Category: Symposium: Economic Dynamics of Law

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Economic Dynamics and Economic Justice: Making Law Catastrophic, Middling, or Better?

Contrary to Livermore,’s post,  in my view Driesen’s book is particularly powerful as a window into the  profound absurdity and destructiveness of the neoclassical economic framework, rather than as a middle-ground tweaking some of its techniques.  Driesen’s economic dynamics lens makes a more important contribution than many contemporary legal variations on neoclassical economic themes by shifting some major assumptions, though this book does not explore that altered terrain as far as it might.

At first glance, Driesen’s foregrounding of the “dynamic” question of change over time may, as Livermore suggests, seem to be consistent with the basic premise of neoclassical law and economics:   that incentives matter, and that law should focus ex ante, looking forward at those effects.   A closer look through Driesen’s economic dynamics lens reveals how law and economics tends to instead take a covert ex post view that enshrines some snapshots of the status quo as a neutral baseline.  The focus on “efficiency” – on maximizing an abstract pie of “welfare”  given existing constraints —  constructs the consequences of law as essentially fixed by other people’s private choices, beyond the power and politics of the policy analyst and government, without consideration of how past and present and future rights or wrongs constrain or enable those choices.  In this neoclassical view, the job of law is narrowed to the technical task of measuring some imagined sum of these individual preferences shaped through rational microeconomic bargains that represent a middling stasis of existing values and resources, reached through tough tradeoffs that nonetheless promise to constantly bring us toward that glimmering goal of maximizing overall societal gain (“welfare”) from scarce resources.

Driesen reverses that frame by focusing on complex change over time as the main thing we can know with certainty.  In the economic dynamic vision, “law creates a temporally extended commitment to a better future.” (Driesen p. 52). Read More

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Driesen on Cost Benefit Analysis (CBA) vs. Economic Dynamic Analysis (EDA)

There are several ways to read The Economic Dynamics of Law by David Driesen. One is as an attempt to construct and defend a new normative foundation for law in fields as diverse as property and financial regulation. This reading judges the project against the extremely ambitious expectations that it sometimes seems to set for itself. Another way of approaching the book is as a set of reform proposals to the standard cost-benefit analysis methodology that has been practiced by federal administrative agencies in the United States for the last three decades. This reading is more modest conceptually but more demanding of political and practical realism.

Viewed as an alternative to the law and economics tradition of cost-benefit analysis, the “economic dynamic analysis” (EDA) that Driesen proposes runs into a number of substantial difficulties. It lacks the clarity and rigor of these more established perspectives. Sometimes, it seems to mirror the methodologies that it purportedly opposes. Where EDA departs from cost-benefit analysis or the law and economics framework, it often seems to stray in normatively troubling directions.

Dismissing EDA as an unattractive conceptual alternative to law and economics, however, would miss what is most useful in Driesen’s effort. By highlighting areas where cost-benefit analysis, as practiced, fails to live up to its promise, while broadly endorsing the goals of rigorous policy analysis, The Economic Dynamics of Law makes a valuable contribution that falls somewhere between the now familiar opposing camps that, on the one hand, downplay the difficulties in cost-benefit analysis methodology and, on the other, seem to question the value of careful ex ante comparison of regulatory alternatives. By inhabiting this middle ground, Driesen demonstrates what productive conversations about the future of cost-benefit analysis can look like, and in the process makes a number of helpful reform proposals that ought to be taken seriously by policymakers.

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Symposium: Driesen’s The Economic Dynamics of Law

This week, we are hosting a symposium on David Driesen’s book The Economic Dynamics of Law (Cambridge University Press, 2013), from today to April 3rd. As the press’s webpage explains,

This book offers a dynamic theory of law and economics focused on change over time, aimed at avoiding significant systemic risks (like financial crises and climate disruption), and implemented through a systematic analysis of law’s economic incentives and how people actually respond to them. This theory offers a new vision of law as fundamentally a macro-level enterprise establishing normative commitments and a framework for numerous private transactions, rather than as an analogue to a market transaction. It explains how neoclassical law and economics sparked decades of deregulation culminating in the 2008 financial collapse. It then shows how economic dynamic theory helps scholars and policymakers make wise choices about how to avoid future catastrophes while keeping open a robust set of economic opportunities, with individual chapters addressing the law and economics of financial regulation, contract, property, intellectual property, antitrust, national security, and climate disruption.

Our terrific line-up of commenters will include:

Sanja Bogojevic
Brett Frischmann
James Hackney
Michael Livermore
Martha McCluskey
Uma Outka
Arden Rowell
Jennifer Taub

Thanks to all of them for commenting on this timely and important book.

Book Symposium: Driesen’s The Economic Dynamics of Law

Next week, we will be hosting a symposium on David Driesen’s book The Economic Dynamics of Law (Cambridge University Press, 2013). The symposium will be held from Mar. 31 to Apr. 3, 2014. As the press’s webpage explains,

This book offers a dynamic theory of law and economics focused on change over time, aimed at avoiding significant systemic risks (like financial crises and climate disruption), and implemented through a systematic analysis of law’s economic incentives and how people actually respond to them. This theory offers a new vision of law as fundamentally a macro-level enterprise establishing normative commitments and a framework for numerous private transactions, rather than as an analogue to a market transaction. It explains how neoclassical law and economics sparked decades of deregulation culminating in the 2008 financial collapse. It then shows how economic dynamic theory helps scholars and policymakers make wise choices about how to avoid future catastrophes while keeping open a robust set of economic opportunities, with individual chapters addressing the law and economics of financial regulation, contract, property, intellectual property, antitrust, national security, and climate disruption.

Our terrific line-up of commenters will include:

Sanja Bogojevic
Brett Frischmann
James Hackney
Michael Livermore
Martha McCluskey
Uma Outka
Arden Rowell
Jennifer Taub

Thanks to them, and to David, for being part of the symposium—we all look forward to the event. Given the topic of the 2014 Phillips Lecture, it’s clear that “avoiding future catastrophes while keeping open a robust set of economic opportunities” is a critical issue for our times.