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Hayek, Leoni, and Law as the Fifth Factor of Production

Author

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  • Peter Boettke

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  • Rosolino Candela

Abstract

This paper discusses the nature of law as the fifth factor of production, or more fundamentally as the institutional framework within which the production process takes place. Unlike land, labor, capital, and entrepreneurship, whose coordination is an outcome of institutional arrangements, the law itself is the institutional embodiment of the voluntary exchange processes evolving from the decisions, but not the design, of judges that form the reliable expectations about who “plans” the coordination of the other four factors of production. The legal theory of Hayek and Leoni lends itself to this dual nature of spontaneous order analysis and also the basis of the burgeoning literature on analytical anarchism. Although Hayek and Leoni were not legal centralists, their conception of law as part of a larger spontaneous order was open-ended to competition and experimentation on the constitutional level of rules just as that experienced on the post-constitutional level of the market itself. Copyright International Atlantic Economic Society 2014

Suggested Citation

  • Peter Boettke & Rosolino Candela, 2014. "Hayek, Leoni, and Law as the Fifth Factor of Production," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(2), pages 123-131, June.
  • Handle: RePEc:kap:atlecj:v:42:y:2014:i:2:p:123-131
    DOI: 10.1007/s11293-014-9405-7
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    File URL: http://hdl.handle.net/10.1007/s11293-014-9405-7
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    References listed on IDEAS

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    1. Peter T. Leeson, 2007. "Trading with Bandits," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 303-321.
    2. Benson, Bruce L, 1999. "An Economic Theory of the Evolution of Governance and the Emergence of the State," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 12(2), pages 131-160, November.
    3. Peter Boettke & Christopher Coyne & Peter Leeson & Frederic Sautet, 2005. "The New Comparative Political Economy," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 18(3), pages 281-304, December.
    4. Peter T. Leeson, 2009. "The Laws of Lawlessness," The Journal of Legal Studies, University of Chicago Press, vol. 38(2), pages 471-503, June.
    5. Baumol, William J., 1996. "Entrepreneurship: Productive, unproductive, and destructive," Journal of Business Venturing, Elsevier, vol. 11(1), pages 3-22, January.
    6. Leeson, Peter T., 2007. "Better off stateless: Somalia before and after government collapse," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 689-710, December.
    7. Stringham, Edward Peter & Zywicki, Todd J., 2011. "Hayekian anarchism," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 290-301, May.
    8. Peter T. Leeson, 2006. "Self-Enforcing Arrangements and Heterogeneous Groups," American Journal of Economics and Sociology, Wiley Blackwell, vol. 65(4), pages 891-907, October.
    9. Peter T. Leeson, 2007. "An-arrgh-chy: The Law and Economics of Pirate Organization," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 1049-1094, December.
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    Cited by:

    1. Omar Al-Ubaydli & John A. List, 2016. "Field Experiments in Markets," NBER Working Papers 22113, National Bureau of Economic Research, Inc.
    2. repec:kap:revaec:v:30:y:2017:i:4:d:10.1007_s11138-017-0375-2 is not listed on IDEAS
    3. Vojtech Olbrecht, 2016. "Harmonised Standards and Firm Productivity: Difference-in-Differences Evidence," MENDELU Working Papers in Business and Economics 2016-64, Mendel University in Brno, Faculty of Business and Economics.
    4. repec:eme:aaeczz:s1529-213420150000019001 is not listed on IDEAS

    More about this item

    Keywords

    Legal institutions; Developmental state; Comparative economic systems; K4; O12; P51;

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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