Private Lawmaking

Abstract:     
This article argues that a significant amount of law is privately made and suggests that privately made law should be subjected to the same kinds of questioning as publicly made law, considering in the end whether privately made law might be considered "molecular federalism." Private lawmaking, through which one private group makes rules that govern much larger groups, extends well beyond the boundaries of relatively well-known examples of private legislatures like the American Law Institute and the Uniform Law Commissioners. The phenomenon includes the practical ability of private entities to make law governing many kinds of corporate, commercial, and consumer transactions, from credit cards to letters of credit. After suggesting the broad scope of private lawmaking through an inductive argument, the article shifts to linguistic analysis to show that the artifacts resulting from these private processes are best considered law and are inadequately described by terms like contract, norms, private ordering, or self-regulation.

The article goes on to a tentative assessment of private lawmaking, asking about efficacy, representation, respect for autonomy, and similar matters. The article ends by emphasizing that much of the legitimacy of private lawmaking depends on competition in lawmaking and surmises that under competitive circumstances, private lawmaking may function as federalism on a molecular level. Because the number of potential lawmakers is much greater, molecular federalism may multiply the benefits of state-based federalism. It may also enhance its quality, enabling bottom-up lawmaking instead of top-down imposition of rules by the state.

JEL Classifications: K10, K12, K20, K21, K22, K23, K33, K4

Accepted Paper Series