Carl Menger was the father of the Austrian School of Economics. Today, we know better the contributions of those who followed on his path, like Hayek and Mises, than those of the initiator. Neverthless, I think that there are still in Menger's works gems of thought that deserve greater consideration.
I plan to write three posts about one of those neglected gems, Menger's thoughts about the orgins of law. His article has been included as appendix VIII of his book "Investigations into the Method of the Social Sciences" (link to the book at Mises.org).
This first post will tell briefly how he came to the notion of spontaneous order, and how he applied it to the origins of law. In the second post I will try to show how Menger provided a better understanding of law than today's dominant theories. In the last post I will trace a parallel between Menger's descriptions of the orgins of money and of law and will suggest that they are relevant not only concerning the origins of both in the distant past but to understand how money and law work today. So Menger's little article on the origins of law sheds light not only on history, but on legal and economic theory.
How did Menger come to the idea of spontaneous order? A few years after writing his book Principles of Economics (1871), he engaged in a famous debate with German economists who denied the very possibility of an economic theory. They claimed that economics had to be dissolved into national history as economic life was merely another manifestation of an undefined national "spirit". As part of his reply, Menger wrote about the real origins of economic institutions, showing that it wasn't a mistical collective spirit peculiar to every nation that shaped them, but the action of people who everywhere on earth tried to improve their situation. In his study, Menger came to the notion of spontaneous order, an order that results from individual efforts of people who pursue individual goals by adapting to each other's action. That is how markets work, without the need of a common national goal, State plan, or Weltanshauung. The notion of spontaneous order became one of the key ideas of the Austrian School of Economics. It was later developed by Friedrich Hayek and many others who followed Menger's insight.
It is well known that Menger wrote an essay in which he explained that it was spontaneous order that created money. It is less often mentioned that he applied the same idea to the origins of cities and of law.
Menger said that the use of money came as the result of spontanous human actions that weren't commanded by any king or parliament but evolved from the mutual adaptation of people who pursued their own goals. Certainly, that is how barter must have started, as it is difficult to assume that some tribal leader gathered his people some day and told them: from now on you will have to exchange things. No, barter must have started by people who shought to improve their situation by offering things they had in excess -say animal skins- in exchange for things they lacked -say arrows. By the same spontaneous process -not following orders-, some individuals came to the idea of using intermediate objects that were easier to carry and were readily accepted everywhere. So they would exchange their excess goods for things they didn't really need, but which they could easly exchange for those they did need. Skins, salt, pieces of iron, silver, gold and many other things started to be used as intermediate goods that facilitated exchange well before any king decided to put his seal on a coin.
I won't try to repeat Menger's magnificent article about the origins of money and must simply recommend the lecture of the original (link). But, as said, I would point out that it is often forgotten that Menger used the same method he applied to the origins of money, to the more general issue of the origins of law.
Today we tend to see law as something made by legislators, perhaps also by judges, maybe even by regulatory agencies. But we seldom stop to think that law must have started the same way money started, by the efforts of individuals who had in mind their own improvement and that of their families. If it is unrealistic to assume that kings ordered their people to engage in barter and then to use intermediate goods, it is even more so to assume that some day a king gathered his subjects and told them about a bright idea he had that he decided to call "inheritance", commanding his people to leave their huts and kattle to their children.
No, some people must have started to do these things spontaneously, and many of them must have observed that those who respected their neighbours' children inheritance had a better chance of having their own children's inheritance respected. Of course, as with barter and money, there must have been variations and even exceptions -tribes that never came to these practices. But on the whole people tended to imitate the most sucessful ways of action.
In commerce, clever individuals in many places around the world must have observed that it is better to honor your word than to cheat. That if you manage to trick your neighbour and sell him a sick animal you won't be able to sell him another one, and probably won't sell kattle again in the whole village. Others would imitate that practice. Some must have observed that it is a good thing to isolate those who broke their promises and refrain to deal with them, which must have been an informal but effective punishment -as it is still today.
Some villagers must have started to use some formal words to stricke their agreements as a way to be certain about the meaning of what is promised. That was advantageous as a way to prevent disputes. Doing it in public must have worked in the same way. Helping others in the persecution and punishment of robbers and other criminals was bound to be seen as a way to protect yourself, your family, and the whole area from suffering future outrages.
None of this implies that this evolution was perfect and without setbacks. Nor does it mean that legal practices were uniform (as there was wide diversity in the objects used to facilitate exchange). Nevertheless, discovery through experience, insight, and imitation of succesful practices worked in law as worked in building, cultivation, sailing, and many other human activities.
We must understand that "spontaneous" does not mean "thoughtless". On the contrary: there are the thoughts of millions of people doing things that benefit each other. It means: practices and order that arise without anyone commanding people what to do, and without the need of an agreement on common goals.
Menger says that sooner or later, chieftains must have started to put their seal on these practices, as they did with money. They must have organized the persecution of criminals, given protection to commercial fairs...and too often abused their power.
When kings issued orders, they called them "law" too. More often than not, it was simply an official seal given to ancient practices that had emerged spontaneously. Sometimes though, these laws were truly just the will of the rulers. Nevertheless, kings and governing bodies must have soon realized that issuing their commands under the name of "law" gave them an aura of respect that ancestral customs and rights possessed, and mere personal whim could not provide. Still, it seems that in some places people refused to use the same name for law that resulted from their own action and the edicts of some authority. In Roman law, the word "delicto" was reserved for those punished by the old rules of the city from time immemorial. Those other ones created by authorities received the name of "cuasidelicto", that is, "like delicto", but different in origin and therefore not to be confused.
In modern times, we tend to think that law is simply the expression of the will of some authority, usually an assembly of legislators. That is because we see only the end result of a long historical evolution and, as with money, we tend to assume that everything must have started as it is today, with some authority putting its seal on something.