The Spontaneous Evolution of Commercial Law
One purpose of the following presentation is to demonstrate that the commercial sector is completely capable of establishing and enforcing its own laws. A second purpose is to illustrate that modern commercial law is, in fact, largely made by the merchant community despite governmental efforts to take over provision of such law. Commerce is an evolving process of interaction and reciprocity which is simultaneously facilitated by and leads to an evolving system of commercial law. Carl Menger  proposed that the origin, formulation and the ultimate process of all social institutions including law is essentially the same as the "spontaneous order" Adam Smith  described for markets. Markets guided by Smith's invisible hand coordinate interactions, and so does customary law [6; 7]. These systems develop because, perhaps through a process of trial and error, it is found that the actions they are intended to coordinate are performed more effectively under one institutional arrangement or process than under another. The more effective institutions and practices replace the less effective. Most economists have assumed that for markets to work government must define and enforce "the rules of the game"--private property rights, contract law, etc. An exploration of the rise and continued domination of the Law Merchant casts considerable doubt on this widely held premise..