| Special Workshop Title: | Law and Economics and Legal Scholarship |
| Author: | Aristides N. Hatzis, University of Athens |
| Paper Title: | New Institutional Economics and Legal Theory: Why New Institutional Economics Has Failed to Provide a Viable Alternative to the Law and Economics Movement |
| Abstract: | It is well known that although New Institutional Economics is quite successful among economists and has managed to exert considerable influence on the mainstream neoclassical approach, it is not as well-received by legal scholars. This is rather odd, since Law and Economics (despite its unprecedented success) has been ferociously attacked by legal scholars who view it as an extremely simplistic and ultra-formalistic approach to human behavior and to legal institutions. If one dispenses with the politically-driven critique and concentrates instead on the methodological/epistemological objections, it becomes obvious that the New Institutional Economics is handling this criticism quite successfully and appears to be able to provide a better alternative to law & economics. However, the dominance of law & economics remains unchallenged and even the interesting and consistent work of lawyers like Ian Macneil remains marginal. One could easily attribute this failure to the indifference of some New Institutional Economists towards the law. After all, Ronald Coase himself had gone as far as to declare: ‘I have no interest in lawyers or legal education’ (Kitch 1983: 172). But this indifference is not generalized, especially if we consider the work of other leading Institutionalists like Oliver Williamson. I strongly believe that the main reason for this failure is the capacity of neoclassical economics to adapt, incorporating all that is useful and discarding any elements that could undermine its agility. By contrast, the richness of Neo-Institutionalism has proven to be an obstacle rather than an advantage. Thus, Neo-Institutional models may be more comprehensive and less simplistic than those of the Chicago Law & Economics school, but this quality has damaged their applicability, at least for the economically-unsophisticated legal theorists. |
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