Lesson 1 – Who Creates Law? The Four Main Sources

Who creates our laws? Most people would answer: the government. Obviously, this answer is true. But this is not the entire picture…

What we know as “law” contains a wide variety of components, such as: legislation, customs, court rulings, (international) treaties, policies, and contracts. Some laws apply to specific situations, others to specific people.

Law evolves, expands, and changes over time―like a living organism.

Because of this, almost mystical qualities are attributed to law, only decipherable by a special brand of magicians called lawyers. This is not justified: anyone with common sense can read and understand law. And as will be clear from this series of lessons, anyone can create laws.

But we’re getting ahead of ourselves…

Who can Create Law?

In this article, I identify the four sources responsible for the laws governing our lives. These are the following:

• Natural Law
• Governments (Positive Law)
• International Organizations (International Law)
• Private Law

Once we understand how these four sources create law, we understand what Decentralized Law can, and can’t, do.

Natural Law – Laws of Nature and God

Natural law (Latin: ius naturale, lex naturalis) is a philosophy asserting that certain rights are inherent to human nature. These laws are endowed by nature (or God) and can be understood and observed through human reason.

Natural law is implied to be universal—the same for everyone on earth. It exists independently of government, legislature or society at large.

How Natural Law is Created

The idea of natural law can be traced back all the way to Ancient Greek philosophers such as Aristotle and Roman philosophers such as Cicero. They noted that certain behaviors are universal and that they had to display a shared fundamental humanity. In addition, there is no culture so backwards, remote or back in time that such behaviors cannot be observed at first inspection. ¹⁾Daniel N. Robinson, “The Great Ideas of Philosophy,”  2nd Edition, (The Teaching Company, 2004): Lecture 17. Roman Law—Making a City of the Once-Wide World.

They advocated the use of reason to analyze human nature to deduce binding rules of moral behavior instilled by God. Cicero said:

“Law is highest reason, implanted in nature… Surely nothing is preferable to the plain understanding that we have been born for justice and that right has been established not by opinion but by nature.” ²⁾ Marcus Tullius Cicero, On the Laws, Translated by David Fott. Ithaca, (Cornell University Press, New York, 2014): Books 1 and 3, accessed on 30 January 2018, http://www.nlnrac.org/classical/cicero/documents/de-legibus

Natural Rights

In the Middle Ages, the Catholic philosopher Thomas Aquinas revived the ideas of natural law, and over the years this led to an increasing popularity of the idea of natural laws and natural (human) rights. The most famous example? When Thomas Jefferson wrote in the Declaration if Independence:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”  ³⁾ Thomas Jefferson et al., “The Declaration of Independence – The Unanimous Declaration of the thirteen united States of America,” (Action of Second Continental Congress, July 4, 1776)

Eventually, the US was established as a new idea under a complete new set of rules, establishing “unalienable rights” based on natural law. Unlike its European counterparts, the US did not have a king. Instead, the law was king.⁴⁾Thomas Paine, “Common Sense,” (1776): “…let a crown be placed thereon, by which the world may know, that so far as we approve as monarchy, that in America THE LAW IS KING.” It was a unique achievement that changed history. The long road of unalienable natural rights however reached its pinnacle shortly after World War II, with the acceptance of the United Nations of the Universal Declaration of Human Rights. ⁵⁾United Nations, “Universal Declaration of Human Rights”

Secular Natural Law

Some readers might disagree with the idea that God instilled a natural order. For our study it doesn’t matter what you belief. First of all, historically religion played a major role in our philosophies and law. What we think about that doesn’t change this fact.

Secondly, there are 100s of millions of religious people for whom the word of God—or their interpretation—holds more value than what the government says. Many countries even today are ruled based on religious laws (think about the Middle East).

And on a final note, there is no need for a non-religious person to discard natural law based on its religious origins: the latest school of natural law is a secular one. Popularized in the 17th and 18th century, it theorizes about the uniform and fixed rules of nature, particularly human nature, to identify moral and ethical norms. ⁶⁾“Natural Law,” The Free Dictionary by Farlex, accessed on December 13, 2019, https://legal-dictionary.thefreedictionary.com/Secular+Natural+Law

As an example: stealing and murder are condemned in atheistic and religious societies throughout human history. Why this is so remains interesting; it reveals a shared humanity regardless of where people are from or what they believe.

