Law and the Self-Coordinating Market Idea

Law and economics (L&E) emerged as a field in the middle of the twentieth century, it focused on using economic theory to study the common law. During this period, L&E offered insights so novel that it not only profoundly influenced legal doctrine, but the movement’s key figures also became some of the most cited and acclaimed scholars in the American academy. The field of law and economics has since continued to grow and become more technically sophisticated, but it is also a less cohesive movement. Moreover, L&E has been misunderstood and misrepresented by the emerging law and political economy (LPE) movement. This Essay starts the process of reclaiming L&E by offering a definition of the current field: Contemporary law and economics is an academic field that (1) has a commitment to using the social scientific method of inquiry to (2) study questions about the law and legal institutions (3) in a way that is typically informed by economic insights. It then describes L&E’s comparative advantages, explains its relationship to the LPE movement, and suggests a roadmap for its renewed relevance.

The law and political economy (LPE) approach is a new scholarly framework that stresses that the economy and politics cannot be separated, but deeply shape one another, and are mediated by law. This Essay describes how LPE scholarship relates to and differs from two other major legal schools of thought that have notably engaged questions of political economy: the legal realism associated with Professor Robert Hale and the law and economics movement associated with Professors Richard Posner, Steve Shavell, and Louis Kaplow. This Essay argues that LPE work, though critically inflected, has also been quite methodologically open. It is oriented by a set of shared critical insights, literatures, normative aims, and practical projects, and does not draw its practices or theories from any single law-adjacent discipline. It is, however, developing a distinctive "reparative" approach, aiming not to reorder the political economy in top-down fashion, but to facilitate democratic shifts in power and help bring about institutions that are more genuinely democratically ordered. One strand of this work calls for “non-reformist” or “power-building” reforms that operate dynamically to empower tenants, workers, and others who have been historically disempowered. Another seeks to bring private power under more public authority, for example by introducing public options or proposing new foundational norms to ground private law.