Economics as a map in law and market economy

DOIhttps://doi.org/10.1108/S0193-5895(2009)0000024005
Publication Date19 May 2009
Pages3-20
Date19 May 2009
AuthorRobin Paul Malloy
ECONOMICS AS A MAP IN LAW
AND MARKET ECONOMY
*
Robin Paul Malloy
ABSTRACT
S.I. Hayakawa said, ‘‘The map is not the territory.’’ Taking this as my
theme, I explore the idea of economics as a cultural-interpretive map that
can be usefully employed to navigate the legal landscape. As a map,
economics facilitates our understanding of law in a market context. At the
same time, the map is not the metaphorical territory that it represents,
just as economics is not the market exchange process to which it refers.
Therefore, we must be careful not to conflate our conception of the
economic map with our understanding of the legal territory.
*rRobin Paul Malloy, all rights reserved (2008). This paper is an original essay that includes
intermittent text and notes from two of my books with Cambridge University Press, Law in a
Market Context: An Introduction to Market Concepts in Legal Reasoning (Malloy, 2004), and
Law and Market Economy: Reinterpreting the Values of Law and Economics (Malloy, 2000)
(quoted text in this paper is not an indicator of what in this paper does or does not come from
these two books). Further discussion and details related to the ideas discussed herein can be
explored in these earlier books.
Law & Economics: Toward Social Justice
Research in Law and Economics: A Journal of Policy, Volume 24, 3–20
Copyright r2009 by Emerald Group Publishing Limited
All rights of reproduction in any form reserved
ISSN: 0193-5895/doi:10.1108/S0193-5895(2009)0000024005
3
INTRODUCTION
For the past 20 years, I have extensively written and lectured on two primary
areas of the law, the first area being on real estate transactions, finance, and
development, and the second area being on the relationship between law and
market theory. Both of these areas converge in the sense that transactional
law is about the ability to use the law to capture and create wealth. It is
natural therefore, for someone with my interest, to turn to economics and
market theory for ideas and tools that can be helpful in the development of a
useful and pragmatic theory of transactional lawyering.
Early on in my work, I became conscious of the fact that both law and
economics were systems that involved the lawyer in the process of interpreta-
tion. The lawyer’s stock and trade is the use, development, and manipulation
of meaning. The successful lawyer communicates effectively using a variety of
mechanisms (metaphor, narrative, grammar, analogy, etc.) to capture the
essence of a deal and move a transaction toward the successful completion of its
objective. At the same time, economics also involves a process of interpreta-
tion. Most fundamentally to economics, the exercise of choice involves a process
of interpretation. Choice is not simply about a calculus of costs and benefits;
it is about the interpretation of costs and benefits, and about determining what
costs and benefits to include as relevant to a decision. As an interpretive process,
choice is an exercise of conscience, and an expression of one’s humanity.
This realization triggered an interest in a third area of study over these
past 20 years, and that is legal semiotics: the study of law as a system of
signs, and more specifically how signs function to generate meanings
and values in law. Signs are ideas that have meaning, and we can explore the
way in which ideas and meanings change over time. In particular, we can
examine the changes in the meanings, and hence values, of law that result
from the introduction of economic concepts into legal reasoning.
In this chapter, therefore, I explore how these three interests (law, markets,
and semiotics) come together. I make two points. First, I discuss the way
in which economics functions as a map for navigating our legal landscapes.
Second, I elaborate on this theme in presenting an argument for using these
‘‘maps’’ to reduce the indeterminacy and subjectivity of legal reasoning.
THE MAP IS NOT THE TERRITORY
As a starting point for better understanding the position I give to economics
in addressing law in a market context, let me offer a deceivingly simple
ROBIN PAUL MALLOY4

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