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Legislation and the Discovery of Law in a Free Society

Note: Updated and revised version included as chap. 13 of Legal Foundations of a Free Society (Houston: Papinian Press, 2023).


Legislation and the Discovery of Law in a Free Society,” J. Libertarian Stud. 11, no. 2 (Summer 1995): 132–81. For a condensed version of this essay, see “Legislation and Law in a Free Society,” Mises Daily (Feb. 25, 2010).

Note: I have since changed my mind on the some of the issues regarding the Hayekian “knowledge problem” and Leoni’s work in this regard, as I noted in a subsequent article, “Knowledge, Calculation, Conflict, and Law,” footnote 5 and accompanying text:

This is why private-property rights serve Barnett’s goals of peace and prosperity: private property rights permit conflicts to be avoided (peace) and allow genuine, free-market money prices to form which can be used for economic calculation and hence rational resource allocation (prosperity).

Concentration on the information-conveying role of prices instead of calculation obscures this role.[5] For example, Hayekians claim that prices contain economic information in “condensed” (or encrypted, encoded, or abridged) form. Barnett follows the Hayekians when he states that “the knowledge-disseminating function of prices is largely unknown . . . the knowledge embedded in prices is not explicit. . . . It is encoded knowledge.”

5. Leoni seems to similarly attribute Hayekian knowledge-related concepts to Mises:

“[T]hat the central authorities in a totalitarian economy lack any knowledge of market pricesin making their economic plans is only a corollary of the fact that central authorities always lack a sufficient knowledge of the infinite number of elements and factors that contribute to the social intercourse of individuals at any time and at any level. (Freedom and the Law, 89 passim.)”

See also Kinsella, “Legislation and the Discovery of Law in a Free Society,” esp. 157–60, in which I, too, influenced by Leoni, conflated Hayekian and Misesian ideas in overstating the analogies between central economic planning and central law-creation. See note [25] below, and accompanying text, concerning the possibility of deducting more concrete legal principles from (themselves deduced) abstract rights.

Oh, that I had heeded Jeff Herbener’s comments on an earlier manuscript, but I either got these comments too late, or did not fully appreciate them at the time. (More information on the calculation debate; see also Knowledge vs. Calculation, Mises Blog (July 11, 2006).)

A condensed version of this article was published as “Legislation and Law in a Free Society,” 45 The Freeman 561 (September 1995), and later as “Legislation and Law in a Free Society,” Mises Daily (Feb. 25, 2010).

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