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German Working Papers in Law and Economics
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Volume 2002

Mariusz Golecki


Mariusz Golecki (2002) "ECONOMICS OF LAW AS A JURISPRUDENTIAL THEORY", German Working Papers in Law and Economics: Vol. 2002: Article 13.

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Economics of law is thought to be a relatively new discipline. As a matter of fact it seems to be a Herculean effort to explain what economics of law in reality is. Some authors draw attention to its origins rooted deeply in a well known article of Ronald Coase and his theorem. It is Coase who has shown how much economy depends on sound legal system, especially on acknowledgement of private rights and liabilities. Others regard Garry Beckers’ efforts to provide a solid and objective basis for social theory and legal reforms as the origins of contemporary law and economics. In this essay I will claim that methodology of law and economics should be changed from implementing price theory and welfare economics (economisation of law) into the interdisciplinary project embracing jurisprudence. The basis for such project is purported by Coase theorem, but may also be found in the writings of Hayek and “old institutionalist”, such as Veblen, Hale and Commons. These efforts are visible as far as new institutional economics and transaction cost economics are concerned. The aim of this essay is thus threefold: firstly, to present briefly the most powerful and popular approach to economics of law, being at the same time influential legal theory as presented by the Chicago school, predominantly by Judge Richard Posner, and to point out limits of this approach from jurisprudential, economic and methodological point of view. The second aim is to analyse the existing alternative approaches to economics of law, related to Austrian school (Hayek), “old institutional” economics (Commons) and transaction cost economics (Coase) as well as the social systems theory (Pearsons, Luhman and Teubner). The first three theories I call foundationalist because they regard law as a foundation of economic order. Foundationalism also seems to admit the existence of the universally accepted foundations of law as well as economy regarded as human activity concentrated on managing of resources. The last theory, namely the system theory emphasising autonomy of both economy and law as social systems, is thus antifoundationalist. This division seems to be significant in the context of the present discussion within jurisprudence, especially concerning the difference between modern and post-modern legal theories. The third objective is to present an alternative point of view on both economy and law from jurisprudential perspective. I would claim that only an interdisciplinary project on law and economics is apt to supersede the dichotomy in contemporary jurisprudence between foundationalism and antifoundationalism. In this paper the term economics of law will be used in the same meaning as the majority of scholars use the term law and economics. I would like however to avoid the association of this term with the theory purported by Posner. Therefore, Posner’s approach will be named economic analysis of law. Economics of law as well as law and economics have certainly a broader meaning. The meaning is associated with a methodological approach - the economic analysis of law as well as the revision within economics itself. I prefer the name economics of law to law and economics because it seems more realistic at the moment - the insight of law in economics is either poor or redefined in economic terms. The impact of economics on law is enormous and a realistic approach cannot neglect this fact. At the same time, while the impact of law on economy is essential, it is not, however, reflected in theory. I use the term jurisprudence when referring to general reflection upon law and justice. The philosophy of law is its synonym. The particular type of reflection within jurisprudence I call jurisprudential theory.

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