Natural Law = Decentralized

Natural law is a fully decentralized form of law; it is universal and exists outside of the control of governments. Maybe it can be revived now that the world cooperates across borders on a daily basis?

Human nature and the natural world are far better understood now than they were even a century ago. Border-less human nature can be easily observed and analyzed on the internet.

As an example, let’s look at the mathematics and technologies used to create Bitcoin. The ways humans interact with these instruments of truth are similar around the world and offer valuable lessons. Bitcoin and what it stands for proved attractive to people around the world. It binds them on a deeper level and reveals what no culture or religion can erase.

Positive Law – Law by Government

As mentioned, during the era of enlightenment, the notion of God-given rights was challenged. Some argued that humans alone constructed laws and that they were enforced by the government. This became known as Legal Positivism.

The United States Code sums up the difference between natural and positive law:

“Positive law is made by people. Natural law comes from sources that are universal. To many people (for example, to Thomas Jefferson in the Declaration of Independence) the source of natural law is God. Natural law is universal; it applies to everyone. Positive law only applies to those people who are the subjects or citizens of the government that creates the law. Positive law must be written down. Natural laws are unwritten laws. In short, then, positive law must be made by a given government and it relies on the government for its power.” ⁷⁾“THE TERM ‘POSITIVE LAW’,” United States Code, Office of the Law Revision Counsel, accessed on March 15, 2018, http://uscode.house.gov/codification/term_positive_law.htm

John Austin was an important Legal Positivist in the 19th century. He wanted to transform law into a true science. To do this, he believed it was necessary to purge human law of all moralistic notions and to define key legal concepts in strictly empirical terms. He thought that law reflects relations of power and obedience between a sovereign and its subjects. ⁸⁾ John Austin, “The Province of Jurisprudence Determined,” 1832, accessed March 30, 2018, http://www.nlnrac.org/node/255
Page 2 “…the aggregate of the rules, established by political superiors, is frequently styled positive law, or law existing by position.”
Page 3 “Every law or rule … is a command.”
Page 7 “Laws and other commands are said to proceed from superiors, and to bind or oblige inferiors.”

H.L.A. Hart was another major contributor to Legal Positivism in the 20th century. However, he refuted the idea that law strictly exists because due to coercion. ⁹⁾Raymond Wacks, “The Philosophy of Law – A Very Short Introduction,” (Oxford University Press, 2006), page 27 “Hart’s positivism is a far cry from the largely coercive picture of law painted by Bentham and Austin.” This came as he believed that there are also forms of law created by individuals to empower themselves, such as contracts and wills.¹⁰⁾Robert S. Summers, “Professor H.L.A. Hart’s Concept of Law,” (Duke Law Journal, vol.1963, no.4): 633
“For Professor Hart, perhaps the most significant differences between legal rules and orders are these: (1) orders direct people to do or refrain from action, but many legal rules do not do this-instead they empower people to act in various ways, e.g., to legislate, to make wills and to make contracts;” More on this below.

During the 80s and 90s Ronald Dworkin came up with an even stronger critique of Legal Positivism. He argued that law is not only deducted from cold hard legislation; rather that it requires that judges come up with the best constructive interpretation of the political structure and legal doctrine of their community. In short: a moral stance must be taken.¹¹⁾ Allan, Dworking and Dicey, “The Rule Of Law As Integrity,” (Oxford Journal of Legal Studies, Volume 8, Issue 2, 1 July, 1988), Pages 266–277, accessed on March 30, 2018, https://doi.org/10.1093/ojls/8.2.266
“Fairness requires a political structure which distributes power correctly. Justice requires a morally acceptable distribution of material resources and the protection of civil liberties. In ordinary politics if not in Utopian theory, however, justice and fairness often conflict. We must therefore embrace integrity as a distinct political ideal which may itself conflict with both justice and fairness. Integrity assumes an (essentially metaphorical) personification of the state, which is to be treated as a moral agent.”

Adding such subjectivity to the theory of law added significant cracks to the proposed scientific foundation as argued by Austin and early Positivists.

Government in the Drivers’ seat

As of today, the idea that national governments make laws is hardly ever challenged. Most people don’t consider alternatives, especially since they belief they influence the process by electing lawmakers. It is unlikely these ingrained systems are replaced soon―and they don’t have to be…

The following two sections reveal that an erosion of the power of governments is already underway, and that there is enough freedom for individuals to start creating their own laws.

International Law

International law is poorly understood, but increasingly influential in the every day life of people around the world―especially in the Western world, where they take it rather seriously.

