Of Bumblebees and Competitive Courts

Considering that what liberty we continue to enjoy in the West is a product in large part of competing legal institutions operating within overlapping jurisdictions hundreds of years ago, it’s curious that so many libertarians still believe such an order — an essential feature of free-market, or natural-law, anarchism — would be inimical to liberty. Why wouldn’t that which produced liberty be up to preserving it?

When I say that competition produced liberty, I of course do not mean that liberty was anyone’s objective. Yet liberty emerged all the same, as if by an “invisible hand.” That’s how things often work. Good (and bad) consequences can be the result of human action but not of human design (to use a favorite phrase of F. A. Hayek’s, which he borrowed from the Scottish Enlightenment thinker Adam Ferguson).


Many authors from the 18th century onward have written about the unintended good consequences of competition, i.e., the absence of central control. They emphasized that in the West the rivalries between church and state, between nobles or parliament and crown, and between nation-states yielded zones of liberty that endure to this day, however diminished in particular matters. Competition among legal institutions — courts and bodies of law — within overlapping jurisdictions played a large role in this centuries-long beneficent process. These of course are not examples of anarchism; on the contrary, states existed. But competitive overlapping legal regimes are an element of market anarchism. So where a state coexisted with a polycentric legal order, we may say, with Bryan Caplan, that there existed “less than the minimum” state; that is, something that fell short of the nightwatchman state favored by limited-government libertarians.

A good place to read about competition in law and dispute resolution is Todd J. Zywicki’s highly accessible Northwestern University Law Review article “The Rise and Fall of Efficiency in the Common Law: A Supply-Side Analysis.” An important feature that “influenced the common law’s evolution,” Zywicki writes, “was the competitive, or ‘polycentric,’ legal order in which the common law developed. During the era that the common law developed, there were multiple English courts with overlapping jurisdictions over most of the issues that comprise the common law. As a result, parties potentially could bring a particular lawsuit in a variety of different courts. In turn this created competition among these various courts for business.”

The idea of courts competing for “business” sounds strange to modern ears, but it was commonplace before the 20th century. (The extent of private arbitration in international commerce is largely unappreciated.) Zywicki’s paper shows that the common law, which featured this competition, was efficient in the eyes of those who used its services. Monopoly is inefficient even (especially?) in matters of security, dispute resolution, and justice. Moreover, it’s a mistake, as Hayek explains in Law, Legislation, and Liberty (Volume 1)  to assume that government is the source of law.

Moves away from competition and the common law, then, aren’t adequately explained by shortcomings in its services to its consumers. Political ambition provides a more satisfactory explanation. (In the case of the criminal law, see this.)

Zywicki draws on the legal historian Harold Berman, who wrote, “Perhaps the most distinctive characteristic of the Western legal tradition is the coexistence and competition within the same community of diverse jurisdictions and diverse legal systems.”

The legal philosopher Lon L. Fuller went further: “A possible objection to the view [of law] taken here is that it permits the existence of more than one legal system governing the same population. The answer is, of course, that such multiple systems do exist and have in history been more common than unitary systems.” (Emphasis added.)

The limited-government libertarian who insists that market anarchism cannot work because it lacks a monopolistic court of final jurisdiction is like the apocryphal aerodynamicist who calculated that a bumblebee couldn’t possibly fly. One needed only to point out the window, saying, “Behold!” Likewise, the anarchist need only point to history.

Berman also wrote (quoted by Zywicki), “The same person might be subject to the ecclesiastical courts in one type of case, the king’s courts in another, his lord’s courts in a third, the manorial court in a fourth, a town court in a fifth, [and] a merchants’ court in a sixth.” But this sounds as though the courts were not really competitive, but rather that the variety of courts constituted specialization and a division of labor. But that inference would be wrong. To see this we may turn to a keen contemporaneous observer, Adam Smith. In The Wealth of Nations, Smith notes that despite a de jure division of labor, courts in fact competed with one another, even to the point of entrepreneurially finding ways to lure cases from other courts. Why do this? Because the courts obtained their revenues from fees paid by parties to cases. The more cases a court heard, the more money it earned, a state of affairs that Smith, no anarchist of course, approved of: “Public services are never better performed than when their reward comes only in consequence of their being performed, and is proportioned to the diligence employed in performing them.”

Smith described the legal environment of his day,


Zywicki also quotes from Smith’s Lectures on Jurisprudence: “Another thing which tended to support the liberty of the people and render the proceedings in the courts very exact, was the rivalship which arose betwixt them.”


“In short,” Zywicki sums up, “a market for law prevailed, with numerous court systems competing for market share in order to increase their fees. This competitive process generated rules that satisfied the demand of consumers (here litigants) for fairness, consistency, and reasonableness.”


Cross-posted at Free Association.

Translations for this article:

Citations to this article:

The Anatomy of Escape
Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist