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Justice Without Markets?

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Law and Economics of Justice (ILEC 2023)

Part of the book series: Economic Analysis of Law in European Legal Scholarship ((EALELS,volume 17))

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Abstract

In a series of legal fields, from constitutional law to contracts to competition law, the market mechanism has provided a claimed neutral baseline against which to measure justice. Rights and remedies have been benchmarked against what “the market” would have provided the parties. That neutrality was always something of a legal fiction—economics has long understood that in some contexts, the market mechanism does not deliver a single, stable equilibrium. However, that did not stop the law from fixating on the cases where market mechanisms do deliver a single, stable equilibrium as a baseline proposition from which to measure rights and remedies. The rhetorical strength of the law’s adoption of a purported neutral market baseline bolstered classical liberals, Chicago School adherents, and others who favoured the translation of market ordering into the positive legal framework.

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Notes

  1. 1.

    See generally Evans and Schmalensee (2016), p 51 (arguing, despite title of book, that “[a]lthough the turbocharged platforms [including Uber] are more powerful than earlier ones, they follow the same economic principles as their older siblings”).

  2. 2.

    See, e.g., Federal Trade Commision (2014).

  3. 3.

    In the U.S. context, Lochner v. New York, 198 U.S. 45 (1905) has been pointed to as exemplifying the adoption of this view. See Sunstein (1987), p. 874 (arguing that by the time of that decision, “[m]arket ordering under the common law was understood to be a part of nature rather than a legal construct, and it formed the baseline from which to measure” whether government intervention affecting the “existing distribution of wealth and entitlements” was permissible).

  4. 4.

    See de Roover (1958), pp. 423–25 (describing how the concept of the “just price,” often fixed by law or determined by common custom, competed with market pricing in the sixteenth century).

  5. 5.

    See Bork (1978), p. 3 (adopting the characterization of a “crisis” in antitrust and advocating a paradigm shift, in a conscious echo of Kuhn (1962) and how it portrayed crises in physics and chemistry).

  6. 6.

    See Allingham (1989) (describing situations that will not have unique equilibria).

  7. 7.

    Woods and Kandel (2002), p. 3.

  8. 8.

    Akerlof (1970).

  9. 9.

    See, e.g., Krawiec (2009), p. 4 (describing several examples of repugnant markets, including potential market for human babies); Roth (2008), p. 52 (observing that “[r]epugnance can be a real constraint on markets” and describing matching programs for in-kind kidney exchange and gastroenterologist training placement as palatable alternatives).

  10. 10.

    See generally Roth (2016).

  11. 11.

    For an argument that there may be a downside to this type of growth, see Calo (2016).

  12. 12.

    OECD (2008) (emphasis added).

  13. 13.

    OECD (2008) (emphasis added).

  14. 14.

    Beard and Ekelund Jr (1991), pp. 1156–58.

  15. 15.

    Mayer (1958), p. 259.

  16. 16.

    United States v. Rumely, 345 U.S. 41, 56 (1953).

  17. 17.

    Sunstein (2001).

  18. 18.

    Pariser (2011).

  19. 19.

    Ingram (2018).

  20. 20.

    Barbaro (2015) (describing, more than a year before the 2016 presidential election, how Trump “ha[d] mastered Twitter in a way no candidate for president ever has”).

  21. 21.

    Peters (2022).

  22. 22.

    Serwer (2022).

  23. 23.

    Lorenz (2022).

  24. 24.

    Lindblom (1977).

  25. 25.

    Issacharoff and Pildes (1998).

  26. 26.

    Wells v. Rockefeller, 394 U.S. 542, 551 (1969) (Harlan, J. dissenting).

  27. 27.

    Barnes (1989).

  28. 28.

    See, e.g., Issacharoff (2002), p. 600 (stating that partisan gerrymandering reduces politicians “accountability to shifting voter preferences”); Levinson and Sachs (2015), pp. 416–18 (arguing that gerrymandering can shift and determine political outcomes).

  29. 29.

    Erie (1988).

  30. 30.

    Milkman (2022) (reporting results of a vaccine lottery administered by the City of Philadelphia for selected ZIP codes); Sargent v. Sch. Dist. of Phila., 2022 U.S. Dist. LEXIS 140262 (E.D. Pa. 2022) (challenging ZIP code-based allocation of public high school admission).

  31. 31.

