not its content. Of course its content is likely to be one of the major
determinants of its consequence. However, from the perspective of social
engineering rather than abstract moralising (which I stress is a worthy activity)
the important things are the consequences of a law.
Now that we have established that the major importance of law is the
consequences that it brings, it is necessary to explain something about these
consequences. By creating these consequences or effects, law changes the
world because it brings about outcomes of effects. These effects are of two
kinds since they can be direct or indirect.
Direct Effects
Every law that a legislature enacts causes a direct effect. It enters the statute
books. It is then available to impose legal consequences on those who come
within its ambit. In some cases, perhaps many, the law will actually impose
those consequences on people. For example, a law that establishes a stock
market and a mechanism for people to sell stock (or shares as they are also
called) enables people to sell stocks and to do so easily. This effect is in all
likelihood the purpose of the law or one of several purposes.
Direct Effects
Most laws will also cause some indirect effects as well.
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These include the
effects that a law has on those who read it. Indirect effects are many and
varied. They can happen in numerous ways, they may be intertwined with
other social phenomena and they may happen some time, even some
considerable time, after the law is enacted. They can also be highly
unpredictable. These indirect effects may be part of the intended purpose of
the law. Or they may be unintended or unanticipated consequences.
We can illustrate indirect effect from the example above of the law that
establishes a mechanism for people to sell stock. While the direct effect of the
law is to provide a simple mechanism for buying and selling shares, there is an
obvious indirect effect (and there may also be some that are not so obvious).
This law is likely to encourage people to invest in stock because they now
have an assurance of resale: if they have purchased stock, then at a later time
for any reason they wish to sell their stock to obtain cash, there is a ready
mechanism for doing so. Without this assurance many would be deterred from
investing because of a fear that if they needed to disinvest and cash in the
stock, they could not be sure of doing so quickly and conveniently.
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The distinction between direct and indirect effects is not strict.
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