Humans have always struggled with the question of how to design institutions that make self-interested individual action result in the welfare of society. This situation is sought to be achieved by market institutions. But there is a large sphere of behaviour that is not governed by legislation.
Around 1919, a man named John Fletcher Moulton, an English mathematician, barrister, judge, and Member of Parliament, gave a speech which was transcribed verbatim by someone in the audience. It was published in The Atlantic in 1924 with the title "Law and Manners". There was no transcript of the speech and if someone in the audience had not written it down, it would have been lost. (It was published after his death. I came to know about this speech from this episode of the podcast econtalk)
In the speech, he says that there are three great domains of human action. First comes the domain of positive law, where our actions are prescribed by laws which must be obeyed. Next comes the domain of free choice, which includes all those actions in which we claim and enjoy complete freedom. But between these two domains there is a third large and important domain which doesn’t get much attention these days.
Here there is no law which tells us what should be done, and yet we feel that we are not free to do whatever we feel like doing. The freedom of action that we have will vary from case to case and will depend on our discretion. It grades from a consciousness of a duty nearly as strong as positive law to a feeling that the matter is just a question of personal choice. This is the domain of Obedience to the Unenforceable. "The obedience is the obedience of a man to that which he cannot be forced to obey. He is the enforcer of the law upon himself."
That is a brilliant phrase - "obedience to the unenforceable". Moulton gets at the fact that if you take the idea of a "free debate" literally, the debate will be destroyed. The assumption regarding a "free debate" is that you don't actually say whatever you want because that destroys debate. A "free debate" is not totally free. You have to recognise that there are unenforceable obligations of self-governance.
If you have a set of norms surrounding speech, where people are given freedom and there's very few formal restrictions and we rely on obedience to the unenforceable, then it is better to leave it alone. But once you fail to be obedient to that unenforceable obligation, creating that obligation is very difficult. If everyone else is talking too long and you respect this norm, then you feel like a sucker. You start to say, : "I'm a fool. Doing what's right is foolish." And then you've lost that norm.
Moulton's analysis suggests that we have a set of impulses which, over time, we can either cultivate or we can desist from doing. So, if I have the right to do something and I always do it, then I am cultivating a habit of vice. But, if I say, 'No, I shouldn't do that: that would be wrong, even though I can do it' then I am cultivating habit of doing the right thing. So, if a situation comes along that happens to be in the third domain of Moulton's framework, I know what the right thing to do is even though it is unenforceable because I've made it a habit.
If we all cultivate that habit, then the society that we live in is much better for everyone. If I'm the only one doing that, I'm a chump and it won't work. If everyone else does it but I don't do it, I start to corrode their commitment to those habits. So, it really is important that when I look around, I see everyone else doing it.
The modern trend is to expand the scope of what Moulton calls law to prescribe things through the power of the state. But things that are legal are not necessarily things that should be done. And similarly, many things that should not be done perhaps should not be illegal. They should just be part of what Lord Moulton was calling manners or "obedience to the unenforceable". Many things should not be enforced through the state but through our social interaction. Many people underestimate the importance of moral strictures that we obey because they are the right thing to do. This is what Moulton emphasised when he used the term "obedience to the unenforceable".
Adam Smith thought that over time, human beings both individually and collectively, were capable of perfecting a kind of self-governance. Much of our behaviour would actually be governed by the reactions of others, represented by the impartial spectator, which we had internalised to a great extent. He says in The Theory of Moral Sentiments that my desire for your approval and your desire to avoid my disapproval, is the foundation of civilisation. It pushes us in a direction of doing the right thing.
He's aware it doesn't work all the time and that sometimes laws are necessary, but there's an impulse toward being a decent human being even when you don't want to be, because you don't want to lose the respect of the people around you. But modern economists will say that these are all principal-agent problems and all we have to do is design a set of rules and impose those in order to solve them.
Thus, the eagerness and willingness to "do the right thing" has been eroded. This puts pressure on the state to use the power of the state to enforce the things that were once unenforceable. This, in turn crowds out the natural impulse of norms and institutions to emerge that would enforce these without the state. This back and forth between our imperfection in creating a demand for government intervention and then that government intervention crippling our ability to solve these problems is a positive feedback loop that is difficult to arrest once it begins.
A lot of what's disturbing about the world right now is the erosion of those norms. We are left with disobedience to the unenforceable and facing the choice of having to legislate improvements.
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