7. The Relevance of Law and Economics for Practical Reasoning

See for example, Archer and Trittner (2000). Social conditioning, emotions and cultures are difficult to grasp with the idea of rationality.

Any interaction is conceptualized as an exchange which is not necessarily how people conceptualize this.

The question of validity is impossible to understand from the economic logic. Moreover, law and economics does not really define what law is or what are the characteristics that makes a norm a law.

For example, Dworkin (1980).

For example, Ackerman and Heinzerling (2004).

Colman (2003 [1998]), p. 162. The discussion on rape appears in the 3rd edition of Richard Posner’s Economic analysis of law.

Landes and Posner (1978). If this article is often portrayed as advocating for a free market in babies, a careful reading of the paper imposes more nuance. It is probably required to read the clarification offered by Richard Posner (1987a, 1987b).

Lott (1987).

This point appears in George Stigler autobiography. Stigler (1988).

This proposition was made by Lawrence Summers; See Swaney (1994).

Hardin (1968).

Some academics do not consider that the frontier between positive and normative economics is largely blurred.

Posner (1981). See also Posner (1980).

Hardin (1992).

For example, Dworkin (1980). Zamir and Medina (2010), Mercuro and Ryan (1984).

See for example, Teles (2008), Baker (1975).

Kaplow and Shavell (2006). The argument was first presented by Kaplow and Shavell (1994).

Kornhauser (2003).

See Arrow (1951). Samuelson also recognized that the social welfare function is arbitrary. See also Kaplow and Shavell (2006).

Calabresi (2016).

See Stojanovic and Silvestri (2019).

See for example, Teles (2008), Baker (1975).

As Frank Knight said: “It is somewhat unusual to begin the treatment of a subject with a warning against attaching too much importance to it; but in the case of economics, such an injunction is quite as much needed as explanation and emphasis of the importance it really has. It is characteristic of the age in which we live to think too much in terms of economics, to see things too predominantly in their economic aspect; and this is especially true of the American people. There is no more important prerequisite to clear thinking in regard to economics itself than is recognition of its limited place among human interests at large” Knight, (2013 [1951]), p. 3.

As Strauss brilliantly said: “the root of all modern darkness from the seventeenth century on is the obscuring of the difference between theory , an obscuring that first leads to a reduction of praxis to theory (this is the meaning of so-called [modern] rationalism) and then, in retaliation, to the rejection of theory in the name of praxis that is no longer intelligible as praxis” Strauss (2002), p. 66. See also Toulmin (2001).

Wendell Holmes (1991 [1881]).

On this distinction, see Marshall (2009). See also Toulmin (2001).

Aristotle (1999), 1139b, especially 18–36: “What pure science or scientific knowledge is— in the precise sense of the word and not in any of its wider uses based on mere similarity—will become clear in the following. We are all convinced that what we know scientifically cannot be otherwise than it is; but of facts which can possibly be other than they are we do not know whether or not they continue to be true when removed from our observation. Therefore, an object of scientific knowledge exists of necessity, and is, consequently, eternal. For everything that exists of necessity in an unqualified sense is eternal, and what is eternal is ungenerated and imperishable (and hence cannot be otherwise).”

Solow (1985), p. 330.

See especially Carrion Alvarez and Ehnts (2016). In one of its meaning, ergodicity means that the position of a system can be predicted without having an idea of the full history of the system.

Samuelson (1969), p. 184.

A bit like what can be found in Fukuyama (1992).

On the concept of path dependency, see Arthur (1994).

See especially O’Driscoll and Rizzo (1996 [1985]).

Aristotle (1999), 1140a 24–1140b 12.

Aristotle (1999), 1140a25 and 1141b10.

Phronesis works through deliberation, which gathers and processes the relevant data e.g. the right time, the right way, for the right reasons (Aristotle (1999), 1106b 21–23: “But to experience all this at the right time, toward the right objects, toward the right people, for the right reason, and in the right manner—that is the median and the best course, the course that is a mark of virtue.”).

Aristotle (1999), 1142a 11–15: “An indication that what we have said is correct is the following common observation. While young men do indeed become good geometricians and mathematicians and attain theoretical wisdom in such matters, they apparently do not attain practical wisdom. The reason is that practical wisdom is concerned with particulars as well (as with universals), and knowledge of particulars comes from experience.”. Aristotle also indicates: “For experience has given such men an eye with which they can see correctly” (1143b 14).

