Every society comes equipped with customs, norms, rules, and laws. The amicable and productive social relations of man would not be possible without them. They are formal and informal, written and unwritten, public and private, common and judge-discovered. There are rules of day-to-day conduct, business rules, rules against crimes, rules of the road, rules of sea, rules to settle accidents and disputes, and rules for marriage and divorce. We need these rules and laws in order to realize both a peaceful social order and freedom.
Upon ourselves and our modern societies, we and the state additionally impose regulations covering every conceivable area of life. In the U.S., there are federal, state, county, and local statutes. Modern man legislates and regulates the content of the automobile, drugs that mean prison and drugs that do not, monies paid to retirees, what money is, and wars to be fought. He imposes the mandates, commands, and legalities that we loosely call our laws. They cover every area of life: birth, schooling, doctoring and hospitals, work, saving, investing, consuming, business, finance, welfare, transportation, communication, energy, farming, factory, trade, illness, and death. Should all of these matters be codified and controlled by the state? Should all of them be regulated and enforced? Should we eliminate all our freedom and create a totalitarian society? Of the laws we do require, should the state simply make them up? Where should law come from?
Tacitus has written: "The more corrupt the Republic, the more the laws." In 1936, the U.S. Federal Register contained 2,620 pages of statutes. By 2004, the number was 78,851, a growth rate of 5 percent a year during a period when population grew by 1.22 percent a year and real Gross Domestic Product (GDP) per capita grew by 2.47 percent a year. While population went up by a factor of 2.3 and real GDP rose by a factor of 5.4, pages of federal statutes rose by a factor of 30. By any measure, the making of federal statutes has qualified as a super-growth industry. Does this bespeak exponential growth in corruption?
Should we applaud this growth or bemoan it? Has it contributed to well-being or has it restrained and diminished it? Which laws have been good laws, which bad? The existence and rapid growth of such a vast array of regulations highlights fundamental questions that have been addressed at least from the days of Moses, Plato, and Huangdi. What is law? Where do rules and laws come from? How does someone legitimately come under the jurisdiction of a law? What shall be a society’s rules? What shall be its laws? What areas of life shall they cover, and what areas shall they not cover? By what standards do we judge what rules and laws shall be applicable to our society and what shall not? How do we know when our rules and laws are good and when they are bad? How do we fashion these rules and laws? How should we fashion rules and laws?
For any people, these are critical social and political questions because the answers arrived at have wide effects on everyone in a society over long periods of time. Choosing laws is like choosing a gas to breathe. If we choose good laws, they are like oxygen. We live and thrive. If we adopt bad laws, they are like methane. We suffocate and die. Rules and laws are ingredients in society’s recipes (or techniques) of production. They are factors that enter into and affect production. After we adopt them, the productive returns come in over a long period of time. The contribution of a law to our values and wealth can be positive or negative.
Good laws are social goods, and as such both add to social capital and further the accumulation of capital in general, both private and social. Bad laws are social bads. They are a diminishment to social capital and they further the decline of capital in general. Just as a person makes an investment in a capital good, so a society invests in social capital. Just as an individual investment works out well or badly, so do a society’s investments in its social capital. Social capital comprises goods that facilitate the well-being and progress of an entire people. So when a society makes errors of investment in its rules and laws, the consequences are serious because they affect everyone in the society. Russia’s investment in Communist rules and laws in 1917 killed millions of Russians and impoverished the entire country for decades. America’s investment in its rules is killing America and Western civilization on this continent. Civilization is not a given and unchanging fact of life. Civilizations rise and fall, and not for random reasons. Wrong rules and laws destroy society’s wealth and civilization just as surely as a bad investment destroys an investor’s wealth.
Wrong laws comprise capital of the wrong kind. They reflect societal choices that are damaging and counterproductive; yet it is easier to make a bad law than remove it. For one thing, supporting interest groups harden and resist change. Removing a bad law causes visible damage to some interests, including the administering government and its bureaucracies, while the prospective benefits are not yet visible. For another thing, obtaining assent for a change in law involves costs of creating a new coalition, and these hold back a change. It is difficult to obtain agreement on the effects of an existing law, much less a new one. The effects of a new rule are not uniform across everyone in society. Because there are gainers and losers, there is a cost to creating a supportive coalition or arranging side-payments to the losers.
Once they are passed, laws, good and bad, become part of the system. Society adjusts to them. They become unthinking ways, habits, and traditions. The costs of overcoming existing traditions impose yet another heavy burden on change.
In short, the costs of scrapping bad laws are high. We are mostly stuck with them.
In view of the difficulties in removing bad laws and their long-term decivilizing effects, we should be far more reluctant to institute new laws than we are. We should be far more risk-averse in making laws. In fact, we should establish a fundamental code that we know is right and stick with it. This is not being done. Instead, we arrogate to ourselves and our states the power to fashion laws in a relatively unconstrained manner. This feature is commonly seen in modern constitutional forms of political government, be they democracy, republican, socialist, fascist, or communist, all of which purport to be lawful.
The power to fashion new laws has a built-in bias toward creating bad laws. It is virtually a law of mankind that new man-made law tends to be bad law. This is because man-made laws serve the interests of those who promote their passage.
John Adams in 1763 thought that republican government should be "bound by fixed laws, which the people have a voice in making, and a right to defend." He was correct about "fixed laws." However, it is a blatant contradiction also to insist that "the people" make laws. Any system of government in which men routinely consult themselves (and thus their own parochial interests) in fashioning laws to be backed up by a monopoly of force, whether via a process of direct democracy, representative government, council, king, presidium, or dictatorship, is a system that is not averse to new laws. It is a system biased toward making new laws. This means it will make more bad laws that are inherently difficult to change. This means a system geared toward increasing damage done to society and increasing decivilization.
We fool ourselves by thinking we can legislate laws and benefits as we please. We accomplish only the opposite by multiplying bad laws that we find ourselves unable to remove.
The great battle of our time is not the clash of civilizations. It is the battle among ourselves to relocate and reinstitute the sources of our own civilization in new and proper ways so that we may maintain that civilization. We will only win that battle when we greatly reduce our power, and thus the power of our political governments, to make law.
We need to restrain ourselves and our governments. We need to stick with an immutable code of law that we know is right, that fosters civilization, and that is beyond man’s tampering and manipulation. Such a code can easily be found in the Holy Bible.
Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York.