The Underrated Bruno Leoni (with Michael Munger)

Michael Munger: Thanks, Russ. It’s a pleasure.

Michael Munger: Well, and relatively brief, tragically–but we’ll get to that. So, he was born in 1913. He died in 1967 in a sensational murder. Alberto Mingardi, who is the head of the Bruno Leoni Institute in Milan, described him as having a frenetic life. Leoni did his studies in Torino and got–and he studied law and the state: and so, it’s kind of a different set of categories for academic disciplines in Italy. He ended up with–he had an academic chair at the University of Pavia.

He was quite a successful academic, but he also did a number of other things. He fought in World War II on the Italian side, but then Italy was defeated–kind of tried to withdraw–but it was hard because they were occupied by the Allies at the time. And then, Germany basically invaded Italy, who had been their ally.

And I think it’s fair to say Leoni switched sides. He adopted–he became part of what is called the ‘A’ Force, and they rescued allied POWs (prisoners of war) who had been captured. The Italians tried to release them; the Germans kept them. And he was almost like a partisan, because it was an irregular force, and it was quite courageous for him to have done that.

He went back to Pavia in 1945. He was head of the Political Science Department from 1948 to 1960. I would call him a political philosopher. But, that discipline in Italy, even post-Fascist, Italy was called the Doctrine of the State. And so, you teach a course on the Doctrine of the State. Actually, what he tried to teach was more like the doctrine of freedom and law. He was interested in the nature of law, and his ideas about what law should be–how we should think of the law–is a fascinating, and I think surprisingly provocative intellectual signpost along the way towards what we now think of Austrian economics and public choice.

So, the reason that I think he is underappreciated is that his contributions–and we can talk more about why his contributions weren’t recognized as much as perhaps they might’ve been–but his contributions in retrospect presage a lot of later developments in Austrian economics and in public choice.

And, there’s pretty good evidence that they actually caused them, in the sense that he knew James Buchanan. He knew Friedrich Hayek. And both of them reference Leoni’s work as having influenced them. But, it was kind of a temporary thing because his death in 1967 ended that.

But, famously in 1960, he shared the stage with Friedrich Hayek, who was then presenting an outline of The Constitution of Liberty; with Milton Friedman, who was working on Capitalism and Freedom. And, Leoni was working on his major book–what turned out to be really his only major book–Freedom and the Law, which was published in 1961. So, that conference was sponsored by the Volker Fund (William Volker Fund), and it was a kind of a high water mark of the 1960s movement towards a rebirth of notions of freedom and criticisms of planning.

He, right after that–partly from knowing Friedman and Hayek and other important people–was made an officer of the Mont Pelerin Society.

Now, the Mont Pelerin Society is a small but important intellectually attempt that Friedrich Hayek and some others had put together in 1947. And, Leoni had been active in the Mont Pelerin Society from the beginning. But, he was elected president of the Mont Pelerin Society in 1967, just months before his death. And so, it does make one wonder what might have happened.

The Mont Pelerin Society was an attempt to recognize that in post-War Europe–and in the United States, for that matter–there was a lack of intellectual coherence in the movement towards opposing this seemingly-inevitable increase in planning and government control of the economy.

So in 1947, it seems kind of hopeless. I have friends now that say it’s hopeless. If you go back to 1947, things were much worse. There’s all sorts of institutions that we now have. Well, the Mont Pelerin Society in part contributed to that. And, he was president in 1967. So, he was important. He was appreciated. He was a central figure in this movement.

All of that is cut short in 1967. We could talk some about the reasons why, but that’s the sort of brief introduction that I would give.

Michael Munger: And others–

Michael Munger: I’m sure that some of the listeners may know or can find out, and so we will leave that as an exercise to the reader.

Michael Munger: For those of you who don’t know, that’s a standard little thing that you hear in econ textbooks where–

Michael Munger: where, ‘This is so obvious that it will be left as an exercise to the reader.’

