The Institutions of Private Law and Their Social Functions

Eli Ginzberg, Karl Renner

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351480819
• Edition: 1
• Topic: Law
• Subtopic: Civil Law
• Index: Law

In the English-speaking world, Karl Renner is by far the best-known among the Austro-Marxists who were active in the Austrian socialist movement during the first few decades of the twentieth century. Recognition of Renner's scholarship is due largely to the English translations of his works on Marxism, as well as to the secondary writings on his notions of socialist legality and national cultural autonomy.

Renner has for over half a century been celebrated for the only book of his that has, to date, been wholly translated into English. It remains the classic socialist attempt to off er a realistic understanding of the role of the legal institution of private property in modern society: The Institutions of Private Law and Their Social Functions. In his introduction to this edition, A. Javier Trevii?1/2o discusses the volume's relevance for today, and briefly describes that aspect of Renner's life that occupied most of this time and energy: his involvement in Austrian social democratic politics.

The substance of Renner's exposition remains intact. The text provides one of the best insights into the relationship between capitalism and property's economic functions. It emphasizes how this fundamental institution's application has, since the initial stage of finance capitalism, increased or diminished, been externally transformed, or inherently metamorphosed. In an age of unprecedented global financial crisis, emerging market countries, and increased government regulation, Trevii?1/2o suggests we would do well to heed the book's message. It might help us understand the complex situations we encounter today as we grapple with our hybrid identities as salaried workers and economic investors.

CHAPTER I
LEGAL INSTITUTIONS AND ECONOMIC STRUCTURE

Section i THE PROBLEM

1 NORMS

OUR modern law is crystallized in a countless multitude of codes, statutes and orders, rulings of authorities and judgments of courts; and of contracts and other acts of private individuals. What is to be the law is set forth in writing and in print: so what had a merely subjective, nebulous existence in the mind of man is rendered objective. In this way the notions of the individual are removed from the control of his fluctuating psychology and are made permanent. The law appears thus to be established, stable and fixed; it becomes statute. (I)

Consider first the language in which law is embodied. The terminology of codes of law varies widely. Nowadays it is most usual to find the indicative mood: assertions, definitions and conditional statements. For example: “The family relationship is established by the contract of marriage”¹ (2) (assertion)—“The right of ownership is the legal power to dispose at will of the substance and fruits of an object, and to exclude all others from interfering with it”² (2a) (definition)—“Whosoever intentionally kills a man is guilty of murder and is liable to capital punishment”³ (3) (conditional statement). This kind of legal norm is very similar (4) in form to the law of physics that when the temperature drops, the mercury in a thermometer falls to a lower level. There is a formal analogy between the laws of nature and the rules of law: the former control the relations among natural objects, the latter regulate the relations among men; moreover, both appear to operate as superior and superhuman powers. The world would seem to be divided into a realm of reason and a realm of nature, the first governed by the rules of law (side by side with the rules of morality), and the second by laws of science. According to tradition both laws are of superhuman or divine origin.¹

On closer investigation of the legal norm, however, we observe that the indicative changes into the imperative. In relation to murder, for example, the individual is told: “Thou shalt not kill”, and further: “If you have killed intentionally, you shall yourself suffer death.” The biblical imperatives “Stone him!”—“Crucify him!” are thus moulded into legal rules. And in relation to property the owner is told: “You may dispose of the substance and fruits of your own property as you please”, and at the same time a command is given to all other members of the community: “None of you is to limit or to interfere with the owner’s pleasure”. Every norm in its indicative form assumes a fetish-like character, akin to a law of nature, transcending the individual, superhuman, even divine. If the norm is resolved into imperatives directed to the individual and telling him “you ought”, “you ought not”, “you may”, “you can”, it appears immediately less unnatural, though still not acceptable as self-evident. The analogy with the law of nature is now meaningless, for nature knows no controlling common will, nor an individual will that is controlled.

The ancients usually spoke in direct imperatives when they recorded their norms in stone and metal, on papyrus and parchment, e.g. the code of Hamurabi, the Mosaic decalogue and the Twelve Tables of Rome.²

Such imperatives are the elements of the legal order. They are addressed to the individual and claim his obedience. Aiming at the will, they limit or enlarge, break or enhance the individual will (autonomy) and hence confront it as an extraneous will (heteronomy). This relation of wills is fundamental to the law, there is no mystery about it, nothing metaphysical, supernatural or divine. From the psychological and physical aspect, the highway robber who attacks the wayfarer in the wood with the alternative command of “Your money or your life” attempts to impose his own will upon that of another person in the same way as the law seeks to impose its authority, with its instant readiness to apply civil sanctions or with the threat of punishment and criminal sanctions. How the authority of another person (the “heteronomous will”) is imposed on the wishes of an individual (his “autonomous will”) is a matter of common experience. He is coaxed or threatened, talked round or browbeaten; fraud and coercion, either physical or mental (hypnosis), play their part.

