Public Choice Concepts and Applications in Law.

• Author: Sokol, D. Daniel
• Position: Book review

PUBLIC CHOICE CONCEPTS AND APPLICATIONS IN LAW. By Maxwell L. Sterns & Todd J. Zywicki. St. Paul: West. 2009. Pp. liv, 601. $70.

INTRODUCTION

Many top elected and appointed federal officials can recall days of outlining for their 1L torts and contracts classes and being cold called in criminal law. JD holders include the president and vice president, as well as six of the fifteen cabinet members. (1) More than half of the current members of the US Senate hold law degrees, as do more than a third of the members of the House of Representatives. (2) Many more lawyers (or former lawyers) head administrative agencies. (3) At the state level, many governors and state legislators also have legal backgrounds. (4) Though members of the judiciary are not required to hold law degrees, nearly all do at the state and federal levels. (5) These decision makers play an important role in the function of law within society.

Law is dynamic, as law shapes behavior. Behavior also shapes law. Public choice can help us to understand this dynamic behavior. At its core, public choice is the use of economics to understand political science. Public choice thus addresses various opportunities for and constraints on behavior in public life in a manner akin to how economics does so in private life (the market). Public choice also assumes rational actors who maximize their utility. Since the 1960s, the use of public choice has had a profound impact in the academic study of law by both those inside and outside of law schools. (6) Given the importance of policy to the law, it is rather odd that the study of public choice has not been a staple of the law school curriculum.

Students are likely to be introduced to public choice in classes that specialize in legislation. Yet, outside of administrative law and legislation, most statutory classes (commercial, corporations, environmental, and tax to name just a few) do not use public choice as a major explanatory tool for policy choices in a given area of law. In common law classes, public choice may often be overlooked altogether.

The next generation of government officials, business leaders, and members of civil society likely will draw from the current pool of law school students. These students often lack a foundation of the theoretical and analytical tools necessary to understand law's interplay with government. This highlights the importance of public choice analysis. By framing issues through a public choice lens, these students will learn the dynamics of effective decision making within various institutional settings. Filling the void of how to explain the decision-making process of institutional actors in legal settings is Public Choice Concepts and Applications in Law by Maxwell Stearns (7) and Todd Zywicki. (8)

Normally, casebooks are not endeavors worthy of a book review. Mainly, they collect cases and provide introductory and concluding comments that provide context and analysis of cases. In sharp contrast, Stearns and Zywicki provide a research tool and resource for students and faculty to understand public choice and law. Public Choice Concepts is a book that focuses on theory, analysis, and case studies rather than edited versions of cases as its primary pedagogical device. This alone should excite students who have read enough cases and yearn for class materials that allow them to begin to apply analysis of their own.

Because of its analytic depth, Public Choice Concepts is likely to be recognized as the leading work on the subject for some time. Steams and Zywicki's contribution to public choice scholarship is important and compelling. Part I of this Review addresses common misperceptions about public choice, provides a descriptive summary of the book, explains its important implications, and suggests some limitations. Part II takes issue with Steams and Zywicki on one important ground--their failure to adequately consider public choice issues in an international context. A number of issues of international importance, such as trade and environmental, and financial regulation, have become daily staples in policy debates. This Part describes how an understanding of public choice can offer insights into international antitrust.

1. PUBLIC CHOICE AND LAW

   1. Misguided Perceptions About Public Choice

      Public choice is not the sole method of analysis of a given legal problem. However, it can serve to enrich the analytical framework of law and legal institutions. Some features of law that seem puzzling to traditional analytical approaches can be explained by public choice analysis. Unfortunately, legal academics oftentimes do not understand public choice and hold a caricatured view of what it embraces.

      Public choice comes in a number of different varieties. Interest group theory is often treated as shorthand for public choice. However, public choice theory also incorporates social choice theory, game theory, and other subfields. Because some of the economic theory-of-regulation public choice literature originated among Chicago School economists, many mistakenly presume that public choice is a right wing deregulatory ideological movement. In fact, public choice has been embraced by political scientists, economists, and law professors of the left and the right. Users of public choice include Daniel Farber, (9) Phil Frickey, (10) Jerry Mashaw, (11) Cass Sunstein, (12) Stephen Breyer, (13) and William Eskridge. (14) Indeed, Public Choice Concepts is a collaboration between a left-leaning public-law scholar (Stearns) and a right-leaning public-private-interface scholar (Zywicki). (15)

      Another misperception about public choice is that it is overly pessimistic about politics. Merrill goes so far as to suggest that public choice serves to "encourage cynicism about governmental institutions, and to promote hostility toward any invocation of the coercive powers of the state." (16) This concern suggests that the spread of public choice may create self-interested behavior that public choice scholars claim is merely a fact of the world. If selfishness exists naturally and public choice accurately describes this selfishness, then cynicism will set in on the part of political actors. The very study of public choice reduces cooperation and destroys traditional social understandings among its students. (17) Such a critique has its origins in the Marxist argument that capitalism creates selfishness. (18)

      A response to this critique is that public choice does not claim that increased selfishness is a good thing. Public choice theorists want constitutional arrangements that maximize general interest in order to better combat selfishness. For Stearns and Zywicki, the purpose of the book and of public choice is to serve a more positive and descriptive function. Understanding public choice allows actors in the legal and political systems to better understand policy tradeoffs and implications. (19) With this knowledge, such actors can make decisions more likely to maximize social welfare.

      In creating new institutional arrangements to maximize social welfare, public choice has normative implications, rather than merely a descriptive function. (20) Public Choice Concepts identifies these normative implications throughout the book, although it does so implicitly. The book explores how an understanding of public choice suggests tools to help institutions overcome some of the flaws that public choice identifies.

   2. The Contribution of Public Choice Concepts and Applications in Law

      Understanding the value of Public Choice Concepts requires an understanding of what distinguishes it from other works in the field. Public Choice Concepts is not akin in its depth and breadth to the comprehensive survey of theoretical and empirical work found in Public Choice III. (21) Nor is the textbook akin to the excellent Research Handbook on Public Choice and Public Law, (22) which provides a survey of the latest theory and applications of public choice across a number of different thematic and substantive areas of law. Instead, the importance of Stearns and Zywicki's contribution is two-fold. First, it is a textbook that serves as a primer for those who are unfamiliar with the importance of public choice, whether they are scholars who focus their academic work on legal institutions or students who learn about these institutions for careers in law, business, or government. As a result, Public Choice Concepts serves as an effective tool for teaching key concepts of public choice law to both students and professors. It is far less technical and more accessible than Public Choice III. Second, Public Choice Concepts informs those social scientists and law professors who understand public choice but not necessarily its applications to different areas of law.

      The book's first part is an overview of the core concepts in public choice. These include collective decision making, interest group theory, rent seeking, social choice theory, and game theory. The second part focuses on institutional issues, and in particular collective decision-making areas: legislatures, the executive branch and administrative agencies, and the judiciary. It also addresses constitutional structure. Online supplements in part three of the book provide additional depth in other areas of law's intersection with policy, such as antitrust, bankruptcy, the Commerce Clause, corporate law, environmental law, and corruption.

      Chapter One discusses how institutions affect decision making. The authors note that behavior by rational actors will vary based on the institutional structure in which actors find themselves (p. 10). Stearns and Zywicki simplify what they mean by an institution, using the well-known work of Nobel laureate Douglass North. (23) In fact, institutional analysis is quite complex and what one means by an institution may vary. Using an oversimplified definition of institutions might distort one's understanding of how institutions affect behavior...