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“Law and Neoclassical Economics”: A Response to Commentaries

Published online by Cambridge University Press:  28 October 2011

James R. Hackney Jr.
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Extract

I first want to thank all of the commentators for their insights on, and criticisms of, my article, as well as thank the editors of Law and History Review for the opportunity to respond. Rather than addressing each comment individually, I will structure my response along conceptual issues raised by all three, although the three comments each have different emphases. The two conceptual categories I use are “technical criticisms” and “historiographical criticisms.” Under the category of technical, I include criticisms of my characterization of neoclassical economics theory and my analysis of particular texts. The historiographical category encompasses substantive historical issues, including which authors should be included in my accounting of law and neo-classical economics as it relates to the reconfiguration of tort law theory. However, it also touches upon broader methodological issues of how one goes about doing intellectual history(ies).

Type
Rejoinder
Information
Law and History Review , Volume 16 , Issue 1 , Spring 1998 , pp. 163 - 171
Copyright
Copyright © the American Society for Legal History, Inc. 1998

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References

1. For an example of this, see Ronald Coase's critique of A. W. B. Simpson's historical work on the Coase theorem, “Law and Economics and A. W. Brian Simpson,” Journal of Legal Studies 25 (1996): 105.Google Scholar (“He [Simpson] writes about economics and economists from the point of view of an historian and a lawyer. It is not surprising to find that his article contains so many misunderstandings of my position and misstatements about me and my work.”)

2. Hackney, , “Law and Neoclassical Economics,” Law and History Review 15 (1997): 288–91CrossRefGoogle Scholar.

3. Heckman, James J., “The Intellectual Roots of the Law and Economics Movement,” Law and History Review 15 (1997): 327.CrossRefGoogle Scholar

4. Ibid., 328.

5. Ibid.

6. Economic studies have documented the fact that there is very little intergenerational income mobility in the United States. Salon, Gary, “Intergenerational Income Mobility in the United States,” American Economic Review 82 (1992)Google Scholar (Papers and Proceedings of the 104th Annual Meeting of the American Economic Association): 393-408; Cutter, David and Katz, Lawrence, “Rising Inequality? Changes in the Distribution of Income and Consumption in the 1980's,” American Economic Review 82 (1992): 546–51.Google Scholar

7. Heckman, “Intellectual Roots,” 328.

8. Ibid., 329.

9. For a comprehensive discussion of recent debates along these lines, see Croley, Steven and Hanson, Jon, “Rescuing the Revolution: The Revised Case for Enterprise Liability,” Michigan Law Review 91 (1993): 683–797.CrossRefGoogle Scholar

10. Heckman, “Intellectual Roots,” 332.

11. Duxbury, Neil, “Law and Economics, Science and Politics,” Law and History Review 15 (1997): 326.CrossRefGoogle Scholar

12. I must admit to not fully exploring one aspect of distinction: Calabresi's paternalist beliefs about the ability of individuals to act in their own self-interest. For an extended discussion of the role of paternalism and distribution in tort and contract law doctrine, see Kennedy, Duncan, “Distributive and Paternalist Motives in Contract and Tort Law, with Special Reference to Compulsory Terms and Unequal Bargaining Power,” Maryland Law Review 41 (1982): 563–658.Google Scholar I am in agreement with Duxbury that more recent writings by Calabresi may clarify the nature and full implications of these and other distinctions (“Law and Economics, Science and Politics,” 326, n.22).

13. Heckman, “Intellectual Roots,” 330-31. Heckman's framing of Coase as a libertarian is somewhat in error. Coase may be more properly labeled as antistatist. See “Looking for Results,” an interview with Coase by Thomas Hozlett, Reason (January 1997), 42: “I've never started off—this is perhaps why I'm not a libertarian—with the idea that a human being has certain rights.”

