Freedom of the market doesn’t imply the absence of law. To the contrary: free market is impossible without good law. Then what function should the law fulfill? If something is legal, then is it morally good and useful? And vice versa, if something is illegal, then is it morally wrong and harmful? This video will discuss what good law should look like. Of course, we will not delve into specifics here; we will only consider general rules on which law should be based.

Let’s start with the concept of natural law. Proponents of natural law believe that each human has rights that are not determined by people, and that are implied by the very fact of human existence. They are defined as timeless and immutable, independent of living conditions, customs, nor positive law. They are understood as universal, that is independent of human origin, race, age, belief, nationality, nor social position. They are also inalienable, which means that one cannot renounce one’s natural laws, nor deprive someone else of them, except for penalties for crimes that violate the rights of others.

The natural rights are:

– the right to life
– the right to property and the related right to fruits of one’s work
also the right to be free and to decide for oneself i.e. liberty

If these natural laws are implied by human existence, then breaking them not only makes impossible such values as self-fulfillment, pursuit of happiness, and achievement of goals, but even being fully human.

The concept of natural law originates in various sources. Some proponents start with religion, recognizing God as the source of natural law, while others consider natural laws as a product of human reason and dignity.

St. Thomas Aquinas wrote: “Consequently every human law has just so much of the nature of law, as it is derived from the law of nature. But if in any point it deflects from the law of nature, it is no longer a law but a perversion of law.“

Whereas the English philosopher John Locke said: “The natural liberty of man is to be free from any superior power on earth, and not to be under the will or legislative authority of man, but to have only the law of nature for his rule.”

And according to French economist and politician Frédéric Bastiat: “Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.“

So if we recognize the existence of natural law, then we cannot deny to any individual the right to defend his life, his property, and his freedom. Thus we must recognize that we have no right to violate his freedom and property, or endanger his life. In short, this means that: “Your rights end where his nose begins.”

Here we can refer again to the words of John Locke: “So that, however it may be mistaken, the end of law is not to abolish or restrain, but to preserve and enlarge freedom: for in all the states of created beings capable of laws, where there is no law, there is no freedom: for liberty is, to be free from restraint and violence from others; which cannot be, where there is no law: but freedom is not, as we are told, a liberty for every man to do what he lists: (for who could be free, when every other man’s humour might domineer over him?) but a liberty to dispose, and order as he lists, his person, actions, possessions, and his whole property, within the allowance of those laws under which he is.”

So if the positive right is to be just and serve the individuals that are subject to it, can it be something else than just a collection of individual natural rights of individual people? The law that equally protects life, freedom, and property of every citizen is invaluable to society. Not everyone can defend themselves. Not everyone can or want to be their own bodyguard or soldier. Good law, before which all are equal, penalizes murder because murder violates the right to life. It penalizes theft and fraud, as both violate the right to property. It also penalizes coercion because it violates the right to be free. Good law protects the weak against the tyranny of the strong. It protects the minority from the tyranny of the majority. It prevents granting privileges to certain groups at the expense of others. In short, such law is an instrument of justice.

But what happens when the law belies the natural rights stated earlier?

More than 150 years ago Bastiat wrote: “The law has been used to destroy its own objective: It has been applied to annihilating the justice that it was supposed to maintain; to limiting and destroying rights which its real purpose was to respect. The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense.”

It follows that objectives of the universal law shouldn’t depart from maintaining the individual rights of individual people.

A person can satisfy his or hers needs either by work or by plundering the fruits of other people’s work. Work is difficult and hard, so as every human avoids labor by nature, he will choose to plunder provided it will be easier. Of course, not everyone will choose to plunder, but there is truth to Francis Bacon’s saying that “opportunity makes a thief.” Good law should make plunder harder, more onerous, and more dangerous than work. The problem arises when the law is created by people who want to live at the expense of others. Their bad positive law makes plunder legal. How does it work? Legal plunder occurs when a government, acting under the guise of law, takes away the property of an individual against his will. It occurs when the government uses law to do something for which a citizen would be penalized. It occurs when the law is exercised for the benefit of one group of people at the expense of another group.

However, plunder sanctioned by law does not cease to be plunder. Thus, law becomes an instrument of injustice. This brings about adverse effects even more grave than the results of unauthorized transfer of property by means of illegal plunder. Bastiat lends us a hand yet again: “When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law.” Many people act based on the belief that what is legal must be both moral and just. But the bad law divides people and pits them against each other. People who are being plundered are set against those benefiting from legal plunder. The sense of injustice thus rises. In this toxic environment each group strives to make law. There are those with good intentions, who want to put an end to the injustice, and there are those who would perpetuate the unjust system to benefit themselves and shift its burdens to other people.

Bad law is also the source of common but unfair allegation that in the free market “the rich get rich at the expense of the poor.” The real culprit here is market regulation, especially government licenses or permits. A large corporation with a stable market position will get these easily, but an individual, striving for a fresh start, will have a hard time with that. Corporations can twist the law through lobbying, and make themselves immune to potential competition. The market becomes increasingly monopolistic. Another example of the violation of freedom and property are tariffs, which were already mentioned in another video. Tariffs interfere with the liberty to reach mutually beneficial agreements, and they benefit elite groups of interest at the expense of others. In some cases it is equally true that bad law benefits the poor at the expense of the rich. Public benefits, redistribution of goods, and compulsory insurance are such examples. Thus, entire society is riddled with escalating mutual plunder, growing divisions, and entitlement mentality that manifests in people blaming the government and other social groups for their misfortune instead of themselves. And in such a system, the blamers have a point, because other people make decisions for them and disallow them to act freely. If a human being is free, and the law protects his freedom and property, then he has no reason to blame anyone else apart for himself for the decisions he consciously made.

In a sense, law is a force. A force in itself is neither good nor bad. Only the way it is used can be described as right or wrong. Law can be a boon that allows individuals to develop in their own ways, or it can be a source of oppression and injustice. Good law is indispensable for the existence of a free and well functioning market.

Recommended books:

Michael Sandel – Justice: What’s the Right Thing to Do?
Frédéric Bastiat – The Law
Bruno Leoni – Freedom and the Law