Abstract
Judge Richard A. Posner is the leading and most creative exponent of “the economic analysis of law”—an extremely influential movement in American jurisprudence and law teaching. As he articulates and defends this pattern of analysis, it is seen as having both a descriptive and a normative dimension. As a descriptive theory, the economic analysis of law maintains that the principle of wealth maximization (goods and services are to be in the hands of those willing to pay the most for them) has in fact—surface language often to the contrary—guided a substantial amount of common law adjudication. As a normative theory, the economic analysis of law maintains that the principle of wealth maximization ought to guide adjudication—that judges, whenever possible, should resolve common law cases in such a way that wealth is maximized. Wealth maximization is the expected result when free market forces are operative, and thus judges should attempt to “mimic the market” whenever possible.
This paper was prepared for presentation at a March 28 symposium on the philosophy of law at the 1986 meetings of the Pacific Division of the American Philosophical Association. It is a reply to the symposium’s lead paper “The Justice of Economics” by Judge Richard A. Posner. (Richard A. Posner is currently a Judge on the U.S. Court of Appeals for the Seventh Circuit and is a Senior Lecturer (formerly Professor of Law) at the University of Chicago Law School). Judge Posner’s paper is a distillation of his longer essay—“Wealth-Maximization Revisited” in the 2 Notre Dame Journal of Law, Ethics, and Public Policy 85 (1985). Both papers are a defense, with slight revisions, of the general theory he developed in his book Economic Analysis of Law (Boston: Little, Brown and company, First Edition, 1982;Second Edition, 1977, third Edition, 1986) and his collection of essays The Economics of Jusrice (Cambridge: Harvard University Press, 1981). For an excellent general criticism of the economic analysis of law (one that has greatly influenced my own thinking) see Ronald Dworkin’s “Is Wealth a Value?” (Journal of Legal Studies, March, 1980).
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References
Both of these methods of defending moral theories are developed and defended in John Rawis, A Theory of Jusaice (Cambridge: Harvard University Press, 1971).
Although concerns with moral skepticism are absent in “The Justice of Economics,” they are briefly expressed in “Wealth Maximization Revisited,” supra note 1. For a defense of sociobiology, see E.O. Wilson, On Human Nature (Cambridge: Harvard University Press, 1978). For an assessment of sociobiology’s relevance for moral philosophy—reflections possibly to be extended to economics—seeJeffrie G. Murphy, Evolution, Morality, and the Meaning of Life (Totowa: Rowman and Littlefield, 1982).
See “A Note on Jurisprudence,” pp. 393–395 in the first edition of Economic Analysis of Law, supra note 1.
A Theory of Justice, supra note 3, pp. 424 tff.
See, for example, Herbert Marcuse, One-Dimensional Man (Boston: Beacon Press, 1964).
Alasdair MacIntyre, After Virtue (Notre Dame: Notre Dame University Press, 1981).
John Rawls, A Theory of Justice, supra note 3. Robert Nozick, Anarchy, State and Utopia (New York: Basic Books, 1974).
Posner acknowledges that libertarianism would seem to rule out some wealth maximizing forms of coercion. He draws on Richard Epstein’s example of the driver who collides with another driver and then refuses to pay compensation. (See Richard Epstein. “A Theory of Strict Liability,” 2 Journal of Legal Studies 151, 1973.) Posner writes: “The legal system will not make him pay provided he was not negligent, which means, approximately anyway, provided the expected accident cost was less than the cost of avoiding the accident would have been. This is the efficient, the wealth-maximizing, solution...but it seems to involve coercing the accident victim—irKant’s terms, making him a means to the ends of the other driver.” Posner thinks that it might be possible to show that this conflict is only apparent by drawing on the concept of ex ante compensation: “One observes that drivers can and do insure themselves both against being hurt (accident victims) and hurting others (liability insurance). If a negligence system is cheaper than a strict liability system, the sum of a driver’s accident and liability insurance premiums will be lower under the former than the latter. He will therefore choose the former.” This move is, of course, controversial. It understands coercion, not in terms of what the victim of coercion now chooses, but in terms of what the victim would have chosen had he been rational in some prior position of setting up social rules. Even if we accept Posner’s argument on this particular case, however, it would seem simply a matter of luck (a matter of unbelievable luck) that libertarian rights would all be respected in a society governed by the principle of wealth maximization. As I shall later discuss, Posner himself admits this with respect to constitutional rights.
Conway v. O’Brien (2 Cir. 1940) 111 f 2d 611,612.
John Rawls, A Theory of Justice, supra note 3, pp. 72 ff.