Michael Munger: Well, it is probably pretty unusual for anyone. It’s very unusual for an economist.

Michael Munger: I had read some brief accounts of this. As far as I know, the story has not been told before in English. If we’re wrong about that, again: Please, readers, let us know.

But, he was very active as an economist and scholar, but he also had a lot of energy, and he had a side-gig working as basically a fixer for the Olivetti family. So, the Olivetti family is a large Italian manufacturing company. Back when there were things called typewriters–people might remember–

Michael Munger: They made those. His job was kind of an odd one. He worked for the Countess Magda Olivetti. He collected rent for them. So, they had a lot of rental apartments and houses in a number of cities. Torino was the one where he lived, and that’s in Turin, which is where he worked.

And, he had hired a printer, a guy named Osvaldo Quero, who lived nearby. And so, what Leoni was trying to do was: he had this job to collect rent. So then he was subcontracting, sending other people out. And, that works great as long as the people that you send out actually turn in the rents. What happened was that Quero was behind in turning in the rents. Now it’s not clear if eventually he was going to turn them in or he had just decided he was not going to pay. Quero was kind of a prickly guy.

Let me say that my sources for this are several Italian newspapers of the period. I don’t speak Italian, so I just work to translate these. I tried to have two sources for different newspapers for everything that I found.

But so, it is clear that Quero was a printer. He had been described as the best worker at the print shop where he worked. And, he got pretty far behind in the payments. Actually, it was less than $150 worth–it was 80,000 lira. So, to be clear, Quero was collecting rents from tenants. He was the equivalent of $150 US behind in delivering these payments to Leoni, and Leoni demands that he pays–which seems pretty reasonable. And, Quero said that: Well, he’d already sent it by registered mail. And Leoni waited a couple days.

And it was odd that he had sent it by registered mail because the detail was that Leoni demanded to see the receipt. When you send something via registered mail, you’ve got a receipt. Now all the receipt says is you sent them a letter. I don’t know if the money is in it or not.

So, Leoni decided he would fire Quero and demand that they have a meeting. So, they met at the main train station. Leoni went to the post office to check for the registered letter. It still wasn’t there. He calls up Quero. And, according to the newspapers–now, these quotes are made up by the newspapers, but this is the account that you get that hasn’t been told in English.

Michael Munger: Yeah, they make up entire stories.

So: ‘Look, Quero,’ the professor angrily asked, ‘Are you sure you sent me those documents?’ Now, he hadn’t sent the documents, but he said, ‘Yes, very sure, by registered letter.’ So, he demands to see the receipt, and they set an appointment for 9:30 P.M. at the main train station–the huge train station in Turin. The professor drives up–these details are great–professor arrives in his Mercedes, Quero in his small Fiat. He has no receipt. Quero says, ‘Oh, I left the receipt at home.’ Like, okay, that’ll work. And Leoni demands, ‘All right then let’s go to your home.’ And so, the Mercedes stayed at the parking lot. They went in the Fiat. I’m just imagining this scene, these two fairly corpulent men in this tiny Fiat, very angry at each other, bumping elbows, because it’s a 20-minute drive. And, Quero is becoming more and more angry because he feels like his–Quero, the printer, the employee is becoming more angry–because he feels that his honor has been impugned, even though he did in fact try to steal the money.

So, they get to the house. They start to have an argument. Quero apparently killed Leoni by repeatedly bashing his head against a wall. And, other people in nearby apartments heard someone screaming, ‘Help, help.’ Quero must have been a physically powerful person. It’s not easy to beat another person to death by bashing their head against a wall if they’re resisting. He continued to beat the body, in a rage, and then he tied the corpse up in a way that was small enough it would fit into a box, put it in the box in his garage, and then goes inside.

