Mirror of Justice

A blog dedicated to the development of Catholic legal theory.
Affiliated with the Program on Church, State & Society at Notre Dame Law School.

Tuesday, December 28, 2004

Response to Rick: Throwing the Law & Econ Baby Out With the Dishwater?

Rick raises the interesting question of whether I am throwing the (useful) Law & Econ baby out with the dishwater. I guess I need to be more precise about what aspect of Law & Econ I see as in conflict with the intellectual tradition of which Catholic Legal Theory is a part. I certainly have little quarrel with the descriptive, analytical elements of economics. Many of those elements -- the concept of efficiency, rent-seeking, the principal-agent problem, the prisoners's dimemma etc. -- "ought to be in the toolkit of any self-respecting social or political theorist," as the political philosopher Don Herzog has put it. And certainly there is nothing in the Aristotelian-Aquinian tradition which would preclude the appropriate use of such concepts. There is indeed nothing Catholic about inefficiency (although those of us in Catholic universities may wonder!). The difficulty, however, is the radical extension of economic concepts such as utility maximization, rational choice and social welfare as prescriptive, normative devices into the traditional province of political philosophy and jurisprudence. Many others have criticized severely the accuracy of the utility maximization principle as a means of modeling human behavior(see, eg, Amartya Sen, "Rational Fools: A Critique of the Behavioral Foundations of Economic Theory," 6 Phil & Pub. Affairs 317 (1977)), so I won't belabor that here (though, see also, Don Herzog, "Externalities and Other Parasites". 67 U. Chi. L. Rev. 895 (2000), "[T]here is no reason to cast utility maximization, or preference satisfaction or the methodical pursuit of self interest, or any such category as the really real, the motor driving human action.") What I want to point out is that economics' assumption that ends (or preferences) are essentially irrelevant, or matters of indifference, and that all that matters is finding ways of satisfying preferences efficiently, is what flies in the face of our tradition, particularly when the assumption is applied to legal problems outside of market contexts. And L & Econ theorists are entirely aware of this conflict, indeed they trumpet it. See for example, Louis Kaplow and Steven Shavell, Fairness Versus Welfare (2002), where it is argued that the pursuit of morally-based notions of fairness rather than welfare results in a pernicious reduction of individuals' well-being (or utility), and sometimes results in everyone being worse off (in terms of their own utility). Posner's critique of Rawls and Dworkin and other academic philosophers I think shares some of this, as does the argument he makes in the Leiter post quoted by Mike Perry below. All the things Posner lists are disfavored, not because they are intrinsically bad or evil, but because there are social norms or conventions that have defined them as such. In economist's terms, they are just preferences shared by lots of people. It is this determined refusal to meditate upon ends that distinguishes this prescriptive, normative aspect of the law and economics enterprise from the tradition of which Catholic legal theory is a part. I'm not making an argument here about which is right or wrong. I am just saying they are different, and that this difference is not obliterated by the usefulness of many economic concept as tools of analysis. I agree with Rick on their usefulness, but that does not diminish my sense of conflict on a different level.



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