The concept of freedom is the stone of stumbling for all empiricists, but at the same time the key to the loftiest practical principles for critical moralists, who perceive by its means that they must necessarily proceed by a rational method.
--Immanuel Kant (1)
In this Article, I succumb to the temptation to make policy recommendations. My policy is "Stop making policy recommendations!" Or, to put this more reasonably, legal academia should realize that policy scholarship should not dominate legal scholarship as it does now. Jurisprudential, theoretical, and doctrinal scholarship should have equal prestige and presence in academia if for no other reason than these forms of scholarship more closely relate to the practice of law that engages most of our students. Indeed, I argue that despite prevailing perceptions that policy-oriented scholarship is pragmatic and hard-headed, other forms of scholarship have much greater practical application.
I address my critique specifically towards recent trends in law and economics scholarship, but it is aimed towards policy-oriented scholarship generally. I also suggest that critical legal scholarship might be revitalized by a new approach to theory informed by the Continental speculative tradition originating with the philosophy of Immanuel Kant and G.W.F. Hegel and continuing into the twentieth century with the psychoanalytic theory of Jacques Lacan. I contrast the thin concept of rationality adopted by both the law and economics and critical legal studies movements with the thicker one adopted by speculative theory.
I suggest a reason for both the overwhelming dominance of policy-oriented scholarship among legal academics and the estrangement of so much of legal academia from legal practice. Policy scholars address law from the position of the governor-legislatures and activist judges who write the law in order to further society's "objective" purposes. They use the law as a tool to achieve a desired policy. In order to do this, policy scholars must claim an ability to predict the empirical behavior of those legal actors subjected to the law. Spontaneous and unpredictable behavior is therefore anathema to the policy planner. Consequently, they seek to define rationality as predictable behavior and dismiss the unpredictable choice of ends as irrational. (2) When legal actors evince behavior that does not comport with this definition of rationality, policy scholars suggest legal rules designed to manipulate these actors into behaving in ways closer to those predicted by their theory. (3) Policy scholarship thus reflects a fundamental fear of freedom. In Kant's words, freedom is the stumbling block on which policy scholarship founders. (4)
In contrast, speculative theorists and doctrinal scholars, like practicing attorneys, address the law from the position of the governed--those subjected to the law's power. They seek to understand how the law affects those subjected to its power in order to help them use the law to achieve their own "subjective" purposes. Speculative theory suggests that it is irrational behavior that is rigidly predictable and that rationality is nothing but the capacity for pure spontaneity.
In recent years, Richard Posner, the doyen of the law and economics movement, has loosed a blistering tirade on the use of neo-Kantian moral theory in legal policymaking. (5) This attack is of a piece with the utilitarian grounds of the neo-classical economics that Posner preaches. Kant's theories of freedom and rationality are inextricably linked to his moral theory. Both theories are antithetical to the economic understanding of rationality which is limited to ends-means reasoning. Posner is absolutely correct, therefore, that in order to adopt a theory of economic rationality, one must also reject Kantian moral theory. Utilitarianism's fear of freedom and hatred of Kantianism are one and the same. Nevertheless, despite my promotion of speculative theory in this Article, I wish to partially defend Posner from the attacks of neo-Kantians such as Ronald Dworkin. (6) The type of detailed normative policy advice often proffered in the name of neo-Kantianism is inconsistent with Kantian theory and the speculative tradition it engendered.
In this Article, I explain why the law and economics movement has consistently refused to respond seriously to external criticism. From the perspective of Lacanian discourse theory, law and economics and speculative theory not only fail to address each other, they are literally speaking two different languages. Policy-oriented scholarship speaks what is called the discourse of the university. Critical theorists, doctrinal scholars, and practicing attorneys, however, speak the discourse of the hysteric. The two discourses cannot communicate directly because they presuppose radically different audiences. Policy scholars speak from the position of expertise and address law's goals. Critical theorists and doctrinal scholars speak from the position of the subject subjected to the law and address law's power. Schematically, each is the other side--the exact logical reverse--of the other. Consequently, Lacan argues that although those speaking the university discourse claim to speak from the position of knowledge, they only produce alienation, whereas those who speak the hysteric's discourse speak from the position of alienation and produce knowledge. (7)
Neo-classical Price Theory and Behavioral Economics
The law and economics movement has traditionally been dominated by the Chicago School neo-classical price theory associated with Milton Friedman. Neo-classical price theory makes predictions based on the assumption that economic subjects act as though they were economically rational. (8) Recently, the law and economics movement has discovered the work of the rival Carnegie School of behavioral economics associated with Herbert Simon. (9) Prominent examples of this alternative theory include an article published by Christine Jolls, Cass Sunstein, and Richard Thaler in the Stanford Law Review (10) and most of the papers presented at the New and Critical Approaches to Law and Economics symposium held at the University of Oregon Law School in March 2000. (11) In contrast to neo-classical price theory, behavioral economics does not start with the rationality postulate as an assumption, but instead makes empirical studies of how economic subjects actually behave. As Jolls, Sunstein, and Thaler have emphasized, behavioral economists believe that empirical data suggest economic subjects are only "boundedly rational" in the sense that they consistently deviate from the neo-classical model of economic rationality in certain specific, observable ways. (12)
What is so striking, however, is that the lessons most of these legal scholars purport to draw from bounded rationality are dinmetrically opposed to those that Simon intends to teach. Simon does not start from a preconception that economic rationality, as classically conceived, is either a superior or paradigmatic form of reasoning. (13) Indeed, he thinks it is impossible in the real world. He studies actual market behavior for two reasons. First, he, like most economists outside of law schools, strongly disagrees with Friedman's assertion that the empirical accuracy of assumptions underlying an economic model are irrelevant so long as the model is a relatively good predictor of behavior. (14) Even if one were to accept arguendo the dubious proposition that prediction is the only valid test of an economic theory, which Simon and others do not, (15) the rationality postulate fails on these grounds; neo-classical economics is a notoriously poor predictor of actual behavior. (16) Simon suggests that a model based on more empirically accurate assumptions is likely to be a superior predictor. (17)
Second, Simon believes that one appropriate goal of economics is to help economic actors achieve their personal economic goals, (18) something that neo-classical price theory neglects. Simon, like Ronald Coase, questions the assumption that one can derive "real World" advice from the abstract perfect market assumptions of price theory. (19) For example, if maximization is impossible in the real world of imperfect markets and limited information, then it is equally impossible to try to approximate maximization with abstract economic models based on perfect markets and information. Consequently, so-called economic rationality is in fact irrational in the colloquial sense of being ineffective, if not outright crazy. Simon argues that in order for economists to give good advice they should examine how actual successful and unsuccessful economic subjects make economic decisions in the real world. Because a real producer can never have access to the type of perfect information needed to maximize profits, Simon believes that any decision process based on an attempt to maximize is doomed to failure. (20) Rather, successful entrepreneurs engage in a form of common sense that Simon calls "satisficing." (21)
In contrast, Jolls, Sunstein, Thaler, and many other self-identified legal economists seek to graft Simon's empirical observations onto the very aspect of neo-classical economics Simon rejects--the assumption that economic rationality is a superior mode of decision making in the "real" world. The policy suggestions made by Jolls, Sunstein, Thaler, and others are designed to force economically irrational subjects to act as though they were economically rational maximizers. (22) In their words, although "the legal system ought always to respect informed choice, ... government decisionmakers ... can be relied upon to make better choices than citizens." (23) That is, the experts should tell you not only what to do, but also what you should want.
Jolls, Sunstein, and Thaler's position is the reverse or other side of Simon's. Rather than giving economic subjects...