The Rise of Law and Economics: An Intellectual History

131 Pages·2020·8.102 MB·English

by  George L. Priest

THE RISE OF LAW AND ECONOMICS

This is a history—though, intentionally, a brief history—of the rise of law and
economics as a field of thought in the U.S. college and law school academy,
though the field has expanded to Europe and South America and will expand
further as other legal systems develop.
This book explains the origins of the field and the sources of its growth
during its formative period. It describes the intellectual roots of the field, and
the field’s relationship to the understanding of the role of the legal system in
directing the functioning of the economy. It describes the effect of the Great
Depression and the expansion of governmental power on advancing the func­
tional approach. The book then addresses the work of Aaron Director, during
the late 1950s, on focusing economic analysis as a means of understanding the
effects of the legal and regulatory system on the allocation of resources in the
society. Then it turns to the subsequent intellectual founders of the field—
Ronald Coase, Guido Calabresi, and Richard Posner—and attempts to explain
the significance of their work. It also discusses the efforts of Robert Bork and
Henry Manne toward the influence of law and economics on public policy.
The book ends with the founding of the American Law and Economics Associ­
ation in 1991.
This is an essential companion to law and economics texts for undergraduate
law and economic students and, especially, a general supplement to first-year
casebooks for law school students.
George L. Priest is the Edward J. Phelps Professor of Law and Economics at
Yale Law School.
“As a witness to the rise of law and economics in the post-war United States,
Professor Priest provides an elegantly written history of the big ideas that con­
tinue to inspire research and spark debate across established and emerging fields,
from economics to public policy.”
— Marc D. Froese, Professor of Political Science, Burman University
“This book reviews the growth and influence of the field of law and economics
from World War II to 1991. It is a remarkable intellectual history, that carefully
dissects the respective contributions made by the prime movers of the field, how
their approaches differed, and how they influenced each other.”
— Stephen J. Spurr, Professor of Economics, Wayne State University
THE RISE OF LAW AND
ECONOMICS
An Intellectual History
George L. Priest
First published 2020
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
52 Vanderbilt Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 George L. Priest
The right of George L. Priest to be identified as author of this work has
been asserted by him in accordance with sections 77 and 78 of the
Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced
or utilised in any form or by any electronic, mechanical, or other means,
now known or hereafter invented, including photocopying and
recording, or in any information storage or retrieval system, without
permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and
explanation without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Priest, George L., 1947-author.

Title: The rise of law and economics : an intellectual history / George L.

Priest.

Description: Abingdon, Oxon ; New York, NY : Routledge, 2020. |

Includes bibliographical references and index.

Identifiers: LCCN 2019054014 (print) | LCCN 2019054015 (ebook)

Subjects: LCSH: Law and economics–History. | Law and

economics–Study and teaching–United States. | Law–

Economic aspects–United States.

Classification: LCC K487.E3 P75 2020 (print) | LCC K487.E3 (ebook) |

DDC 340/.11–dc23

LC record available at https://lccn.loc.gov/2019054014

LC ebook record available at https://lccn.loc.gov/2019054015

ISBN: 978-0-367-33937-1 (hbk)

ISBN: 978-0-367-33938-8 (pbk)

ISBN: 978-0-429-32294-5 (ebk)

Typeset in Bembo

by Swales & Willis, Exeter, Devon, UK
For T, C, N, and J.

With deepest love.

CONTENTS

List of figures ix

Acknowledgements: my relation to law and economics x

1 Introduction 1

2 The early development of the functional approach to law 7

3 The problems of the Depression and the broader acceptance

of the functional approach to law 12

4 The birth of modern law and economics as a discipline 27

5 The revolutionary expansion of law and economics:

Ronald H. Coase 35

6 Calabresi and the economic framework of The Costs

of Accidents 51

7 Law and economics made dominant: Richard A. Posner

and Economic Analysis of Law 61

8 Coase, Calabresi, and Posner compared 74

9 The influence of law and economics on regulation

and antitrust law 81
viii Contents
10 Henry Manne and the popular expansion of law and economics 92

11 Epilogue: the John M. Olin Foundation and the founding

of the American Law and Economics Association 98

Table of cases 101

Bibliography 103

Index 117
FIGURES
4.1 Aaron Director 28

4.2 Aaron Director and his group 33

5.1 Ronald Coase 36

6.1 Guido Calabresi (c. 1960s) 52

7.1 Richard A. Posner (c. 1970s) 62

7.2 William Landes (c. 1980s) 71

9.1 Robert H. Bork, 1979 86

10.1 Henry Manne and the judges 95

10.2 Seminar on the Intellectual History of Law and Economics,

Los Angeles, March 5–8, 1981 96