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.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Acemoglu, D. (2008). Introduction to modern economic growth. Princeton: Princeton University Press.
Bauer, P. T. (2000). From subsistence to exchange and other essays. Princeton: Princeton University Press.
Baumol, W. J. (1990). Entrepreneurship: productive, unproductive, destructive. Journal of Political Economy, 98(5), 893–921.
Benson, B. (1999). An economic theory of the evolution of governance and the emergence of the state. The Review of Austrian Economics, 12(2), 131–160.
Boettke, P. J. (2001). Calculation and coordination: Essays on socialism and transitional political economy. New York: Routledge.
Boettke, P. J. (2005). Analytical anarchism as a progressive research program. In E. Stringham (Ed.), Anarchy, state, and public choice. Cheltenham: Edward Elgar Publishing.
Boettke, P. J., Coyne, C., Leeson, P., & Sautet, F. (2005). The new comparative political economy. The Review of Austrian Economics, 18(3/4), 281–304.
Buchanan, J. M. (2000). The collected works of James M. Buchanan vol. 7: The limits of liberty: Between leviathan and anarchy. Indianapolis: Liberty Fund Press.
De Soto, H. (2000). The mystery of capital: Why capitalism triumphs in the west and fails everywhere else. New York: Basic Books.
Hayek, F. A. (1960). The constitution of liberty. Chicago: The University of Chicago Press.
Hayek, F. A. (1973). Law, legislation, and liberty, volume I: Rules and order. Chicago: The University of Chicago Press.
Hayek, F. A. (1994). The road to Serfdom, 50th anniversary edition. Chicago: The University of Chicago Press.
Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press.
Leeson, P. T. (2006). Cooperation and conflict: evidence on self-enforcing arrangements and heterogeneous groups. American Journal of Economics and Sociology, 65, 891–907.
Leeson, P. T. (2007a). An-arrgh-chy: the law and economics of pirate organization. Journal of Political Economy, 115, 1049–1094.
Leeson, P. T. (2007b). Better off stateless: Somalia before and after government collapse. Journal of Comparative Economics, 3, 689–710.
Leeson, P. T. (2007c). Trading with bandits. Journal of Law and Economics, 50, 303–321.
Leeson, P. T. (2008). The laws of lawlessness. Journal of Legal Studies, 38, 471–503.
Leoni, B. (1972). Freedom and the law. Los Angeles: Nash Publishing.
Leoni, B. (1991). The law as individual claim. In Freedom and the law, 3rd ed. Indianapolis: Liberty Fund Press, http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=920&chapter=193204&layout=html&Itemid=27.
Masala, A. (2003). Il liberalismo di Bruno Leoni. Milan: Il Sole 24 Ore.
Mises, L. (2008). Socialism: An economic and sociological analysis. Auburn: Ludwig Von Mises Institute.
North, D. C. (1990). Institutions, institutional change and economic performance. New York: Cambridge University Press.
Rothbard, M. (1962). Man, economy and state. 2 volumes. Princeton: Van Nostrand.
Smith, A. (1981). An inquiry into the nature and causes of the wealth of nations. Indianapolis: Liberty Fund Press.
Stringham, E. P., & Zywicki, T. J. (2011). Hayekian anarchism. Journal of Economic Behavior and Organization, 78(3), 290–301.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Boettke, P.J., Candela, R. Hayek, Leoni, and Law as the Fifth Factor of Production. Atl Econ J 42, 123–131 (2014). https://doi.org/10.1007/s11293-014-9405-7
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11293-014-9405-7