… is from page 213 of GMU Econ alum Edward Stringham’s superb 2015 Oxford University Press book, Private Governance (link added):
Hayek’s use of the term “discover” to describe the task of the judge in the common-law system is almost certainly deliberate in the sense that it is meant to invoke Hayek’s notion of competition as a discovery process articulated in his economic theory. Still further, Hayek’s description of the iterative process of legal discovery by judges, of trial-and-error efforts to better articulate the underlying norms and expectations of justice of those in a given society, strongly resembles the market discovery process that he has previously described. Furthermore, this sense of the law is oftentimes tacit ([Todd] Zywicki, 1998); it exists in customs and conventions that evolve over time, in Hayek’s framework an intuitive knowledge of what the rules are even if it is difficult to state or define the rules precisely.
Precisely.
Law is not a set of commands, designed and written clearly and enforced only, or even chiefly, by the state. Those legislatively issued commands are properly called “legislation” even if and when they are embodied in documents called “constitutions.” Legislation can, of course, be the articulation of – the “codification” of – genuine law. But legislators can no more make law than they can make language.
If legislators disapprove of the current vocabulary, grammar, syntax, or pronunciation of the people’s prevailing language, they can poke guns in people’s faces and command them to speak and to write and to define words differently, but the futility and tyranny of any such arrogance is immediately seen by sensible people. The goodness or badness of the legislators’ intentions is irrelevant. Such an effort to construct with commands a language different from the one that has evolved and whose rules are understood and followed widely will either fail or ‘succeed’ only through the most brutal tyranny. (More likely, if such language constructivists are sufficiently determined to achieve their ends, their efforts will be brutal and will nevertheless fail.)
To the extent that legislators interfere in market arrangements they are bound to fail to achieve the goals that they articulate as justifications for their interventions, even though (as is often the case) most of their victims are invisible. Minimum-wage legislation, for example, cannot change the market value of an hour of every worker’s labor any more than can a legislative diktat ordering the word “chair” to mean “fuel for a jet engine” change the meaning of the word “chair.”
Oh, just as poking a gun in people’s faces can prompt people to be observed using “chair” as if it were a synonym for “jet fuel,” poking a gun in people’s faces can cause the observed marginal value of low-skilled workers’ labor to rise to the level of the minimum wage. But such gun-poking by a minimum-wage-enforcing legislature ‘succeeds’ only by either worsening the nature of the jobs that low-skilled workers perform or by driving some low-skilled workers out of jobs (or, more likely, both). Yet just as “chair” still does not really mean “jet fuel,” the marginal value of all low-skilled workers’ hours of labor is not really changed by legislative diktat.
Law, language, and market prices are real-world examples of emergent phenomena. They are (as Hayek often said, inspired by a phrase from Adam Ferguson) “the results of human action but not of human design.” Most legislators – along with many benighted pundits, professors, and preachers – have no interest in understanding this reality about law and the economy, for to understand it would be to realize that the vast majority of legislators’ trumpeted schemes and efforts are at best futile and, more likely, counterproductive.