Now Mrs. Leoni had been calling the Queros because she knew that the meeting had taken place. She was asking where her husband was. By this time, it’s two in the morning. Quero’s wife said she hadn’t seen him. Finally, Quero comes in. He’s covered with blood. His wife tries to say, ‘What’s wrong?’ And he said, ‘Well, I helped a man who was hit by a car.’ Quero told Leoni’s now-widow, although she didn’t know it: ‘I left your husband about 1:00 A.M. in the main train station. I haven’t seen him.’ Takes off his clothes; for some reason, put his clothes in bundles, tied them up, and hid them under armchairs in the bedroom. So, he’s not thinking very rationally. Goes to sleep.

Michael Munger: Just immediately goes to sleep.

Michael Munger: Gets up–wakes up in the morning, sees his wife staring at him. She’s upset. I mean, she’s not buying any of this. She knows he’s very angry. He’s covered with blood, and he’s saying, ‘I don’t know.’ But, apparently she also looked out the window and there was blood on the driveway leading up to the garage. So, unless he helped a man hit by a car in the garage, that seems unlikely.

So, then he says, ‘Rosina, I had an argument with the professor last night and I killed him. He’s down in the garage.’ So, this is not something anyone wants to hear from their spouse. He gets dressed, takes some money, and drove away toward Turin.

Now so far, this is just weird. But now it takes a–well, a sort of almost comic book turn. He decided he would create–he, Quero–decided he would create a diversion contacting Leoni’s widow anonymously and claim to have kidnapped him. And so, there’s a kidnapping scheme: Unless we get money, we’re going to kill him. And for some reason, he signed the kidnapping note: The Sardinians. As if they were from Sardinia.

And of course, he was already dead in the box. I think what he wanted was to try to divert attention: ‘We don’t know where he is.’ ‘Ah, it’s because he’s kidnapped.’

Problem was that the neighbors had called the police and said, ‘There’s blood running out of the garage.’ Well before the kidnap note was delivered, the police had found the body and were starting to look for Quero. And of course, Rosina Quero, the wife, said, ‘He clearly did this. He was covered with blood last night.’ So, it’s not even that she was ratting him out.

So, his plan was: he was going to go back to the garage, load up the boxed body into his car, and then dump it somewhere. It would have been better if he had taken it in the first place. So, the whole thing smacks of–it actually wouldn’t be believable except that it’s true.

So, he saw a newspaper headline–I don’t know what he was doing–driving around, trying to make plans. He sees a newspaper headline saying that Leoni has been killed and was found beaten to death in his garage. Quero drives to Rome.

Michael Munger: In Quero’s garage, yes. Yes.

Quero drives to Rome; hears sounds, thinks that he’s about to be captured. Drinks a significant quantity of bleach in an attempt to commit suicide–which is a pretty tough way to go. It burns your esophagus unless you–I mean, of course, you immediately throw it up. So, it’s hard: it’s very painful, but difficult, to commit suicide by drinking bleach. He survived that. He was arrested; he was tried and sent to prison for 24 years.

Now the reason that–as we’ve talked about a little bit–that these details are important is that Leoni had been an influence on three different parts of what we now think of as mainstream classical liberal scholarship. So, he was closely associated with Hayek for years, and introduced Hayek to the concept of common law as being an alternative to legislation. So, Hayek’s distinction between law and legislation, in part–Hayek himself said–owes to Leoni. But Hayek also says, in his encomium at the time–the commemoration at the time of Leoni’s death–that Leoni never had time to develop this. He never came up with any sort of syncretic theory of how that would work. And so, his death cut off what might have been important developments there.

Second, James Buchanan, who was developing Public Choice, credited Leoni as having identified important problems–and we can talk about that in a minute–important problems with consent and political authority, which are the main themes that Buchanan was interested in. That’s what motivated him to work on that.

And then, third–and this is not as widely recognized, but I found it from Todd Zywicki, who was a professor at George Mason Law School–the law and economics movement, through George Priest, was heavily influenced by Leoni’s thought; and again, was kind of cut short because there are these references that are tantalizing, but we never see the sort of full-blown theory of how he would have put–he, Leoni–would have put these things together.