14. See Knight, Frank, “The Role of Principles in Economics and Politics,” American Economic Review 61 (1951): 15.Google Scholar (“[D]on't expect too much of ‘the state,’ be very critical in appraising the prospects for good and for harm to result before calling on ‘Leviathan’ and giving him power.”) For a discussion of Knight's libertarian views, see McKinney, John, “Frank Knight and Chicago Libertarianism,” in The Chicago School of Political Economy, ed. Samuels, Warren J. (New Brunswick: Transaction Publishers, 1976), 191.Google Scholar For an analysis of Knight's uneasiness with the laissez-faire position, see Kasper, Sheryl Davis, “Frank Knight's Case for Laissez-Faire: The Patrimony of the Social Philosophy of the Chicago School,” History of Political Economy 25 (1993): 413–33.CrossRefGoogle Scholar

15. Ernesto Screpanti and Stefano Zamagni have written a very good treatment of the demise of Keynesianism at the hands of neoclassicists ranging from Lionel Robbins to Milton Friedman. It is clear from their account that the era of “reigning Keynesian social planners,” as described by Heckman, was relatively short lived as a dominant theoretical project and subject to almost immediate contestation by antistatist neoclassicists. See Screpanti, and Zamagni, , An Outline of the History of Economic Thought (New York: Oxford University Press, 1993).Google Scholar

16. Screpanti and Zamagni give a detailed account of Austrian influences on “mainstream” economics. According to their chronology, the “Austrian theoretical approach joined the mainstream of the neoclassical system in the 1920's and 1930's.” See ibid., 196.

17. Coase's recognition of his intellectual debt to F. A. Hayek and the institutional role Hayek played in establishing law and neoclassical economics studies at the University of Chicago is illustrative of this point. Hackney, “Law and Neoclassical Economics,” 284, n. 42, 306, n. 141.

18. See “The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932–1970,” ed. Kitch, Edmund W., Journal of Law and Economics 26 (1983): 163CrossRefGoogle Scholar (roundtable discussion of principal founders of law and neoclassical economics at the University of Chicago).

19. University of Chicago economists have had a tradition of paying particular attention to the intellectual history of their field. For a discussion of this and their motives for doing so, see Henderson, John P., “The History of Thought in the Development of the Chicago Paradigm,” in The Chicago School of Political Economy, ed. Samuels, Warren J. (New Brunswick: Transaction, 1976), 341.Google Scholar

20. Hackney, James, “The Intellectual Origins of American Strict Products Liability: A Case Study in American Pragmatic Instrumentalism,” American Journal of Legal History 39 (1995): 443–509.CrossRefGoogle Scholar

21. Horwitz's, MortonThe Transformation of American Law, 1780–1860 (Cambridge: Harvard University Press, 1977)Google Scholar and The Transformation of American Law, 1870–1960 (New York: Oxford University Press, 1992)Google Scholar would be essential points of departure for such a study.

22. Schorske, Carl, “1987 Charles Homer Haskins Lectures of the American Council of Learned Societies,” in Life of Learning, ed. Greenberg, Douglas and Katz, Stanley N. (New York: Oxford University Press, 1994), 64.Google Scholar

23. I never meant to cast any aspersions on Duxbury's exemplary account of law and neoclassical economics. It is obviously a major contribution to our understanding of the subject. However, I would not be the first to note that he “does not look closely enough into particular fields.” See Gordon, Robert, “Book Review of Patterns of American Jurisprudence,” Georgetown Law Journal 84 (1996): 2225.Google Scholar While Gordon's criticism was limited to Duxbury's study of the legal realists, I believe it is generally illustrative. It does not hold true so much for Duxbury's cogent analysis of law and neoclassical economics contributions to antitrust law but certainly applies to his discussion of tort law contributions, which lacks doctrinal focus and text analysis.

24. Schorske, “Haskins Lectures,” 64.

25. Duxbury, “Law and Economics, Science and Politics,” 323. Whether such analyses fall under the rubric of “rigorous revisionism” or “something more sophisticated” is a matter of semantics. Ibid., 324.