Fred,  
  
The question is not just a historical one --- in which case you are right for 99% of the
experience under investigation --- on the issue that the state is necessary for the
definition of property and enforcement of contracts.  But there are a few examples of
where "law" evolved without state interference and property rights came to be defined and
enforced in that context. And they need not be trivial examples --- the Law Merchant, for
example.
  
The question then becomes how far can we stretch this example.  
  
But the very flexibility and dynamic adjustment properties of the common law are of course
beneficial, but also in the case that it is tied to the law of precedent which makes the
law predictable for economic actors --- it changes much slower than civil law can change
and in a more predictable manner.  That is why Hayek refers to it as "real law" and
contrasts it with legislation.
  
There is an interesting literature in economics since the 1990s that has discussed the
relevant merits of law and finance and its relationship to economic development ---
scholars such as Shleifer, LaPorta, Katrina Pistor, etc.  It is actually one of the areas
that demonstrates that economics today is far more interested in these "bigger questions"
than what it was 20 years ago.
  
Avner Greif's new book is also full of examples of where "law" emerged outside of the
state, but then how the state emerged in order to provide that law more effectively as
pure reputation mechanisms and ostracism broke down.
  
In the recent book, Anarchy, State and Public Choice edited by Edward Stringham, I have an
essay "Anarchism as a Progressive Research Program in Political Economy," in which I go
through the history of ideas on many of these issues from Hobbes to Buchanan, and the
empirical implications of the contemporary reality of failed and weak states on this
discussion.
  
  
Peter J. Boettke