And, the Mont Pelerin Society, as we’ve talked about, lost its president two months into his term.

So, those four things all were significant in different areas, about the quickness, the sudden unexpectedness of Leoni’s death. And, I think it’s just a surprising story. So, I did spend a fair amount of time trying to track it down.

Michael Munger: It’s time you got some listeners.

Michael Munger: Well, it makes me think of baseball players: not by the late 1960s, but in the 1940s and 1950s, many professional baseball players would also have a side job. Being a professor just didn’t pay very well.

Michael Munger: Lord Moulton.

Michael Munger: Well, he was worried about obedience to the unenforceable.

Michael Munger: Well, I’ve told this story before. I use it in class, so I’ll just say it briefly; but now I would say that it’s about Leoni rather than Hayek. So, imagine that we are the Board–since you’re a university president, you may have been in meetings like this. We’re having a meeting of the Board and we have to decide: where are we going to put the sidewalks at Leoni University? And, one thing we could do is we could have aerial photographs and we could decide these are the most likely paths that will go between the buildings. But, another thing we could do is just wait two years and then pave the muddy paths.

And, pave the muddy paths is basically Leoni’s claim for how the law should work. And it’s both unenforceable, but kind of self-enforcing. Paths appear, not because any individual says, ‘I’d like to make a path.’ They have their own plans and purposes. It’s idiosyncratic. We all have different reasons. But as a result, there emerges this path between buildings.

Now, the question is: Where do the buildings come from? And, the buildings come from some sort of central plan. We don’t say, ‘Oh, look over there under that tree: that appears to be a group of sociologists. That’s where we’ll put the sociology department.’

And so the question is: What should be the line between legislation, which is the blueprint for where the buildings go. And, we have to decide that in advance because that requires the mobilization of resources and cooperation at a large scale. The transactions cost of getting that many people to cooperate–that’s too high to emerge spontaneously. However, once that’s done, all sorts of paths will emerge. And, if we pave those, we’ll save a lot of information costs because the paths are an emergent property.

So, it seems to me that that is–a fundamental insight that Leoni has–except it goes much farther than I think anyone else that I have encountered would push it, farther than Hayek went–was that the common law is–Leoni is kind of chauvinistic and Italian about this. He calls it Roman law. And, his description of where the common law came from was a discovery process. He explicitly uses ‘process of discovery,’ which is what Hayek and Mises also call the process by which we learn about markets.

Michael Munger: Well, common law is judge-made law; and I will try to talk about it in Leoni’s terms. So, his claim is that judges or lawyers or others who are in a similar position, being asked to decide things–

Michael Munger: I was wondering whether to go there. And, since you raised it, let me go exactly that way.

So, let me take one step back.

Leoni is concerned about his conception of the rule of law. His idea of rule of law–and this is law, not legislation. So, we’ll get to the common law in just a second. His conception of rule of law has three parts: freedom, universality, and non-arbitrariness. And, freedom– the big part of freedom–is what Leoni calls ‘law as individual claim.’ And, you just nailed it. What happened is, there has to be some kind of dispute. If there’s not a dispute, the law doesn’t apply. We don’t deal with the state; we don’t deal with any kind of enforcement. We just go on with our business. There’s no legislation that applies to us unless a dispute arises.

Now–and, that’s a very radical idea, obviously. So, that his conception of freedom is extremely encompassing.

So, judges or lawyers only intervene if they are asked to do so by the people that are concerned. And the decision of judges is effective in regard only to the party to the dispute, not with regard to third persons.

So, his idea of the common law was that we will have disputes, and judges will render decisions, literally case by case.

Now the English (meaning, in England–Econlib Ed.) conception of the common law is that: There’s a dispute, and the judge says–and here is the outcome, here is the reason, here is the principle that underlies this–the principle that is used to determine the outcome of the dispute in English common law then becomes a precedent if other judges decide to use it.

