Legal Structure as Public Capital

Legal Structure as Public Capital

“The question directly suggests a critically important feature of law and law-abiding that has been left aside to this point. The structure of law, whether this be described empirically in formal or informal terms, represents social or public capital stock, the yield from which accrues through a sequence of time periods. The “public good”that law provides is analogous to the lighthouse as initially constructed; it is not analogous to the “public good”that is offered in the municipal fireworks display on July 4, something to be enjoyed jointly but only in the instantaneous time frame. This capital-goods feature is emphasized in the isolated Crusoe example. The very purpose of adopting laws or rules is to restrict behavior in future periods, restrictions that will, in turn, allow planning to incorporate more accurate predictions. The isolated person secures greater efficiency, he accomplishes more good for less bad, if he lays down rules for his own behavior in advance.

This element or feature does not change when the analysis is shifted to the many-person social setting, where laws and rules are designed to restrict behavior in the interest of mutual but not unilateral gains. It would, of course, be possible to analyze the possible emergence of behavioral rules or laws that apply only to a single time-period. Robin Hood and Little John may agree on a “law,”with no implications that this would apply on other subsequent crossings of the footbridge. It seems apparent, however, that the capital-stock characteristic of law has been implicit in almost all discussion and, indeed, the word “law”would scarcely be appropriate in a strict consumption-services setting.

This capital-goods characteristic is important both in the initial formation of law, in constitutional contract, and in the maintenance of existing law. To the extent that an initial agreement on law, or on changes in law, involves major bargaining and transactions costs, the benefits of agreement may be insufficient to warrant enactment of formalized rules at all if the applicability of these is anticipated to extend only over a short time-period.”

Buchanan, James M. The Limits of Liberty: Between Anarchy and Leviathan. Indianapolis, IN: Liberty Fund, Inc. 1999. Library of Economics and Liberty [Online] available from https://www.econlib.org/library/Buchanan/buchCv7c7.html; accessed 29 July 2012; Internet

Author: international

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A Selection of Legal Maxims.