The Law and Economics Movement:

Abstract

In the last thirty years, the scope of has expanded dramatically beyond its traditional domain of explicit market transactions.' Today there is an economic theory of property rights, of corporate and other organizations, of government and politics, of education, of the family, of crime and punishment, of anthropology, of history, of information, of racial and sexual discrimination, of privacy, even of the behavior of animals-and, overlapping all these but the last, of law.2 Some economists oppose this expansion, in whole or (more commonly) in part.3 There are a number of bad reasons, all I think closely related, for such opposition, and one slightly better one. 1) One bad reason is the idea that means the study of markets, so that nonmarket behavior is simply outside its scope. This type of argument owes nothing really to economics, but instead reflects a common misconception about language more specifically a failure to distinguish among three different types of word or concept. The first type, illustrated by the term cost, is purely conceptual. The term is rigorously and unambiguously defined by reference to other concepts, just as numbers are; but (again like numbers) there is no observable object in the real world that it names. (Try finding a firm's marginal costs on its books of account!) The second type of word, illustrated by rabbit, refers to a set of real-world objects. Few such words are purely referential; one can speak of a pink rabbit or a rabbit the size of a man without misusing the word, even though one is no longer using it to describe anything that exists. Nevertheless, the referential function dominates. Finally, there are words like ' religion, literature -and economics -which are neither conceptual nor referential. Such words resist all efforts at definition. They have, in fact, no fixed meaning, and their dictionary definitions are circular. They can be used but not defined.4 One cannot say that is what economists do, because many noneconomists do economics. One cannot call the science of choice, either. The word rational lacks a clear definition; and, passing that difficulty, there can be noneconomic theories of choice, in which few predictions of ordinary may hold; for example, because the theory assumes that people's preferences are unstable. There can also be nonrational economic theories; an example is the type of survival theory in industrial organization in which firms that randomly hit on methods of lowering their costs expand vis-a-vis their rivals; another example is Marxism. One cannot call the study of markets either, not only because that characterization resolves the question of the domain of eco*Judge, U.S. Court of Appeals for the Seventh Circuit; Senior Lecturer, University of Chicago Law School, 1111 E. 60th St., Chicago, IL 60637. I thank Gary Becker, Frank Easterbrook, William Landes, Geoffrey Miller, Richard Porter, George Stigler, Geoffrey Stone, and Alan Sykes for comments on a previous draft and Nir Yarden for research assistance. 'See, for example, Gary Becker (1976); Jack Hirshleifer (1985, p. 53); George Stigler (1984); Gerard Radnitzky and Peter Bernholz (1986). 2 For a recent conspectus of economic analysis of law, see my book (1986). 3See, for example, Ronald Coase (1978). Coase is of course a leading figure in the of property rights, so his opposition is far from total. 4For an excellent discussion, see John Ellis (1974, ch. 2).

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 72 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.