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On the Institutional Foundations of Law: The Insufficiency of Custom and Private Ordering

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  • Geoffrey Hodgson

Abstract

Some theorists propose that systems of law largely arise spontaneously, as an extension of customary rules. At most, the role of the state is to endorse customarylaws and add some minimal general rules. Some see no essential difference between custom and law. By contrast, this paper argues that law has properties that cannot be reduced to custom or private ordering alone. Customary mechanisms are insufficient to explain adherence to complex systems of law. Furthermore, law proper arose when customs were violated and some higher adjudication was required. We require an explanation of how a system of complex legal rules may be enforced, and why people often obey laws in the absence of obvious incentives or disincentives. Laws and their enforcement depend on stratified social structures within the framework of the state.

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  • Geoffrey Hodgson, 2009. "On the Institutional Foundations of Law: The Insufficiency of Custom and Private Ordering," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(1), pages 143-166.
  • Handle: RePEc:mes:jeciss:v:43:y:2009:i:1:p:143-166
    DOI: 10.2753/JEI0021-3624430107
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    Cited by:

    1. Harris, Colin, 2018. "Institutional solutions to free-riding in peer-to-peer networks: a case study of online pirate communities," Journal of Institutional Economics, Cambridge University Press, vol. 14(5), pages 901-924, October.
    2. Maria Lissowska, 2018. "Crowdfunding - zjawisko, problemy, regulacja," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 59-86.
    3. Antoine Pietri, 2017. "Les modèles de « rivalité coercitive » dans l’analyse économique des conflits," Revue d'économie politique, Dalloz, vol. 127(3), pages 307-352.
    4. Geoffrey M. Hodgson, 2012. "Veblen, Commons and the Theory of the Firm," Chapters, in: Michael Dietrich & Jackie Krafft (ed.), Handbook on the Economics and Theory of the Firm, chapter 5, Edward Elgar Publishing.
    5. Marciano, Alain & Ramello, Giovanni B., 2019. "Introduction to the symposium on the empirics of judicial institutions," Journal of Institutional Economics, Cambridge University Press, vol. 15(1), pages 73-80, February.
    6. Murtazashvili, Ilia & Murtazashvili, Jennifer, 2016. "The origins of private property rights: states or customary organizations?," Journal of Institutional Economics, Cambridge University Press, vol. 12(1), pages 105-128, March.
    7. Boettke, Peter J. & Coyne, Christopher J. & Leeson, Peter T., 2013. "Comparative historical political economy," Journal of Institutional Economics, Cambridge University Press, vol. 9(3), pages 285-301, September.
    8. Simon Deakin & David Gindis & Geoffrey M. Hodgson & Kainan Huang & Katharina Pistor, 2015. "Legal Institutionalism: Capitalism & the Constitutive Role of Law," Working Papers wp468, Centre for Business Research, University of Cambridge.
    9. Gutmann, Jerg & Voigt, Stefan, 2020. "Traditional law in times of the nation state: why is it so prevalent?," Journal of Institutional Economics, Cambridge University Press, vol. 16(4), pages 445-461, August.
    10. Hodgson, Geoffrey M., 2013. "Observations on the legal theory of finance," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 331-337.
    11. Ambrosino, Angela & Fiori, Stefano, 2017. "How Can Formal Norms Change Informal Norms? Douglass North’s Approach to Ideologies and Institutional Change," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201707, University of Turin.
    12. Rossi, Enrico, 2020. "Reconsidering the dual nature of property rights: personal property and capital in the law and economics of property rights," LSE Research Online Documents on Economics 105840, London School of Economics and Political Science, LSE Library.
    13. Pietri, Antoine, 2015. "« Propriété » ou « possession » : une question de sémantique…ou de paradigme ? [“Property” or “possession”: just a matter of semantics…or paradigm?]," MPRA Paper 67096, University Library of Munich, Germany.
    14. Guido Rossi & Salvatore Spagano, 2018. "From Custom to Law, An Economic Rationale behind the Black Lettering," Journal of Economic Issues, Taylor & Francis Journals, vol. 52(4), pages 1109-1124, October.
    15. Pistor Katharina, 2021. "The Code of Capital: How the Law Creates Wealth and Inequality – Core Themes," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 11(1), pages 1-7, March.
    16. Pistor, Katharina, 2013. "A legal theory of finance," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 315-330.

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