Law and Economics seminar
Regulatory debates are often situated within the broader context of the interaction between the economy, society and law. This seminar aims to provide a general introduction to some of the different perspectives on the nature, and desirable scope, of regulation contained in this wider law and economics literature.
The seminar begins with a key chapter on the interaction between economy and society in the 1930’s and 1940’s before considering more recent scholarship in behavioural economics and related fields focussing on ‘soft’ forms of regulation, and the relationship between regulation and the courts.
In considering each of these perspectives, we will focus on the implications for regulation, including the prescriptions of each perspective for regulation, and the influence that the theories have had (and are having) on the design of public policy and regulation.
During the seminar we will discuss the following questions:
- Do the debates of the pre-war scholars (such as Hayek and Polanyi) as to the interaction between the market, the state and society, still have contemporary relevance? If so, what are some of the possible implications for the nature and scope of regulation? (for example, in relation to financial regulation)
- What are the key precepts of law and economics drawn from Coase and Calabresi & Melamed. What are Sen and Waldron’s critiques, and how might either of these positions apply to the baseball rule?
- What are the insights from the behavioural economics literature that may be relevant to regulation? What possible trade-offs may be associated with applying these insights?
Essential Reading
Smith, A., Theory of Moral Sentiments (1759) and The Wealth of Nations, (1776) excerpts on ‘the invisible hand’.
Hayek, F. A., The Road to Serfdom, 1944, Chapters 3-6 (see Road to Serfdom in Cartoons)
Hayek on the use of the price signal in ‘The Use of Knowledge in Society‘, just the paragraph starting “Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people …”
Polanyi, The Great Transformation (1944), Chapter 6
Coase, R., ‘The Problem of Social Cost‘ (1960) Vol 3, The Journal of Law & Economics, pp. 1-44 (note the basic premise and the points on transaction costs).
Jollis, C., Sunstein, C.R., and Thaler, R.H., ‘A behavioural approach to law and economics’ (1998) 50 Stanford Law Review 1471
Robert E. Suggs, Poisoning the Well: Law & Economics and Racial Inequality, 57 Hastings L.J. 255 (2005).
Ogus, A., ‘Regulation revisited’ (2009) Public Law Apr, 332-346
Austin, R., ‘Nest Eggs and Stormy Weather Law, Culture, and Black Women’s Lack of Wealth’, in Fineman, M., ed. (2018) Feminism Confronts Homo Economics
Grow, N., and Flagel, Z., ‘The Faulty Law and Economics of the baseball Rule‘ (2018), 60 William & Mary Law Review 59 Intro + Section 3 “Courts have failed to change …”
Further Reading
Guido, C., and Melamed, A. D., ‘Property Rules, Liability Rules, and Inalienability‘ One View of the Cathedral (1972) 85 Harvard Law Review 1089
Sen, A. K., ‘A Critique of the Behavioural Foundations of Economic Theory‘ (1977)
Waldron, J., Review of Criticizing the Economic Analysis of Law Reviewed Work(s): Markets, Morals, and the Law by Jules L. Coleman, (1990) (99)6) The Yale Law Journal, pp. 1441-1471
Applying behavioural economics at the Financial Conduct Authority Document | Further
Behavioural Economics in Competition and Consumer Policy – Centre of Competition Policy, UEA, 2013
Harlow & Rawlings (2021) Law and Administration, Chapters 8 ‘The Regulatory Laboratory’ & 10 ‘Contract, Contract, Contract’
Optional
William H. J. Hubbard ‘Newtonian Law and Economics’ Coase Lecture, University of Chicago, Youtube or podcast.
‘Briefly 4.5 – Critical Race Theory v. Law & Economics’, University of Chicago podcast
Perspectives on Regulation seminar
The purpose of Seminar Eight is to question some of the assumptions that underpin the North-American, Australian and North-European literature about law and society interactions in regulation. The seminar will thus provide an opportunity to draw on your experiences of legal regulation in the particular jurisdiction in which you have studied law.
The seminar asks a number of questions, including:
- To what extent are these assumptions also valid for other countries, such as Latin-America, China and South-East Asia?
- Can we transfer assumptions about the interactions between or within law and society between any countries?
- Is variation in law and society interactions that inform regulation just a ‘North-South’ issue or are there even limits to transferring assumptions about law and society interactions in regulation from a North-American context to a North-European one, from an English to an Irish context?
- If the actual operation of regulatory regimes is highly dependent on the national political, legal and economic cultures in which they occur, can we develop any overarching theories of regulation that can be applied to a range of countries?