So, the question is: Do other judges find the principle elucidated by the judge in this one case to decide a whole class of analogous cases?

Because: legal reasoning is always by analogy. There’s a set of facts. And, at the trial–in court–what happens is, the disputants argue about what the correct precedent is. Because if I can get the judge to accept the precedent I want to apply, I’m a clever lawyer. Of course, the precedent that I want to apply gives me the outcome that I want. And, the judge decides between these different precedents that basically have legal standing, provided that judges have, over time, found these rules to be useful for adjudicating similar disputes.

So, that all seems very complicated.

Common law, first, is judge-made law, where a decision is rendered, a principle is outlined, and if that principle is useful and general, other judges also use it. And so, it’s like an emergent path. This is the way to get from this dispute to this outcome. And, all similar disputes will be resolved by a similar principle.

So, that’s how the common law works in England.

Michael Munger: They’re helped, they are helped to examine it by the arguments brought to them by the disputant. So, it’s important that it’s an adversarial system–

Michael Munger: So, the judges are presented: ‘Here is the argument that you should use.’ ‘No, no, here is the argument that you should use.’

So, it really simplifies the decision that the judge has to make, because you have smart, articulate people saying, ‘Here are the principles that have arisen from other cases that we say are like these.’

Michael Munger: It’s called The Answer Is Transaction Costs. And, I am concerned with questions about this, like this. In some cases pretty small and in some cases much larger.

But, what’s so important about what you just said and the reason that so often in The Answer Is Transaction Costs, my podcast, I take this up, is that it is the coordination of expectations that is the best way of reducing transactions costs. We all go into this expecting what actually happens, for all sorts of reasons that reduces enforcement costs. It means I don’t have to change my plans. And when it’s operating right, it’s like a baseball umpire. Nobody notices them. The last thing you want to be if you’re a baseball umpire is to be famous, because it means something bad happened.

So, the only time cases go to court–I’ve had a number of arguments about this with law professors. They say, ‘Well, judges can decide that.’ No. If the system is operating properly, there are no cases that come before a judge.

So, what you want is not to have the cases decided correctly. What you want is to have the cases decided in advance, so that there’s no dispute to begin with.

And so, we’ve talked a little bit about common law. Let’s go back to Leoni because he actually has a more radical view. His more radical view is that–and he makes an analogy and it’s very explicit. So, markets are to centrally planned economies as common law is to legislation. And, a big problem that we haven’t talked about so far is the knowledge problem. So, it’s not incentives: it’s that literally no one could possibly know what they would need to know to come up with a written law that would encompass all of the circumstances and exigencies that we’re actually going to have to deal with.

Michael Munger: I mean legislation; although, and Todd Zywicki–I hate to give Todd Zywicki credit; it doesn’t happen very often, there’s twice in one podcast–but Todd has pointed out that it doesn’t have to be legislation. A lot of it is rule promulgations by bureaucracies.

And so, this is the correction. This is the point at which the intervention by Leoni changed Hayek’s mind.

What Hayek wanted was certainty of a certain kind; and that is, he wanted the law to be predictable. And the way to have that is to have black letter law that is written down in a book. And Leoni said, ‘That’s not certain. The legislature can change it tomorrow. What you need is something that emerges out of a tradition that’s hard to change. That’s what gives you predictability.’

And so, that’s the advantage. It’s not only that no one could know, but having something written down and saying, ‘Well, I know exactly what these words say’–those could be changed at any time. Also, in the system that we have for adjudication, the interpretation of the law might be changed by a court. And, Leoni objected to having the content of the decision–the reasoning–have that have the force of law.

