Arguably, the emergence of modern property law is itself the origin of the capitalist system. The destruction and privatization of the commons in England has been cited as the ideal conditions for the rise of capitalism and the Industrial Revolution. The commons, which were based on a diffusion of responsibility and power, were difficult for outsiders to organize and they promoted community instead of exclusion and individualization. Private property, which was, and still is, backed by state sovereignty, worked to dismantle the commons and do away with its community, grassroots dynamic. Thus the course was set for modern capitalism.
Over the centuries, property law has been responsible for mass transfers of wealth to a smaller, more concentrated group of people. By the 1600s, property had become a structure to entrench an individualist world-view. Property law maintained that any redistribution of property would never become common, but remain in private hands. It was used as a legal justification for colonization and it “[i]s still perhaps the most powerful institution of exclusion, individualization, and competitive accumulation.” In this way, property law is one of the foundations for Western capitalism.
If property law provided the original foundation for capitalism, the law of contract is its close cousin. In his book Capitalism and Freedom, Milton Friedman declares that consensual exchange between two parties to each of their benefit is the way the market organizes society in a voluntary way. This, he explains, is modern capitalism. That sentiment is echoed by William LaPiana who writes that laissez-faire’s legal equivalent is “freedom of contract.” No other doctrine represents the spirit of the liberal project better than that of the law of contract.
Tort law is again slanted towards those who control capital over those who produce it. Originally, tort law grew out of the industrial revolution. The idea that industry is what drives a nation’s growth and wealth and, therefore, the growth and wealth of society, is baked into torts. Tort law presents the problem of whether or not the legal system will help or hinder enterprise. Further, torts are based on an individualist, liberal ideology. Trespass is based on harm to an individual, whether that be assault, battery, false imprisonment, or others. Principles of capitalism are embedded in tort law as well. For example, one defense to a tort claim is “defense of property.” Although tort law itself is not a foundation of capitalism, it very much supports the capitalist principles of liberty and private property.
Criminal law is the enforcement of capitalist ideas, standards, and principles under the threat of violence of the state. At the beginning of the Industrial Revolution, as the commons were privatized and people were forced into cities, criminal law developed to force them into factories and other workplaces that they may not have wanted to go to otherwise. It accomplished this through criminalizing “vagabonds, the poor, and the unemployed.”Later, it would come to include union busting. Activities that either actively or passively flaunted the power of property owners were condemned by the state and enforced with violence by the police. Like tort law, criminal law is not directly foundational to capitalism. However, it is responsible for enforcing the capitalist system, coming down on anyone who does not abide by it.