Aristotle (1999), 1144a 27–35: “That is why men of practical wisdom are often described as “clever” and “knavish.” But in fact this capacity (alone) is not practical wisdom, although practical wisdom does not exist without it. Without virtue or excellence, this eye of the soul, (intelligence,) does not acquire the characteristic (of practical wisdom) […] But whatever the true end may be, only a good man can judge it correctly.”

Aristotle (1999), 1144a 35–37: “For wickedness distorts and causes us to be completely mistaken about the fundamental principles of action. Hence it is clear that a man cannot have practical wisdom unless he is good”.

Aristotle (1999), 1144a 29–30.

Transalation could vary and moderation, temperance and self-control are often used. See, Aristotle (1999), note 12, p. 178: “A sophron is well-balanced through-and through; he gives the impression of 'self-control' without effort or strain”. Moderation is thus not the result of a computation, it is also intuitive.

It is possible to consider that Aristotle presents what would be “ideal” even if it is unclear if a man can reach this level.

Hayek (1974).

Stuart Mill (2001 [1859]), pp. 21–22. The paragraph ends like this: “The steady habit of correcting and completing his own opinion by collating it with those of others, so far from causing doubt and hesitation in carrying it into practice, is the only stable foundation for a just reliance on it: for, being cognisant of all that can, at least obviously, be said against him, and having taken up his position against all gainsayers—knowing that he has sought for objections and difficulties, instead of avoiding them, and has shut out no light which can be thrown upon the subject from any quarter—he has a right to think his judgment better than that of any person, or any multitude, who have not gone through a similar process”.

Landes and Posner (2003a, b), p. 10.

This could be the result of a conscious optimizing behavior or simply the result of an unconscious behavior.

Law and economics does not describe, it offers a way to formulate hypothesis about how the world might be working.

See Posner (2016).

See Posner (2016).

See Lanneau (2023).

See for example Shavell (2004).

Cooter (2000).

See Lanneau (2021).

See indirectly Buchanan and Tullock (1962). The model they use for determining the optimal majority could be use to explain why different rules could be modify using different procedures.

Ben-Shahar and Sneider (2014).

And Public choice tells us that we should not be too hopeful. See Stigler (1971).

Any environmental economics textbook will show that incentives are higher with economic incentives than with command and control.

Traditional microeconomics textbook will point towards higher demand and lower supply. This is what can indeed be observed in Mumbai (India), in Ireland, and almost everywhere this strategy has been used. See for example Bourne (2014).

See Landes and Posner (1978).

Coase (1960), p. 18.

Hayek (1974).

Landes and Posner (1978).

Brinig (2000), p. 233.

Even if, the purpose of the paper is probably more to explore ways to “improve” the “market for babies”. As Posner said, “the question of public policy is not whether baby selling should be forbidden or allowed but how extensively it should be regulated. I simply think it should be regulated less stringently than is done today” Posner (1987a, 1987b), p. 72.

Radin (1987), p. 1905: “Universal commodification undermines personal identity by conceiving of personal attributes, relationships, and philosophical and moral commitments as monetizable and alienable from self”.

Ibid, p. 1917: “if we choose market-inalienability, we might deprive a class of poor and oppressed people of the opportunity to have more money with which to buy adequate food, shelter, and health care in the market, and hence deprive them of a better chance to lead a humane life”.

Posner (1989b).

Hylton (1990).

See for example Titmuss (1997).

Tobin (1970).

Donohue III and Ayres (1987), p. 812.

Coase (1960), p. 43.

Posner (1989a), p. 194.

For example, Landes and Posner (2003a, b).

For example, Posner (2001).

For example, Stevenson (2008).

For example, Cooter (2000).

For example, Trachtman (2008).

For example, Somin (2020).

For example, Ben-Shahar and Sneider (2014).

For example, Hovemkampf (2006).

See for example the last section of Coase (1960).

Arrow (1974).

For example, Komesar (1997).

For the European Union, see Directive 2014/24/EU on public procurement.

Hayek (1974): “Organized complexity here means that the character of the structures showing it depends not only on the properties of the individual elements of which they are composed, and the relative frequency with which they occur, but also on the manner in which the individual elements are connected with each other. In the explanation of the working of such structures we can for this reason not replace the information about the individual elements by statistical information, but require full information about each element if from our theory we are to derive specific predictions about individual events. Without such specific information about the individual elements we shall be confined to what on another occasion I have called mere pattern predictions – predictions of some of the general attributes of the structures that will form themselves, but not containing specific statements about the individual elements of which the structures will be made up”.

Toulmin (2001), p. 204.