Is There Life Beyond Efficiency? Elements of a Social Law and Economics

I. Introduction Over the past three decades, economic analysis has made substantial inroads into the area of legal decision making.(1) The march has not been without its detractors, both within the realm of mainstream legal theory (see Dworkin, 1985 and Michelman, 1978) and from the left-liberal side of the ideological spectrum, especially the Critical Legal Studies (CLS) school (see Kelman, 1987; Kennedy, 1985; Unger, 1983). There have also been some questioning voices within the economics sphere, and especially among institutionalists (see Samuels, 1989; Schmid, 1987; Mercuro, 1989; Liebhafsky, 1987; Medema, 1989; Samuels and Schmid, 1981). Yet, aside from the fact that there is some overlap between the institutionalist school and social economics, little work has been done in formulating an approach to law and economics from an explicit social economics perspective.(2) This paper attempts to lay some groundwork for accomplishing exactly this objective. However, it does so with two qualifications. First, social economics is many things to many people. Nowhere is this more apparent than in the excellent collection on social economics edited by Mark Lutz (1990). The social economics umbrella stretches over, among others, Catholic solidarists, institutionalists, Marxists, humanistic economists, Kantian deontological ethicists, and neoclassical economists. The common element that seems to bind the members of these groups who would label themselves social economists is "a profound interest in values and the process of valuation in order to more fully understand both economic behavior and the possibilities of improving the economic system" (Lutz, 1990, p. ix). Coupled with this is a strong sense of the importance of ethical values, variously defined, in judging economic outcomes. Given the pluralistic nature of social economics, it is probably impossible to design an approach to law and economics that will command universal assent among social economists. In light of this, it should be recognized that this paper is not intended to be the beginnings of the social law and economics, but rather the beginning of a social law and economics. The hope is that this article will stimulate others to analyze these issues from their own perspective within social economics. The second qualification to be made here is that this paper is not intended to be a comprehensive analysis of law and economics. Since the scope of law and economics is virtually as wide as the law itself, one cannot hope to treat all relevant issues within a single paper. Although the neoclassical approach to law and economics does present a fairly common over-arching paradigm, there are some idosyncracies across subfields. This paper will focus primarily on the general themes of neoclassical law and economics and suggest how these themes might be dealt with from the perspective of a social law and economics. Thus, while it is hoped that this paper will have a good deal to say about doing law and economics, it is in no way claimed that the ideas contained herein constitute a comprehensive approach to the field of law and economics. II. Neoclassical Law and Economics A. History The neoclassical school of law and economics dates itself to the work of Ronald H. Coase (1960) and Guido Calabresi (1961) in the early 1960s. This movement, along with the CLS (see Kelman, 1987; Kennedy, 1985; Unger, 1983), Law and Society (see the Law and Society Review), and literary theory (see White, 1987, 1990; Levinson and Mailloux, 1988) movements have evolved over the last three decades as descendants of the Legal Realist attack on law in the early Twentieth Century. The Legal Realists rejected the claim of mainstream legal scholars that law is an autonomous discipline able to resolve matters on its own terms without input from outsiders. Rather, they said, one needs to look outside of the law to justify legal outcomes. These modern movements have attempted to fill these gaps by incorporating economic theory, Marxism, critical theory, sociology, anthropology, feminist theory, and literary criticism into the analysis of law. …