Laws Order: What Economics Has to Do with Law and Why It Matters

An Intermediate Text , Law's Order: David Friedman is the son of economists Rose and Milton Friedman. He graduated magna cum laude from Harvard University in , with a bachelor's degree in chemistry and physics. He is an atheist. In his book The Machinery of Freedom , Friedman sketched a form of anarcho-capitalism where all goods and services including law itself can be produced by the free market. This differs from the version proposed by Murray Rothbard , where a legal code would first be consented to by the parties involved in setting up the anarcho-capitalist society.

Friedman advocates an incrementalist approach to achieve anarcho-capitalism by gradual privatization of areas that government is involved in, ultimately privatizing law and order itself. In the book, he states his opposition to violent anarcho-capitalist revolution.

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He advocates a consequentialist version of anarcho-capitalism, arguing for anarchism on a cost-benefit analysis of state versus no state. Friedman is a longtime member of the Society for Creative Anachronism , where he is known as Duke Cariadoc of the Bow. He is known throughout the worldwide society for his articles on the philosophy of recreationism and practical historical recreations, especially those relating to the medieval Middle East.

He is a long-time science fiction fan , and has written two fantasy novels, Harald Baen Books , and Salamander He has spoken in favor of a non-interventionist foreign policy. From Wikipedia, the free encyclopedia. For other people with the same name, see David Friedman disambiguation. The Machinery of Freedom.

Archived PDF from the original on 17 December Retrieved 25 November Much is made in libertarian circles of the division between 'Austrian' and 'Chicago' schools of economic theory, largely by people who understand neither. I am classified as 'Chicago'. The key concept for normative economic analysis is efficiency , in particular, allocative efficiency.

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A common concept of efficiency used by law and economics scholars is Pareto efficiency. A legal rule is Pareto efficient if it could not be changed so as to make one person better off without making another person worse off. A weaker conception of efficiency is Kaldor-Hicks efficiency. A legal rule is Kaldor-Hicks efficient if it could be made Pareto efficient by some parties compensating others as to offset their loss.

Guido Calabresi , judge for the U. A Legal and Economic Analysis has been cited as influential in its extensive treatment of the proper incentives and compensation required in accident situations. The economic analysis of law has been influential in the United States as well as elsewhere. Judicial opinions use economic analysis and the theories of law and economics with some regularity, in the US but also, increasingly, in Commonwealth countries and in Europe.

The influence of law and economics has also been felt in legal education, with graduate programs in the subject being offered in a number of countries. Many law schools in North America, Europe, and Asia have faculty members with a graduate degree in economics. In addition, many professional economists now study and write on the relationship between economics and legal doctrines. Anthony Kronman, former dean of Yale Law School, has written that "the intellectual movement that has had the greatest influence on American academic law in the past quarter-century [of the 20th Century]" is law and economics.

Despite its influence, the law and economics movement has been criticized from a number of directions.

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This is especially true of normative law and economics. Because most law and economics scholarship operates within a neoclassical framework, fundamental criticisms of neoclassical economics have been drawn from other, competing frameworks, though there are numerous internal critiques as well. Critics of the law and economics movements have argued that normative economic analysis does not capture the importance of human rights and concerns for distributive justice. Some of the heaviest criticisms of the "classical" law and economics come from the critical legal studies movement, in particular Duncan Kennedy [11] and Mark Kelman.

Relatedly, additional critique has been directed toward the assumed benefits of law and policy designed to increase allocative efficiency when such assumptions are modeled on "first-best" Pareto optimal general-equilibrium conditions.



Under the theory of the second best , for example, if the fulfillment of a subset of optimal conditions cannot be met under any circumstances, it is incorrect to conclude that the fulfillment of any subset of optimal conditions will necessarily result in an increase in allocative efficiency. Consequently, any expression of public policy whose purported purpose is an unambiguous increase in allocative efficiency for example, consolidation of research and development costs through increased mergers and acquisitions resulting from a systematic relaxation of anti-trust laws is, according to critics, fundamentally incorrect, as there is no general reason to conclude that an increase in allocative efficiency is more likely than a decrease.

Essentially, the "first-best" neoclassical analysis fails to properly account for various kinds of general-equilibrium feedback relationships that result from intrinsic Pareto imperfections. Another critique comes from the fact that there is no unique optimal result. Warren Samuels in his book, The Legal-Economic Nexus , argues, "efficiency in the Pareto sense cannot dispositively be applied to the definition and assignment of rights themselves, because efficiency requires an antecedent determination of the rights 23—4 ".

Law and economics has adapted to some of these criticisms see "contemporary developments", below.

Laws Order What Economics Has to Do with Law and Why It Matters

One critic, Jon D. Hanson of Harvard Law School , argues that our legal, economic, political, and social systems are unduly influenced by an individualistic model that assumes "dispositionism"—the idea that outcomes are the result of our "dispositions" economists would say "preferences". Instead, Hanson argues, we should look to the "situation" , both inside of us including cognitive biases and outside of us family, community, social norms, and other environmental factors that have a much larger impact on our actions than mere "choice". Hanson has written many law review articles on the subject.

David D. Friedman - Wikipedia

Law and economics has developed in a variety of directions. One important trend has been the application of game theory to legal problems. Other developments have been the incorporation of behavioral economics into economic analysis of law, and the increasing use of statistical and econometrics techniques.

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American Law and Economics vs. The Journal of Law and Economics.



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