These differences in the level at which the law is instrumental, if at all, suggest that the three strands of the economic analysis of the law will adopt different approaches to the study of case law. These theories are described and discussed in section 5 below. The content could be justified in different ways. A legal positivist might argue that the recognition rule identifies effectiveness as an appropriate ground for judicial law. Or it could be argued, as Dworkin suggested, that efficiency provides the best interpretation of the practice of accident law. For these two reasons, the claim that efficiency identifies the content of the law is a contingent claim. For the positivist, the content of the recognition rule depends on the social practice of the competent officials; You can, but you do not have to, define an efficiency criterion. [15] Similarly, the Dworkin Act stems from the best interpretation of past Community political decisions. These decisions are, of course, conditional; A different history of decisions could lead to a different representation of the law. Claim (II) is therefore not a competing legal concept.
One of Hart`s rhetorical tools provides a useful starting point for the development of a concept of (functional) governance in the social sciences. To introduce the concept of a secondary rule, Hart [1961] tells a fable about the emergence of a legal system in a small community. It suggests that a small, homogeneous, stable and closely related society does not need differentiated governance structures. These structures appear to solve the problems that arise in large, heterogeneous or environmentally insecure societies. Although Hart identifies only three of these problems, we will identify four different functions that could be distributed among societal structures: (1) characterizing socially acceptable (or unacceptable) behavior, a task whose importance increases with the increasing rate of change in society; (2) monitor behaviour to identify likely cases of deviant behaviour; more public limited companies may require a more institutionalized policy; (3) a final decision on non-compliance with social norms; Again, when society is no longer face to face, such a decision may be necessary to trigger sanctions; and (4) sanction deviant behaviour; Informal sanctions become increasingly difficult to impose when society is not face to face. A legal system should contain clear definitions of property rights. That is, for any asset, it is important that the parties are able to clearly determine who owns the asset and what exactly rights that asset entails. Ideally, efficiency implies that in a dispute over ownership of a right, the right should go to the party who appreciates it most.
However, if the exchange of rights is permitted, the effectiveness of the initial assignment is of secondary importance. Coase`s theorem – the most fundamental conclusion in economic jurisprudence – states that if rights are transferable and transaction costs are not too high, the precise definition of property rights is not important, as parties can exchange rights and rights move on to their most valuable uses (see Externalities). This book will be of interest to scholars of law, economics and development, as well as those interested in the transformation of former communist states. It`s also easy to see how a legal rule could provide information that changes the agent`s beliefs about the likely outcome of different options for action. For example, imagine a driver on a mountain road hitting a sign indicating an upcoming curve where the speed limit has been lowered to 15 miles per hour. In light of this sign, the officer should adjust her beliefs about the highest safety speed at which she can handle the road. Health and safety regulations can work in the same way. Political economy therefore strives to have a concept of governance based solely on incentives; it therefore denies the existence of legal systems within Hart`s meaning. However, it could recognize a different legal concept. Some political economists, for example, suggest that legality in the sense of an impartial „rule of law“ promotes economic growth.
The political economist could then identify the law or legal systems as the governance structures that implement such a rule of law (in certain circumstances). The political economist could therefore adopt two related concepts. The first concept of a governance structure is explanatory; It characterizes social governance mechanisms in terms of the degree of institutional differentiation and bureaucratic control mechanism within these institutions. The second related concept is normative. It identifies a value that a governance structure could achieve. Call this value legality. The legal concept is therefore normative; that identifies the value of legality. The social scientist then attempts to identify the conditions under which specific governance structures will recognize the value of legality. Mattei shows how the concepts of economics can be applied to the study of comparative law.
It then applies the concepts to several important problems of comparative law, including the history and sources of law, the differences between civil and customary law systems, and the reasons for legal changes and shifting law from one country to another. He deals with specific issues in real estate law, contract law and fiduciary law. Finally, he uses the knowledge he has developed to understand the problems associated with changing laws in developing and former socialist countries. From the philosophical literature on obligation and the very limited economic literature on compulsory behaviour, four possible mechanisms can be extracted by which obligation influences individual action. The first mechanism simply reduces the obligations to the standard model of self-interested rationality (eng). The above review of the legal form indicated how this reduction could take place. Other methods of reduction are discussed below. Political economy, on the other hand, aims to explain all legal phenomena with regard to the personal interest of actors. This analytical strategy excludes a Hartian representation of law; Legal rules cannot play a role in explaining the behaviour of individuals or officials, as no staff member has the appropriate internal attitude towards the rule. A person who is faced with choice takes into account the costs and benefits that each option represents for him. These costs and benefits include „legal fees and benefits“, but these costs and benefits are not determined by rules; They are the result of incentives faced by private and public employees. Rules are just rules of thumb that express the reaction of average people to certain events under normal circumstances.
Of course, the rules of thumb used can greatly affect the social balance achieved in a particular jurisdiction. The economic analysis of the law has had an influence both in the United States and elsewhere. Court opinions use economic analysis and theories of law and economics with some regularity, in the United States, but increasingly also in Commonwealth countries and Europe. The influence of law and economics has also been felt in legal education, with graduate programs in this field offered in a number of countries. The influence of law and business in civil law countries can be measured by the availability of law and economics textbooks in English and other European languages (Schäfer and Ott 2004; Mackaay, 2013).