INTRODUCTION TO EQUALITY, HISTORY AND SOCIAL THEORY

Equality – the principle of equality, including principles of anti-discrimination that in many jurisdictions and/or languages are seen as specific principles of equality – appears in at least three manifestations in law. It comes in the form of legal norms (for example, Art. 3 of the German Constitution – Grundgesetz; Title III (Arts. 20 – 26) of the EU Charter of Fundamental Rights). It also comes – according to the understanding of fundamental rights – as an overarching legal principle. Finally, over a good two millennia, equality has even been perceived as the ultimate ratio and goal of law itself – if, with Aristotle, one sees equality as the essence of justice. Yet, despite this multilayered, comprehensive meaning of equality – the principle of equality, the principles of equality – in and for law, and despite the overarching character of the concept, two paradoxical main trends need to be seen for equality and the principles of equality. They have meant radically different things at different times in historical development (see below, section 2) and they are seen very differently in the circle of disciplines (see, paradigmatically, below, section 3 ).

Probably no other general legal concept – or, at best, freedom – has moved the history of the good and the right in society in a comparable and similarly controversial way as equality and the principle or principles of equality. Fraternity ( fraternité) – later solidarité, and later in the nineteenth century, and in the twentieth century, social justice – had, and have, a much more recent history, at least if one does not want to understand the Christian, fundamentally nonlegalised “charity” as a largely similar precursor. As a lived political and legal postulate, solidarity had a comparably powerful effect only in the second half of the nineteenth century, and fully only in the twentieth century. Equality and freedom, proclaimed as the two great (early) postulates of the two pioneering human rights declarations at the beginning of the “present”, are undoubtedly in a relationship of tension with each other, and are, therefore, also considered together selectively or more broadly in the following, and in many of the other contributions to this volume.

This chapter addresses the function that negotiations and contracts fulfil in society (and in law) and explores the extent to which consensus is a source of legitimacy for legal effects (‘justice of consensus’) – including the negative side, the limits of the legitimacy of consensus. More in detail, this chapter is about three main sub-questions: justification(s) for freedom of contact and of its limitations; which kinds of particular limitations may be legitimate, namely whether and when redistribution is a legitimate goal, and how much rationality can be assumed or not and which reactions are advisable in case of biases. One particular prerequisite for ‘free’ decision-making – free in a meaningful way, that is, information – is dealt with in Chapter 12.

Among the most revolutionary findings of twentieth-century contract theory is that the divergence between spot contracts – discrete agreements for immediate exchanges – and the long-term, co-operative contracts now generally called relations or relational contracts may be just as great as (or even greater than) the divergence between relational contracts and organizations such as companies. Relational contracts, moreover, are often situated in larger networks, that is, multi-party arrangements. Such contracts are, in practice, generally the basis of a stable organizational arrangement. Thus, rather than a single dichotomy between the market and firm forms (see Chapter 19 and Coase’s paper of 1937 – and more generally for the firm and its embeddedness, see Chapters 20–22), hybrids and intermediate solutions become a core issue of consideration, suggesting functional neighbourhoods that depart considerably from those suggested by the traditional legal categorizations.

When this book seeks to encompass the theoretical foundations of recent private law theory (private law understood in a broad sense, encompassing questions of regulation and rule-setting in particular), it takes a stance on legal theory that draws heavily on broad social theory (i.e. on theory developed for the most part outside legal scholarship). It seeks to combine it with legal theory in the narrow (traditional) sense, looking at law (in its changing structure) namely with tools of legal philosophy such as logic or ethics and from within legal scholarship. In this, ‘The Inside and the Outside of Law?’ as a title refers to a topic for discussion rather than making a statement. Private law theory as proposed by legal scholars will be combined with concepts drawn from law and economics, legal philosophy, sociology and the behavioural sciences; constitutionalism combined with considerations of consensus and its intrinsic justification – all in relation to markets, risks, persons and organizations.

This chapter is the third of a series on the concept and conceptualization of the corporation and the role that core actors play in it. It discusses the power and the limitations that can be observed in the player that, in mainstream doctrinal and economic conceptualization, is seen as the ultimate risk and decision taker. It deals with the power and the limitations that apply to the shareholder in their various decisions, most notably in the decision to invest or disinvest and decisions in the general meetings. While the texts discussed both refer directly to corporations as organizations, one of them decidedly takes a more general view and equally includes and refers to other types of organizations, also of the political sphere – types to which the second text could at least be related.

This chapter concludes the section on rule-setting and ‘private law beyond the state’. With this concept, the question is also raised as to whether particular areas de facto constitute or even should constitute a sphere ‘outside the law’. One of the most striking examples in this respect can be found with the Internet and in particular with clashes of opinion in the digital sphere (see also Chapter 16). The most direct conflict might well be that of hate speech (and other insults, threats etc.)

Information is a valuable resource: Knowledge is power. And yet it occupies a slum dwelling in the town of economics.’ So begins George Stigler’s article early in the 1960s, often considered to be the start of information economics, written one year after his Chicago colleague Ronald Coase published his seminal paper on ‘Social Cost’, often seen as the start of transaction cost and institutional economics. Contemporaneous legal scholarship had a similar blind spot regarding information as an asset; that is, at least until the last three decades of the twentieth century, during which it came to dominate regulation theory in private law. Throughout the preceding decades, competition issues had been the central occupation of economic theory, and practices that would restrict competition the core target of market regulation.

Is it possible to reduce the topic of ‘Economics and Private Law Institutions’ to three core ideas? This chapter cannot even summarize, let alone substitute for a treatise on law and economics or on new institutional economics (see fn. 16). Three developments – and their founding texts as well as their contexts – stand out, however, as the foundations of the relationship between economics and private law (theory).