So, we pore over Supreme Court cases on the First Amendment, for example, to try to interpret what tests we will use to determine whether something is going to be unconstitutional law. Leoni didn’t want that. He argued that–and again, he was proud of the Roman law contribution. He said that the Roman jurist was a sort of scientist: that the object of his research was a solution to cases that citizens submitted to him for study. So, an industrialist or a scientist might look to a physicist to engineer a technical problem. So, private Roman law was something to be described or discovered, not something to be enacted. So, over time, these principles emerge.

So, the analogy would be Newton trying to figure out gravity. Gravity works. There are certain underlying laws; and you can discover them by the application of scientific reasoning. That’s what Leoni thought the common law was–was the emergence of principles that were a kind of discovery process.

And, only–this is exactly parallel to Hayek’s claims and Mises’ claims about discovery processes in prices. So, market processes deliver us information about the scarcity of resources through the emergence of price. For Leoni, disputes cause judges to have to think, ‘Huh, I wonder, which of those arguments is closer to being correct?’ And, over time we grope, through a tatonnement process, towards better, more widely applicable, and maybe simpler laws.

So, the idea that judges are going through a discovery process is something that really changed Hayek’s mind; and that’s where the law-versus-legislation distinction comes in. Hayek had been saying what we need is rule of law, black-letter law, written down, applies to everyone.

Michael Munger: Right. What he meant was legislation when he said that. You’re right to correct me.

Then, he made this distinction after having talked to Leoni about, ‘Well wait: the common law works differently.’

Michael Munger: Well, Leoni thinks differently in the sense that he thinks black-letter law has two problems. First, the legislature cannot have sufficient information to be able to write the correct laws, because they’re writing them from scratch. Second, they’re subject to change. And so, they don’t satisfy his precept of certainty.

So, for those two reasons, they can’t be consistent with freedom. It may be necessary sometimes to have legislation, but Leoni was pretty radical in thinking that there should be a strong presumption against having any laws whatsoever.

Michael Munger: And, remember, all of this comes–you’re right to keep correcting me because I’m used to thinking in terms of laws. We write down laws, we have how a bill becomes a law; but legislation is something that legislatures produce. His thought was that we should not be subject to legislation and we should only encounter the law if there is a dispute between us.

So, if you and I cannot reconcile our disagreement because our expectations and behavior have not been sufficiently coordinated by the law–which is the common law–then we might need legislation. Maybe we need criminal laws to be able to say, ‘You can’t do this’ because that could be clear. ‘The speed limit is going to be 65’: it’s not clear that that would emerge; maybe some range of speeds would emerge, but probably not.

So, except, though, for simple things that allow–drive on the left or right? Eventually we probably could decide which of those to do. But, in a coordination game like that, just having someone move first may help. But, otherwise, in most cases, Leoni thought the law–by which he was saying legislation–should not be part of our lives unless we choose to make it part of our lives.

Michael Munger: And they arise from disputes–

Michael Munger: We need, we need, we need not legislation. It’s not that we don’t need it, we need not legislation. He will go that far.

Michael Munger: We should only have the law.

Michael Munger: And, you’re about to say, but legislation can? That’s his point.

Michael Munger: You have literally just made his point–

Michael Munger: Contract disputes are the source of where these disagreements come from.

Michael Munger: So, that’s where the law comes in. We need a judge.

Michael Munger: And what was expected at the time of the contract–

Michael Munger: You are describing Leoni’s ideal judge. There’s no reason to be trained in jurisprudence.

Michael Munger: There’s no reason to memorize legislation.

Now, he may be wrong about that. But you have exactly intuited what his argument must be. You have just described what a judge should do.

So a judge’s job is literally to decide what is the right outcome in this case. And, the reasoning need have no precedential(?) value for other similar cases. That will be decided by other later judges.

Michael Munger: Shared, shared expectations–

Michael Munger: Yep. Exactly. That’s exactly right.

Michael Munger: And, there are no more disputes. It’s settled. Ideally, that’s what settled law is the absence of disputes. So, in equilibrium, there are no disputes because the path is fully paved.

Michael Munger: I’ve never heard that story. That’s great.