There is however, this mysterious difference: that in modern times all law is laid down, in the name of all citizens, by the state, conceived as an entity. Instead of one man’s will prevailing over the will of another, the common will is regarded as imposed upon that of the individual. How this common will arises—for it is clearly not the volonte generale—is one of the fundamental problems of jurisprudence; but we need not concern ourselves with this question.

For the purpose of the present investigation we will take it for granted that the state lays down the law which confronts the subject as the common will and claims his obedience; we will not examine whether the state in this aspect is real, an actual entity, a person; nor will we enquire whether this unity of the state corresponds in any way with a real unity of the society within its borders.¹ (5) Let it suffice that the legal order is in fact imposed upon the individual will of the citizens as a unified common will, and that in actual fact it operates as a unified whole. It is one of the most important functions of legal science to analyse the process by which a unified common will arises from a chaos of conflicting individual wills. But this analysis does not form part of our present task.

Of greater interest to us is another part of legal theory which I will call the analysis of positive law; distinguishing it as a separate branch from general legal theory, for it has its own functions and methodology. It is not the object of positive legal analysis to investigate the origin of the common will, its essence, its growth or decay. Its object is to analyse the legal norms contained in the sum total of positive legal provisions, arranging them in accordance with their inherent nature, and to reduce them to a system. For the chaotic multitude of norms can neither be understood nor expounded, neither taught nor applied, without previous co-ordination. We have to classify the norms according to their constituent elements, (6) which we will call “legal characteristics”. Positive legal analysis distinguishes rules of private law and rules of public law, (7) and divides the former, in accordance with the particular relations of individual wills with which they are concerned, (8) into rules of the law of property, of obligations, of family relationships, and of succession. Such analysis treats a loan, for example, invariably as a relationship between the wills of two persons, creditor and debtor, concerning the giving and returning of an object; it pays no regard to whether the creditor exploits the debtor—as is usually the case—or whether the debtor exploits the creditor—which may also happen—or to whether the loan concerns a debt of honour or a commercial credit. Positive legal analysis has no other task than to ascertain all the legal norms relevant to the facts and to apply them to the case in hand. This exhausts the function of positive legal analysis. The question how loan transactions collectively react upon the economic system, upon particular classes or upon society as a whole, in short the social effect of the norm, transcends its legal structure. (9) However interesting these social repercussions may be to the lawyer as a side-line, they are the province of the economist and sociologist. They lie outside the province of systematic legal analysis, just as the economic use of the tobacco leaf lies outside the province of botany. (10)

2 LEGAL INSTITUTIONS AND THEIR COMPONENT NORMS

There is a radical difference of approach when we consider norms from the standpoints of law and of economics. Systematic legal exposition enquires whether the norms establish rights; it distinguishes absolute and relative rights, (II) rights in personam and rights in rem; (12) it is the juridical aspect of the rights which decides their classification. Rights are conceived as having a life-cycle: a right is acquired; it is enforced against interfering third parties; it is lost. (13) If the right is exercised in a normal way without disturbance, it remains outside the scope of legal analysis. (14) Yet it is just this day-to-day exercise that reveals the value of the law in the life of the community.

In the eyes of the law a landowner exercises his right whether he plants corn or tobacco on his soil, or leaves it untilled; but in this continuing exercise of his right the landowner is not the concern of the law; he is of no interest to the lawyers and judges who are agents of the law. No contract is involved, no lawsuit, no judgment; but the normal and undisturbed exercise of a right is none the less of paramount economic and social importance. To the lawyer the acquisition and extinction of a right, and interference with it, are normal incidents. The economist regards these events differently: for him they are at the most symptoms of a disease, abnormalities which he mentions in an appendix. (15) A right of real property is to legal analysis a homogeneous concept where no further differentiation is possible. Yet if this right is exercised in different ways, there will be different economic and social consequences. The economist is therefore bound to establish different categories of land-holding: small-holders’ property, peasants’ property and landed estate. (16) He will examine how these affect the density of population, conditions of labour, imports and exports, and so forth. He will treat the small-holding, the farm and the large estate as distinct economic institutions. As an example, the rentcharge of the parents (17) is normally part of the economic institution “farm” but it is a totally different institution in the eyes of the law. Between legal and economic institutions there is no point-to-point correspondence.

