Law without the State: The theory of high engagement and the emergence of spontaneous legal order within commercial systems

Abstract

This paper examines the idea that commercial law has the capacity to evolve spontaneously in the absence of a clear state authority because of its unique nature. I argue that the manner of interaction implied by commerce plays a crucial role in this ability as it involves a high degree of overall engagement. This I term “high engagement,” which I divide into two elements: repetition and the creation of clear cycles of interaction. Together they produce identifiable legal norms and subsequent compliance. Game theorists have long recognized the importance of repeated interaction in inducing cooperation; however, how the manner of commercial interaction itself facilitates this process has been left largely unexamined. Part I presents a brief overview of the concept of reciprocity and spontaneous law theory. In Part II, a more detailed explanation of the notion of high engagement is offered. Here I set out exactly how high engagement is instrumental in the emergence of legal norms. Finally, the paper concludes that the element of high engagement indeed plays a decisive role in commercial law’s ability to evolve and function in a decentralized, spontaneous fashion—an important insight in terms of the future international development of the modern law merchant as it emerges in the absence of a single legislative authority.