We continue here, in my ongoing series, Nine Reasons Why The Free Market is a False Concept. I’m adding one reason a day. Here goes Reason Number Five.

In the Middle Ages, it was common when disputes arose or allegations of criminal offenses to do something called “The Ordeal.” Most were variations on this kind of thing: you grasped a red hot stone for a required length of time. Then if you were able to do that, your burned hand was bandaged up. In three days, it was unwrapped. If the wound was infected, you were guilty. If not, you were innocent or telling the truth.

Such was the law. But centuries passed, and the law progressed. Sort of.

In England in the 1800s, there still existed the “Bloody Code,” which made capital offenses of just about everything, including what today would be called petty theft. In Ireland in the 1840s, then part of Great Britain, being caught outside after curfew was punished by being banished to Australia, which usually meant for life, given the distance.

I know there are some libertarian theorists who postulate you could have a sort of private market-place of laws and thus no government-made law, but these are pretty much academic exercises. Once you concede we need a government of laws, then the question is what kind of laws? This is no mere minor point to the so-called free market. It’s not as if there is one set of laws available or optimal. There are tens of thousands of laws, and tens of thousands of choices. And making something a law doesn’t make it fair or just.

Those who contemplate the so-called “free market,” whether from a point of support or of opposition to it, usually skip over this step of laws. The free market is a false concept because there can be no markets without laws, and what kinds of laws you have determine what kind  of market or markets you have.

In my book The Surprising Design of Market Economies, Chapter Three goes into law, including Common Law. Common Law is the mass of laws that have built up over the centuries in England and the United States in the courts and is not written down or passed by a legislature. It is judge-made law, or case-made law. It is undemocratic, I say, because it puts perhaps the largest body of law outside the domain of the elected legislatures, who we think of ask “making law.” I bring it up here because it is yet another land on the landscape of markets, something to be wrestled with when asking and answering the question: what kind of markets do we want?