Positive legal analysis builds up legal institutions from their (18) constituent norms, in accordance with formal legal characteristics. The legal theorist disregards the economic and social significance of an institution, as is only right; for he is applying a method which is peculiar and necessary to positive legal analysis. Contrast the methods of the economist who looks for unity of economic purpose when he classifies the works of mankind which make up an economic institution. Thus he speaks of the institution of peasant-holding, although now and then (19) the owner does not farm the land himself but leases it to a tenant. The holding is then partly in a different legal category. In practice it often happens that the same term is used indifferently for a legal and an economic institution; and this may lead to confusion.

Quite a number of economists—some of them of considerable repute—demand that the lawyer should fuse the economic and legal methods. These theorists themselves apply a combination of these two methods in their own field. (20) They regard with deep disfavour¹ the civil lawyer’s concept of the right of property—the rigid individualistic concept of Roman Law which emphasizes the absolute character of property: connoting unlimited power. Just as the bourgeois economist sees everything in terms of value—a glass of water in the desert, the baritone in the opera, and the favours of a prostitute—so do these economists regard everything as property—debts, copyrights and patent rights. Their definition of property would even include ownership in “legal relationships” and “rights”² (21) And when they are able to refer in this connection to medieval Germanic Law, they claim to have strikingly exposed the alleged one-sidedness of the contemporary theory of civil law, a theory that is foolish enough to aim at an interpretation of civil law as legislation has made it. (22)

In our legal system there are more such seeming inconsistencies. As we all know, the law relating to property is split up into three parts: civil law, criminal law and law of administration; legal analysis follows the legislator in making these divisions of one legal institution. Moreover, the civil law of property is a mere illusion without the law of civil procedure, its most important complement in the sphere of public law. For this subdivision legal theory has good methodological reasons and good practical reasons. Surely the concept of property, a concept of civil law, should not be made to include restrictions and obligations imposed on the owner by the law of administration, such as liability to land tax. Adolf Wagner actually demands that the civil lawyer’s definition should embrace “the possibility to restrict by law the owner’s power of disposal, and even to impose on him obligations to perform certain acts”. This suggestion will appear monstrous to all lawyers. They well know that every right is conferred by the law, that it has no existence but for the law; that this same law may in any particular case impose personal liabilities upon the owner and encumbrances upon the res or subject-matter of the ownership; just as it can compel all citizens to act in a certain way, and can encumber all things within the territory of the state. Should the teacher of law have to recite the principles of constitutional and legal theory every time he wishes to define a legal institution? (23)

And what would be the position if the constitution itself were to lay down the rule that “property obliges and should be made to serve the common good”—as does the Weimar Constitution in Art. 153? A programmatic pronouncement of this kind is a command addressed not to the citizen but only to the legislator, enjoining him to translate these obligations into legal norms, while to the citizen it merely gives an exhortation. But, be that as it may, is the right in rem called “property” affected by the duties of the owner as a citizen? (24)

Or does this formulation mean that our private property as we know it thereby becomes social property? Can all this prove anything more than that the owner is not sovereign but remains a subject of the state? Property is absolute in the sphere of private law; in the sphere of private economics it is equally absolute; this is of paramount importance to the economist. Tamper with this, and you reduce the economic system of private capitalism to the confused medley of qualified statements which serves the champions of private economy when they compile their principles, guides and text-books for business men and students.

There is no greater stumbling block in the path of knowledge than the mingling of various methods. The unity of a legal institution derives from the unitary character of the norms from which it is built up. How such an institution affects social life, is quite another matter. We shall in due course meet many illustrations of this point; for the moment a few examples will suffice. Contract (25) remains one and the same legal institution, though it may serve an infinite variety of purposes—economic or otherwise—marriage as well as prostitution. In particular, the contract of loan does service for charity and usury alike. Conversely, the same economic purpose may be achieved by a variety of legal institutions. For instance “share-cropping” can be carried out either by an agreement of partnership or by a contract of service, providing for a partial payment in kind. The settlement of an estate inter vivos for a limited period is a substitute for testamentary succession and has a similar economic effect. T...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• INTRODUCTION TO THE TRANSACTION EDITlON
• INTRODUCTION by O. KAHN-FREUND, LL.M., Dr. Jur., Reader in Law, University of London
• CHAPTER I LEGAL INSTITUTIONS AND ECONOMIC STRUCTURE
• CHAPTER II THE FUNCTIONAL TRANSFORMATION OF PROPERTY
• CHAPTER III SOCIOLOGICAL ANALYSIS OF FUNCTIONAL CHANGE
• Index