power between winners and losers. In a political market, the minority voters lose their power to the majority ones. In the end, all have to obey the law, even though you have voted against it. On the contrary, every dollar is not only counted but also counts in the market. If the majority dollars have bought all the product/service quantity, the minority dollar vote can find a substitute product/service to satisfy them. In a well-functioning market, business will jump to get more supply of the product, or diversify its products, in order to serve this minority. Business understands that it is better to get all the dollars instead of just the majority of them. You cannot do this in the political decision-making process. You either win or lose. While in the market supply and demand are not only compatible but also complementary, in the political field, in which legislation belongs, the choice of winners on the one hand and losers on the other are neither complementary nor even compatible. (Leoni, 1961, p. 166)

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References Leoni, B. (1961). Freedom and the Law, Indianapolis, IN: Liberty Fund.

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