On Liberty and Objective Law: Sir Edward Coke
From the Magna Carta to the Bill of Rights
Among those living in relatively free societies who like to discuss politics and economics, everyone has an opinion about capitalism and socialism. Those are catch-all terms for the small government vs. big government debate, but very few really know what either of them means. Put simply, capitalism bans the initiation of force from human transactions and socialism demands the initiation of force to control production or distribution. Naturally, very few will go along with that.
In the 20th century, the commonly accepted exponents for each were economists Friedrich Hayek and John Keynes, yet both supported different forms of government safety nets and neither had a high opinion of human nature. For Hayek, a moral code can be justified by cultural leadership; and for Keynes, money is a corrupting influence. But for the objective investor, both sets of ideas are dangerous, as novelist Ayn Rand explained in her epic 1943 novel, Atlas Shrugged,
Your moral appraisal is the coin paying men for virtues or vices, and this payment demands of you as scrupulous an honor as you bring to financial transactions — that to withhold your contempt for men’s vices is an act of moral counterfeiting, and to withhold your admiration from their virtues is an act of moral embezzlement.
Because people are living organisms with free will and reason is our means of survival, the first moral principle for social systems is individual rights. Accordingly, money is property and subject to property rights, it is unconsumed wealth earned by someone’s productive virtues, it is a tool, and it cannot corrupt. Conversely, the desire for unearned wealth or power is corrupting – and that is a major difference between capitalism and socialism.
Accordingly, the heroes of civilized societies are the people whose ideas and actions promote voluntary trade and defend it against criminals and the looters in government. To more fully comprehend the radical nature of capitalism, it took 1000 years after the fall of Rome for the Renaissance to emerge. Even then, the progress was difficult and incomplete.
Reason
In late 16th England, the legal procedures to enforce repayment under a “writ of debt” were terribly inefficient. Another legal process called “assumpsit” was installed - one that the Court of Kings Bench sanctioned, but that also had problems because it included a false premise of deception by the defendant.
Regardless, the 1602 decision known as Slades Case became a watershed legal event because it not only replaced the archaic procedures with a streamlined precedent but accomplished that by judicial legislation – a violation of separation of powers. And as Isabel Paterson wrote in her landmark 1943 The God of the Machine, the evolution of society to voluntary written agreements from a society of heredity status can be messy:
Trade and money, which go together in the stream of energy, inevitably wash away the enclosing walls of a society of status. . . Money was to empower kings to subdue nobles; and kings would not have been convinced that trade must presently enable parliaments to execute kings.
Slades Case not only opened the flood gates for plaintiffs seeking restitution, seventy-five years later it led to the Statue of Frauds that required certain agreements to be in writing to become legally enforceable. And significant to a society of contracts are the arguments made by John Slade’s attorney, Sir Edward Coke. He was the first to define “consideration,” which is a necessity today for all simple contracts.
Individualism
Independence and honesty may be internal to the individualist, but moral justice and the courage to act on principle are the outward signs. Not only had Coke been removed as Chief Justice for the Court of Common Pleas by King James I in 1616, but he was also imprisoned for six months in 1620 as a member of parliament.
Yet, in an act that reaffirmed the Magna Carta of 1215, the English House of Commons, in cooperation with the House of Lords, submitted four resolutions to King Charles I in 1628. Known as the Petition of Right, it declared 1) No imprisonment without trial, 2) No arrest without a legal cause, 3) No one forced to make a loan to the monarchy, and 4) No soldiers or sailors billeted in private homes without consent.
Only when cultural leaders are aware of existence and man’s relationship to reality can they create social institutions that bring legal justice within range of moral justice. To internalize that, see the Ayn Rand and Isabel Paterson quotes above.
With Coke’s influence, the Petition of Right balanced a nation of laws with the rights of the individual, established due process, led to England’s 1689 Bill of Rights, and had bearing on the third, fifth, sixth and seventh amendments to the US Constitution. In other words, equal justice under objective law.
Armed with this knowledge, when you hear politicians, potentates, priests or pundits proposing “unity” with “our shared values” to “save democracy,” ask them to define that. Explicitly. They cannot. They do not know.
Capitalism
What they do know, at least subconsciously, is that statists are irrelevant to wealth creation and free markets, and in response, the State and its bureaucrats create monopolies for the benefit of their donors. To be clear, markets are efficient, excess profits are opportunities, and monopolies do not exist unless the trading advantage is enforced by government.
In the context of 16th and 17th century England, the Crown was able to generate revenue by granting and enforcing patents for benefit of the guilds and foreign merchants they controlled. This was a way to raise money without the monarchy admitting to the imposition of taxes. Eventually the practice expanded to a multitude of commodities known as “odious monopolies” and led to another conflict between the Crown and Parliament.
Eventually, many monopolies were abolished by the Committee of Grievances chaired by Sir Edward Coke, but the practice continued to grow. In the end, Coke drafted the Statute of Monopolies that was passed by the House of Commons in 1621, thrown out by the House of Lords, and finally passed by Parliament in 1624.
As published in the 1957 Journal of Industrial Economy, of all the far-reaching provisions that banned monopolies and arbitrary patents, the most important one continued the approval of patent applications for the creation, design and manufacture of new products:
One of the landmarks in the transition of this country’s economy from the feudal to the capitalist was the Statute of Monopolies of James I. This Statute rendered void all grants of monopolies and dispensations with one exception. The exception was the grant of ‘letters patent . . . The basis of the grant is that the ‘manner of manufacture’ is new and would not be introduced into the country were it not for the agency of the inventor.
Independence
In the end, intellectual property rights defended by a society of contract was leading the way to independence for women and the abolition of slavery, but not so fast. It took 6000 years to for these radical achievements to take hold. The abolition of slavery in England was 200 years away, and the right to vote for women was 300 years away.
As a sign of the times, Coke had also forced his minor age daughter into marriage with a political ally. According to him, “a man’s house is his castle.” Obvious to us, more radical change from the medieval traditions of faith and force was needed. At the same time, Sir Edward Coke was laying the intellectual, legal and moral foundation required for the industrial and American revolutions.