Economics and the Law: From Posner to Post Modernism.

• Author: Schiegel, John Henry
• Position: Review

By Nicholas Mercuro and Steven C. Medema.

Princeton, NJ: Princeton University Press, 1997. Pp. x, 235. $50.00 (cloth), $18.95 (paper).

It is arguable that over the past 20 years, roughly the years of the Volker and Greenspan Federal Reserve Boards, the branch of study that goes by the name Law and Economics has had more influence on public economic policy than any other academic discourse. The macroeconomic concerns that so dominated the 50s, 60s, and 70s have given up pride of place to what seems to me a deafening and endless nattering, rooted in price theory, about the efficiency of various midrange governmental programs and policies. In the face of such a shift in thinking about public policy, it is important to have a fair-minded primer that clearly explains the various aspects of thinking about law and economics in the policy arena today. This book attempts to provide just such a primer. It is notable for the clarity and fairness of its exposition of what are controversial debates about the proper direction for economic policy.

Mercuro and Medema begin with a brief history of economic thinking in American law from the Civil War through World War II and then turn to a sensible, but not particularly technical, discussion of the micro and social welfare economics that underpin all work in law and economics, leaving the more technical exposition to an appendix. Thereafter, follow five chapters detailing five different styles of the economic analysis of law and a brief conclusion attempting to isolate the way the totality of these perspectives fail adequately to address all the important questions in the field. It is the five descriptive chapters that are the most important part of the book, making it a wonderful teaching tool as well as a bookshelf resource for clear thinking.

The first of these chapters describes the dominant school in the economic analysis of law, the one popularly associated with the University of Chicago, Ronald Coase, Robert Bork, and Richard Posner. This group of scholars began by arguing that the antitrust laws were anticompetitive and then shifted to examining judge-made common law, particularly that of contracts, torts, and property. With the appearance of Coase's "The Problem of Social Cost" and then Gary Becker's work, the Chicagoans have come to emphasize that proper legal rules are those that would mimic the results that the market would bring and have broadened their work from narrowly economic law into areas such as family law and criminal law. They believe that...