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Science, Politics, and the Evolution of Law and Neoclassical Economics

Published online by Cambridge University Press:  28 October 2011

Extract

James Hackney's article provocatively points our attention to very important and underexplored issues concerning the interplay of science and politics in the dramatic evolution of law and neoclassical economics since the Second World War. At the heart of his article is his rejection of any reductionist interpretation of the leading developments in this area. Modern law and neoclassical economics, he argues, cannot be accurately viewed either as merely a faithful, nonpoliticized application of modern social science or, alternatively, as simply a convenient vehicle for the promotion of particular contentious political beliefs. Hackney insists that law and neoclassical economics, both in general and in the specific doctrinal area he emphasizes, is about both science and politics. His article seeks to demonstrate this duality and, more broadly, to clarify the general nature and evolution of modern law and economics. Hackney highlights key general characteristics of twentieth-century intellectual thought and examines the influence of those characteristics, as well as the interplay between science and politics, in a series of landmark works on law and economics that have great relevance to recent debates over appropriate products liability standards.

Type
Forum: Commentary
Copyright
Copyright © the American Society for Legal History, Inc. 1997

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References

1. Hackney, James R. Jr, “Law and Neoclassical Economics: Science, Politics, and the Reconfiguration of American Tort Law Theory,” Law and History Review 15 (1997): 275322.CrossRefGoogle Scholar

2. See Duxbury, Neil, Patterns of American Jurisprudence (New York: Oxford University Press, 1995), 340–41.Google Scholar

3. In stressing the importance of Friedrich A. Hayek to the evolution of neoclassical approaches to products liability and to tort law, Hackney does link him to modern law and neoclassical economics in general and to the “old” law and neoclassical economics in particular. See Hackney, “Law and Neoclassical Economics,” 284, note 42. Drawing on Ronald Coase's brief history of modern law and economics at the University of Chicago, Hackney notes Hayek's role in the establishment of a “Free Market Study” headed by Aaron Director at the University of Chicago Law School. Hackney describes this as one illustration of the same “institutional symbiosis between Hayek and the law and neoclassical economics movement” that he declares also was reflected in the instrumental role that Director and Frank Knight played in the later American publication of The Road to Serfdom by the University of Chicago Press. Having noted these early connections, however, Hackney never pursues developments in law and economics at Chicago from the close of the Second World War to the 1960 publication of Coase's “The Problem of Social Cost” or the possible relationship between those earlier developments and the evolution of later neoclassical analyses of tort law.

4. See, for example, Posner, Richard A., Economic Analysis of Law, 4th ed. (Boston: Little, Brown and Company, 1992), 2122Google Scholar; Coase, R. H., “Law and Economics at Chicago,” Journal of Law and Economics 36 (1993): 239.CrossRefGoogle Scholar

5. See Coase, “Law and Economics at Chicago,” 248-51.

6. Further examination of this question might focus, for example, on the fundamental belief in the importance of marketplace competition and appropriate legal rules to govern it that Hackney finds central to the thought of both Hayek and Knight. See Hackney, “Law and Neoclassical Economics,” 286-87, 297-98, 301.

7. See Kitch, Edmund W., ed., “The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932–1970,” Journal of Law and Economics 26 (1983): 163, 201.CrossRefGoogle Scholar

8. Schorske, Carl, Fin-de-Siècle Vienna: Politics and Culture (1961; reprint, New York: Vintage Books, 1981).Google Scholar

9. Hackney, “Law and Neoclassical Economics,” 283, quoting Schorske, Fin-de-Siècle Vienna, xxiii.

10. See, e.g., Director, Aaron and Levi, Edward H., “Law and the Future: Trade Regulation,” Northwestern University Law Review 51 (1956): 281, 282–84.Google Scholar For an extended discussion of this landmark early expression of Chicago School antitrust analysis and its relation to both prior and later antitrust developments, see May, James, “Redirecting the Future: Law and the Future and the Seeds of Change in Modern Antitrust Law,” Mississippi College Law Review 17 (1996): 43.Google Scholar

11. Hackney, “Law and Neoclassical Economics,” 278.

12. There seem to be some strong parallels between major aspects of late nineteenth-century economic thought within law and the connections Hackney stresses among science, politics, and neoclassical economics in the mid- to late twentieth century. First, in both of these periods, invocations of economic principles and analyses in law strongly reflected the prevailing assumptions, methods, and general perspectives of contemporary social science. Second, the relationship Hackney (ibid., 286-87) finds between politics, economics, and the importance of legal rules in Hayek's work seems to echo substantially the classical economists’ belief that appropriate legal rules were crucial to the maintenance of the competitive free market system that they, too, thought to be fundamental, even if Hayek and modern neoclassical scholars would employ different standards for evaluating the legitimacy of particular legal rules than would earlier classical economic thinkers. Finally, the operation of political values that Hackney (ibid., 300-303, 321) finds behind differing appropriations or applications of contemporary economic science today appears to be paralleled strongly by the differing appropriations or applications of general economic theory in late nineteenthand early twentieth-century legal thought as a result of the differing political values and sympathies embraced by various legal analysts in that period. For an extended discussion of these and other aspects of the interrelationship of economic and political theory within law in the late nineteenth and early twentieth centuries, and a comparison of that pattern to modern law and economics, see May, James, “Antitrust in the Formative Era: Political and Economic Theory in Constitutional and Antitrust Analysis, 1880–1918,” Ohio State Law Journal 50 (1989): 257, 258-309, 391–95.Google Scholar

13. Illuminating comparison over time of the relationship of science and politics in economic analysis within law, of course, may well require some further clarification of the relationship between science and politics in economic analysis before the rise to prominence of institutional economics. Scholars continue to disagree substantially about the interrelationship of economic science and political belief in late nineteenth- and early twentieth-century America. Herbert Hovenkamp, for instance, has declared that late nineteenth-century substantive due process doctrine was “fundamentally about economic theory, and not merely about imperfections in the legislative process.” See Hovenkamp, , Enterprise and American Law, 1836–1937 (Cambridge: Harvard University Press, 1991), 182.CrossRefGoogle Scholar Conversely, other scholars such as Michael Les Benedict have urged that constitutional law scrutiny of regulatory legislation in this period rested on a “libertarian rather than economic basis.” See Benedict, , “Laissez-Faire and Liberty: A Re-Evaluation of the Meaning and Origins of Laissez-Faire Constitutionalism,” Law and History Review 3 (1985): 293, 304.CrossRefGoogle Scholar For a discussion of these differing views and an alternative interpretation suggesting a more integral interrelationship in law between classical economics and the libertarian ideals of political liberalism, see May, “Antitrust in the Formative Era,” 269.

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