Economics as a map in law and market economy

• DOI: https://doi.org/10.1108/S0193-5895(2009)0000024005
• Published date: 19 May 2009
• Pages: 3-20
• Date: 19 May 2009
• Author: Robin 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