We’re coming to our third online reading group discussing Bruno Leoni’s Freedom and the Law. So far the discussion was lively and insightful, a good reminder to me that the only way to really *know* a book is re-reading it periodically, as it may speak differently to you and you may notice things that you did not before. Doing so for a Liberty Fund conference, albeit a virtual one, is always a privilege.
One very important part of Leoni’s book lies in the author’s discussion of democracy. Leoni, as we have hinted before, is looking at the law as a spontaneous order, somehow completing the insights of Austrian economics. In this context, he compares the common law and the operation of the market, as bottom-up processes, whereas legislation is compared to economic planning – if nothing else because, as he pointed out, economic planning is done by legislation. This latter point may seem obvious but Leoni thought many economists, including those most critical with central planning, were often thinking of it as a series of “policies” but they were not concentrating on the fact such policies were enabled only by the sort of centralized law-making that is legislation. The two things cannot be examined separately. Perhaps in a “genuine” common law system, some example of central planning would have emerged, but it would have been far more precarious, being exposed to a steady wave of judicial challenges and adjustments, instead of being solemnly written up in statutes.
What has driven the triumph of legislation in the modern world? Leoni suggests that a twist in the concept of representation may have played a role.
The very idea of a “representative” should point to a relationship imbued with trust, as it happens in “private life” where “anybody may contact anybody else whom he trusts and engage him as an agent to negotiate a contract, for example, according to instructions that can be clearly stated, clearly understood, and clearly carried out”. There are problems – as Leoni reminds us that,
…economists and sociologists have already drawn our attention to the fact that representation in big private corporations works badly. Shareholders are said to have little influence on the policy of the managers, and the discretionary power of the latter, being a result as well as a cause of the ‘managerial revolution” in our times, is the greater, the more numerous are the shareholders that the managers “represent” in a business.
It is worth noticing that Freedom and the Law was published in 1961; its author had first hand knowledge of business as an attorney and he neatly summarized issues of corporate governance which are way more apparent to us these days.
What about politics? How does representation work, between the many voters and the few elected officials? For Leoni,
…it is a truism that issues at stake in political life are too many and too complicated and that very many of them are actually unknown both to the representatives and to the people represented. Under these conditions, no instructions could be given in most cases. This happens at any moment in the political life of a community when the self-styled representatives are not in a position to represent the actual will of the alleged “people represented” or when there are reasons for thinking that the representatives and the people represented do not agree about the issues at stake.
Leoni was critical of the idea that “representation” in a proper sense may happen in politics. Democratic voting procedures apply to group decisions, and are a means to reach them by majority rule. But somebody who has been chosen through majority rule can hardly be a “representative”, in the more traditional, fiduciary sense. In a way, majority rule ensures that the preferences of a certain subset of individuals trump the preferences of other subsets. Hence it is paradoxical to call the very instrument by which this happens, the elected official, a “representative”. She knows well she does not represent those who voted against her.
Bruno Leoni was a great friend of James M. Buchanan and admirer of public choice, that resonated very well to him also because, as a highly educated Italian lawyer and political scientist, he knew the work of Mosca and the Pareto schools (the so-called Italian school of elitism) very well and these authors inspired, at least in part, Buchanan and the development of public choice.
Notice how Leoni, who is strongly interested in using the economist’s toolbox in dealing with political issue, is skeptic of the parallel between competition and political competition:
Of course, choosing between potential competitors is the proper activity of a free individual in the market. But there is a great difference. Market competitors, if they are to keep their position, are necessarily working for their voters (that is, for their customers), even when both they and their voters are not completely aware of it. Political competitors, on the other hand, are not necessarily working for their voters, since the latter cannot actually choose in the same way the peculiar “products” of the politicians. Political producers (if I may use this word) are at the same time the sellers and the buyers of their products, both in the name of their fellow citizens.
Freedom and the Law is short but so rich in insights. I hope you may give it a look.