- Do we actually need such overarching theories in order to explain and critique regulatory regimes?
- What, if any, new elements of theory do we need in order to understand regulation beyond North-America, Australia and Europe?
Some critiques of instrumental theories of legal regulation assume that a neo-liberal paradigm is shaping contemporary governance. For instance, some Foucauldian inspired approaches consider deregulation and the turn to regulation through a social sphere as a specific neo-liberal ‘governmentality’. But this assumes that a society has already progressed through a phase of significant state ‘command and control’ regulation. Some states, however, are just building up ‘command and control’ regulatory regimes in various sectors, such as utilities or the environment.
Also from a legal perspective various contributions to regulation scholarship have been concerned with promoting accountability, legitimacy and citizens’ involvement in regulatory processes. These debates often occur in the context of regulation in liberal democracies. The challenge thus is to develop public participation, accountability and legitimacy architectures in developing countries, some of which are governed by more authoritarian political regimes.
But the line of argument indicated in the assumptions listed above does not take into account the possibility of successful ‘legal transplants’ and the claim that we are witnessing the globalization of legal, political and regulatory orders. Both successful legal transplants and globalization diminish the significance of variation between countries for understanding how regulation works. But the strong cultural dimensions of law often preclude successful transfer of regulatory models. And globalization has been criticized from a post-colonial studies perspective because attempts to transfer specific regulatory models, for instance to developing countries, through international organizations, such as the World Bank, may lack legitimacy and can be perceived as examples of ‘regulatory imperialism’.
This seminar also asks us to consider perspectives between people, particularly how relevant are gender, race and ethnicity, sexual orientation or ontology are to regulation. Do you agree with the assumption at the heart of most regulation studies that the state is the main actor? What role do families and communities play? What about if we do not share an ontology or a perspective, how can national governance or theories of property or rights provide for effective regulation?
Jenson, J. (1991). Thinking (a Feminist) History: the Regulation Approach as Theatre. Cahiers de recherche sociologique, (17), 185–197.
Noble, B., (2008) ‘Owning as Belonging/Owning as Property: The Crisis of Power and Respect in First Nations Heritage Transactions with Canada‘ in Catherine Bell, and Val Napoleon (eds) First Nations Cultural Heritage and Law: Case Studies, Voices, and Perspectives, (UBC Press).
Parisi, L., (2010) ‘Feminist Perspectives on Human Rights‘ International Studies, 1-30
Prado, M. M., ‘Implementing independent regulatory agencies in Brazil: The contrasting experiences in the electricity and telecommunications sectors’ Regulation & Governance (2012) 6, 300–326
Emily Snyder; Val Napoleon; John Borrows, (2015) ‘Gender and Violence: Drawing on Indigenous Legal Resources’, 48 U.B.C. L. Rev. 593
Erie, M. S., and Ha, D. J., (2021) ‘Law and Development Minus Legal Transplants: The Example of China in Vietnam’ 8(2) Asian Journal of Law and Society, 372-401.
Vaughan, S. and Jessup, B., (2022) ‘Backstreet’s back alright: London’s LGBT + nightlife spaces and a queering of planning law and planning practices‘ in Abbott, C. and Lee, M., Taking English Planning Law Scholarship Seriously (UCL Press)
Further Reading
Todd, Z., (2016) ‘An Indigenous Feminist’s Take On The Ontological Turn: ‘Ontology’ Is Just Another Word For Colonialism’, 29(1) Journal of Historical Sociology
Urueña, R.,(2012) ‘The rise of the constitutional regulatory state in Colombia: The case of water governance’ 6 Regulation & Governance (2012) 282–299
Haines, F., (2003) ‘Regulatory Reform in Light of Regulatory Character: Assessing Industrial Safety Change in the Aftermath of the Kader Toy Factory Fire in Bangkok, Thailand’ 12(4) Social & Legal Studies, 461-487
Thiruvengadam, A. K., and Joshi, P., (2012) ‘Judiciaries as crucial actors in Southern regulatory systems: A case study of Indian telecom regulation, 6 Regulation & Governance 327–343
Optional
Daniel Hough, (2021) ‘Corruption: how the UK compares to other countries‘, The Conversation
Achille Mbembe (2015) Decolonizing Knowledge and the Question of the Archive
Rashawn Ray and Alexandra Gibbons, (2021) ‘Why are states banning critical race theory?‘ Brookings.edu