Law and Economics Classics - Legal Origins
At Grove City College, I teach Law and Economics--a course that explicitly examines how "people expand their options by cooperating." It therefore lies at the heart of "mere economics." In this sermon series, I'll be posting a summary of classic L&E papers over the coming weeks.
Glaeser, Edward L., and Andrei Shleifer. "Legal origins." The Quarterly Journal of Economics 117, no. 4 (2002): 1193-1229.
Part of a group of papers on comparative legal systems that have been among the most cited in economics of the last two decades. See “The Economic Consequences of Legal Origins” for an overview of these papers.
Many of the world’s countries inherited either the English common law or the French civil law tradition. Even in the present day, English common law heritage countries appear more favorable to free markets, property rights security, and contractual enforcement. French civil law heritage countries seemingly evince more regulation, worse property rights protection, government corruption, and the like. This paper attempts to answer two questions: Why did legal systems evolve differently in England vs. France? Secondly, why do these differences seem to generate variation in social and economic outcomes?
LaPorta et al. (2008) summarize the answer to the first question:
- “They argue that England was a relatively peaceful country during this period, in which decentralized dispute resolution on the testimony of independent knights (juries) was efficient. France was a less peaceful country, in which high nobles had the power to subvert decentralized justice, and hence a much more centralized system, organized, maintained, and protected by the sovereign, was required to administer the law. Roman law provided the backbone of such a system. This view sees the developments of seventeenth and eighteenth centuries as reinforcing the structures that evolved over the previous centuries."
Glaeser and Shleifer categorize the consequences of alternative legal origins into buckets: civil procedure and social outcomes. The differences in civil procedure are numerous, but here’s one example that highlights what Rizzo might call “praxeological coherence”:
- “Absent bright line rules and other guides for adjudicators, precedents may serve to remind judges and juries where the law has drawn lines previously. Despite precedents, it is common for advocates in common law systems to draw subtle distinctions between cases, unlike in the civil law systems, where similarities are sought by a judge [Damasïka 1986]. Nonetheless, precedents may serve to eliminate excessive unpredictability, which may be a natural consequence of the importance of individual trials and of particular sentiments of the juries. “Certainty is achieved in the common law by giving the force of law to judicial decisions, something theoretically forbidden in civil law” [Merryman 1969, p. 51].”
On the question of social outcomes, Glaeser and Shleifer wish to explain why civil law heritage countries tend to exhibit more interventionism and offer less security of property rights protection. In short, they argue that civil law systems, when transplanted, do not comport as effectively with “liberalism,” as do common law systems.
- Put simply, regulations and controls [civil law] are much more vulnerable to misuse by the sovereign than is community justice [common law].
Before this empirically-oriented debate, economists debated the merits of common vs. civil law. See Todd Zywicki’s excellent “Gordon Tullock’s Critique of the Common Law” for a helpful analysis of this debate.