Ronald Dworkin, Taking Rights Seriously (Cambridge: Harvard University Press, 1977).
Robert Paul Wolff, “Robert Nozick’s Derivation of the Minimal State,” 19 Arizona Law Review 7 (1977). Wolff entitles the final section of his essay “On the Weirdness of Anarchy, State and Utopia.”
See, for example, Chapters 4 and 25 of the first edition of Economic Analysis of Law, supra note 1.
Ibid., pp. 358 ff: “And so with the rape victim’s body.” And so? What exactly is being talked about here? The idea of rape as the bypassing of an established market might make some literal sense with respect to the rape of a prostitute (though surely it would still not be the primary reason for criminalizing), but what literal sense can we make of this notion of rape in general? Comparing auto theft to rape will require the exploration of complex issues that are in no interesting sense economic in nature—e.g., to what degree is the relation of one’s self to one’s body strongly analogous to the relation of one’s self to one’s automobile?
Or consider what Posner says (p. 394) about the strict liability element in the crime of statutory rape: “The proper criticism of the various pockets of strict liability in the criminal law (e.g., reasonable mistake no defense in a prosecution for...statutory rape) is not that they are inconsistent with the idea of law but that the risk imposed is greater than the circumstances warrant.” Posner seems to be suggesting that, in thinking rationally about strict liability, we should abandon the traditional moral position that strict liability, being prima facie unfair or unjust, is prima facie inconsistent with the ideal of the rule of law; and we should instead replace this moral thinking with economic thinking, with cost-benefit analysis. The practical result will be the same (i.e., an attack on strict liability) but the reasons will now be the correct ones.
But what does this suggestion really come to? As noted previously, one does not get genuine economic analysis merely by talking in very general terms about costs and benefits. What is crucial is how these various costs and benefits are to be analyzed and valued. Suppose we believe (a) that strict liability here would incline people to avoid sexual relations with persons who might not be adult, (b) that there is no social value in such relations and considerable social disvalue, and (c) that the burden placed on an individual who is scared away from sexual experimentation with children is reasonably trivial and thus does not violate anything we might want to call a fundamental right of that individual. Two things are worth noting about this belief cluster: (1) Given these beliefs, it might seem quite reasonable to impose strict liability; (2) None of these beliefs—though (a) and (b) could be said to assess benefits and (c) to assess costs—areto be illuminatingly analyzed in economic terms. The first belief (that the threat of strict liability will better deter people from sexual experimentation with children than will a negligence standard) will depend upon a psychological theory of the nature and power of sexual desire as weighted against the desire to avoid trouble with the law. The second belief (that there is a social disvalue in sexual experimentation with children) will be a function of one’s view of the nature and worth of children, childhood sexuality, and the family and the role of these in the social life of the community as a whole. And the third belief (that the person who is deterred form sexual experimentation with children suffers only a trivial interference and no violation of a fundamental right) will rest both upon one’s theory of sexuality and one’s general political and legal theory. My point is not that this belief cluster is correct but is rather this: even to talk about the cluster intelligently requires theories about a variety of issues (sexuality, the family, etc.) that would become hopelessly distorted if understood mainly in economic terms.
The moral of the above is this: Problems of criminalization and criminal liability pose serious obstacles to the economic analysis of law because its extension into such areas as murder, rape and child abuse seems to produce (to use H.L.A. Hart’s phrase) “uniformity at the price of distortion.” For more on this, see Alvin Klevorick, “On the Economic Theory of Crime,” and Jules L. Coleman, “Crime, Kickers and Transaction Structures,” both in Nomos XXVII: Criminal Justice edited by J. Roland Pennock and John W. Chapman (New York: New York University Press, 1984). See also my “Why Have a Criminal Law at All?” (reprinted in this collection) .
There is also a general point worth making here: Simply because economic considerations may sometimes help us in answering the question “Of all wrong acts, which should we choose to criminalize?”, it must not be assumed that economic considerations will be helpful to anything like the same degree in answering the question “What makes certain acts wrong?” . Even auto theft is not wrong solely because it bypasses an efficient market, but this feature of theft may indeed explain why the criminal law is the appropriate social technique to use in dealing with this particular kind of wrongness—whyfor example, a mere tort remedy would not be appropriate. I believe that this important distinction is often missed by Posner and other economists writing on such matters.
Richard Dawkins, The Selfish Gene (Oxford: Oxford University Press, 1976).
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Murphy, J.G. (1992). The Justice of Economics. In: Retribution Reconsidered. Philosophical Studies Series, vol 54. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-7922-3_5
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