We have this idea of customs and norms and private ordering, even preceding the creation of law or legal institutions or sometimes supplanting them in early years of human development in which people gravitate toward agreements and rules amongst themselves that help to facilitate exchange, facilitate cooperation, facilitate human flourishing within communities.
The economic way of thinking is part of the human condition and as a consequence, every time humans have tried to structure their lives in a more beneficial way through cooperative agreements, whether they be customs norms or private ordering agreements, has involved a certain level of law and economics understanding. This becomes formalized or started to be formally recognized when people start to figure out how do we structure legal rules and legal institutions and really kind of debate that and debate it at a very serious level during sort of the Scottish Enlightenment era.
Locke's Two Treatises of Government are really designed to provide the infrastructure through which markets can operate. And there's some recognition, at least, in John Locke's work that we need a system which recognizes property, which recognizes the neutral arbiter to resolve torts, and recognizes the need to enforce bargains and, and contracts as key features of governmental institutions.
Classical liberal structures can help to facilitate the kinds of human exchanges that really are economic exchanges, that can help to solidify property rights. Why? So that we have investment in that property, so that we have people who are encouraged and incentivized to gain property rights and improve property.
So it is, it is a recognition of the way that law can provide the, the sufficient confidence and incentives to act, that really we start to get a recognition of economics and its interaction with law, even if it's not expressly stated as such.
In Adam Smith's Wealth of Nations, in particular, he starts to study the way in which the right customs or the right norms can help to facilitate this kind of economic specialization, economic exchange, the creation of markets, the idea of protecting the, the value of goods.
All of these things that he talks about in The Wealth of Nations as well as in his lectures on jurisprudence and a theory of moral sentiments,all read together help to demonstrate a key understanding of the interaction between law and economics.
Of course, we see then, you know, the, the founders of the United States Constitution borrowing a lot from both Locke and from Smith and, and recognizing the necessity of creating institutional structures which understand economic principles as well.
And so the founders create things like the Contracts Clause in the Constitution to protect the sanctity of contracts and prevent the government from interfering so that there's a higher level of security and durability and there's less risk of confiscation and there's less risk of interference and there's more confidence in the judiciary.
We have things like the eminent domain provisions which limit the means by which the government can seize property so that property actually can have greater value and so that property is more secure than it would be under a system in which there is a risk that a king could come and seize the property without providing compensation or could seize the property for anything other than a public use.
So there are these provisions in the Constitution as well as just the limitation of power, as well as, and, and the creation of an independent judiciary, that is designed to help recognize and resolve disputes, as well as the preservation of, of the role of the states ordering a lot of economic affairs through the Tenth Amendment. All of these things have a bit of an economic valence to them and the framers of the US Constitution and the early political philosophers had insights of law and economics, even if it wasn't recognized as such.