    United States Post Office (1963), p. 7 (“Major new elements of this across-the board, interlocking effort to provide Nationwide Improved Mail Service (NIMS) were launched in fiscal 1963 to accelerate the collection and delivery of business mail (ABCD) and to reduce the number of steps in mail-handling procedures through the use of ZIP Code numbers.”).

  32. 32.

    Postal Service History, supra note 1, at 56 (“To cope with rising mail volumes, the Department needed to sort and distribute mail more efficiently. Adding more and more employees to sort ever-increasing volumes of mail was not an option. Costs aside, there was nowhere to put them, as many large postal facilities were already cramped.”); see also id. at 7-8 (“ZIP Code was designed to help the Department efficiently handle the rapidly mounting mail volume without a correspondingly large increase in manpower—to contain costs and forestall the day higher postage rates might become necessary.”); Graph Presentation of the ZIP Code System, supra note 8, at 60 (“Because of the fantastic rate of growth in this country, it is absolutely essential that we devise improved methods of processing mail.”).

  33. 33.

    See Hahn (1962) (presentation slides that accompanied November 1962 announcement of the ZIP code by Postmaster General Day); see also Day (1962).

  34. 34.

    United States Post Office (1963), p. 7; Postal Service History, supra note 1, at 56.

    Postal Service History, supra note 1, at 57.

    United States Post Office (1963), p. 8.

  35. 35.

    Postal Service History, supra note 1, at 57.

  36. 36.

    United States Post Office (1963), p. 8.

  37. 37.

    See United States Post Office (1963), p. at 7 (“Major new elements of this across-the-board, interlocking effort to provide Nationwide Improved Mail Service (NIMS) were launched in fiscal year 1963 to accelerate the collection and delivery of business mail (ABCD) and to reduce the number of steps in mail-handling procedures through the use of ZIP Code numbers.”).

  38. 38.

    Id.

  39. 39.

    Id. at 8.

  40. 40.

    Karp (1986).

  41. 41.

    Karp (1986).

  42. 42.

    Status report to the Congress, supra note 31, at 64.

  43. 43.

    Id.; see also Hirsch (1982), p. 26 (reporting on comments of Postmaster General William F. Bolger at the National Postal Forum).

  44. 44.

    Id.; see also Office of Technology Assessment, supra note 33, at 2 (“Use of ZIP + 4 allows USPS to sort letters down to the city block, building, or post office box, whereas the 5-digit ZIP code permits sorting only to the level of a smaller post office zone or a geographical area within a larger post office zone.”).

  45. 45.

    Office of Technology Assessment, supra note 33, at 2.

  46. 46.

    Id.

  47. 47.

    Status report to the Congress, supra note 31, at 53; see also Postal Service History, supra note 1, at 68 (“The sixth and seventh digits denoted a delivery sector: several blocks, a group of streets, a group of Post Office boxes, several office buildings, a single high-rise office building, a large apartment building, or a small geographic area.”).

  48. 48.

    Status report to the Congress, supra note 31, at 53.

  49. 49.

    Id. at 52–53 (detailed explanation and depiction of the ZIP + 4 geographic scheme).

  50. 50.

    Id. at 54 (“A segment—the last two digits of the add-on code—can be one side of a street between intersections; both sides of a street, including cul-de-sacs; a company or building; a floor or group of floors within a building; a cluster of mailboxes; sections of post office boxes; or any other designated delivery point.”).

  51. 51.

    Pasquale (2016).

  52. 52.

    Pigou (1924), p. 250.

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Authors and Affiliations

  1. Beasley School of Law, Temple University, Philadelphia, US

    Salil K. Mehra

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  1. Salil K. Mehra
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Correspondence to Salil K. Mehra .

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Editors and Affiliations

  1. Faculty of Law, University of Lucerne, Lucerne, Switzerland

    Klaus Mathis

  2. School of Law, University of Notre Dame, Notre Dame, IN, USA

    Avishalom Tor

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Mehra, S.K. (2024). Justice Without Markets?. In: Mathis, K., Tor, A. (eds) Law and Economics of Justice. ILEC 2023. Economic Analysis of Law in European Legal Scholarship, vol 17. Springer, Cham. https://doi.org/10.1007/978-3-031-56822-0_5

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  • DOI: https://doi.org/10.1007/978-3-031-56822-0_5

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