International law is the result of multinational cooperation of different States. Over the years, developments like international trade, economic cooperation, wars and subsequent peace treaties and many multinational governing bodies have led to what is known as international law.

It can be described as follows:

“…the body of rules and principles that determine the rights and duties of states, primarily in respect of their dealings with other states and the citizens of other states, determine what is a state and within what geographical territory they exist.”  ¹²⁾Vaughan Lowe, “International Law (Clarendon Law Series),” (Oxford University Press, 1th edition, November 17, 2007): Chapter 1.2, “The Scope and Nature Of International Law”

How international law is created and why it is so powerful is out of scope of this article. It is explained in more depth in Lesson 2 – How do International Organizations Create Law?

Who creates International Law

The most obvious example of a supranational law creating entity is the European Union. It clearly creates legislation which is influential in member states. There is, however, a wide range of organizations you may or may not have heard of with an increasing amount of power. Think for example of the OECD, the WTO, United Nations, and much more.

It is worth noting that non of the people leading such organizations is elected, they enjoy a high degree of immunity, and freedom from pesky administrative burdens (such as taxes).

The next example clearly demonstrates how much influence such organizations have, especially on the crypto-space.

KYC (Know Your Customer) legislation

Every serious crypto-currency exchange nowadays has to verify the identity and address of their customers. Privacy sensitive data has to be provided before such services can be used.

These obligations do not come from “Uncle Sam” or “leftists/right-wingers” in power; they are a product of FATF (Financial Action Task Force), an organization established by the G7.

That’s right, the representatives of seven (Western) countries have given a carte blanch and immunity to one small group of people to create laws which everybody in the world is now forced to follow. Countries that don’t implement these “standards” are placed on “black” or “gray” lists of “non-cooperative” countries, and face economic sanctions.

You see, national governments aren’t the only institutions creating laws and voting doesn’t matter for an increasing number of issues. The power and liberty of the individual is logically diminished.

Luckily, there is still a lot of freedom for individuals to arrange their private affairs. Especially in such a pioneering area such as crypto-currencies there is absolutely no reason why we should wait for laws imposed by governments and institutions. We as a community can voluntarily create our own laws.

Private Law

It was the Romans who created the distinction between Public Law – governing the relationship between individuals and the State – and Private Law – governing relationships between individuals. This distinction becomes important later in our study, because it is in the area of private law that the quickest steps toward Decentralized Law can be made.

There are a variety of ways that private individuals can create law, or have done so in the past. Here are three examples:

Copy-right Laws

Regardless of government policies, private groups have come up with new ways of licensing creative work in a more flexible way. Examples are Creative Commons licenses, or a wide variety of open source licenses.

Lex Mercatoria

The exact definition of Lex Mercatoria is debated, but it refers to a system of law developed during the Middle Ages that successfully governed international trading. Rather than a law belonging to one country, it could be considered as a general law of nations.

International Sports Organizations

Worldwide international organizations such as the FIFA (world cup of Football) and the IOC (Olympic Games) hold significant power of participating countries and their athletes.

Private Law by Contract

Besides these known forms of private law, anyone has the power to create a specific form of law: by creating a contract. A contract emerges when two or more people of sound mind sign an agreement that binds them to whatever agreed upon terms. Such contracts can be highly influential in an individual’s life.

As you will discover in the remainder of these lessons, private law by contract will be the first essential building block for the early stages of Decentralized Law. The main reasons being that there is a wide variety of freedom to engage in contracts, they offer flexibility in determining the governing laws, and they are enforceable around the world.

More on this in Lesson 3 – How can private individuals create law?

Law Creation: Conclusion

The average person probably thinks that only governments can create law. In this article we have, however, discovered four sources of law:

• Natural Law
• Government (Positive Law)
• International Organizations (International Law)
• Private Law

We learned that the idea of natural law is somewhat out-of-date, but still very much alive. We also saw that governments are all powerful in their law creation, but that an increasing amount of sovereignty is siphoned off towards international organizations.

Finally, we learned about the flexibility of private law, and how this will be the major building stone for Decentralized Law. This is explained in later lessons.

This article is part of a series of lessons on Decentralized Law (view summary).

Cite this article

Thysse W., “Lesson 1 – Who Creates Law? The Four Main Sources,” (Decentralized Law Lessons, December 28, 2019), available on: https://decentralizedlegalsystem.com/law/who-makes-law/

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