Absracts & Papers

For nearly a century legal scholars have vacillated between two strategies for dealing with the collapse of legal science as an autonomous discipline. One typical response has been to abandon the notion of a legal theory and to borrow a theoretical discipline from the social sciences or from the humanities. Another response has been to discard the idea of legal theory by highlighting the practical wisdom of lawyers and celebrating law as a craft.

Our mission in this Essay is to describe legal theory as an enterprise robust enough to justify separate naming. Legal theory focuses on the work of society's coercive normative institutions. It studies the traditions of these institutions and the craft typifying their members, while at the same time continuously challenging their outputs by demonstrating their contingency and testing their desirability. In performing the latter tasks, legal theory necessarily absorbs lessons from law’s neighboring disciplines. But at its best, legal theory is more than a sophisticated synthesis of relevant insights from these friendly neighbors, because of its pointed attention to the persistent jurisprudential questions regarding the nature of law, notably the relationship between law's normativity and its coerciveness and the implications of its institutional and structural characteristics.

Before we turn to elaborate on these features, we begin with an outline of the three other important discourses about law: law and policy; socio-historical analysis of law; and law as craft. Sketching these three genres of legal scholarship is instrumental for our task because analyzing the ways in which legal theory is different from these other modes helps us characterize legal theory.

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This article reports the results of an empirical study of the Israel Supreme Court
(ISC). It covers the outcomes of 2,734 cases (as of this writing), all decided in 2006 and
2007, and describes the cases by subject area, litigant-pair characteristics, and source of jurisdiction---mandatory or discretionary. In mandatory jurisdiction cases, the ISC affirmed lower court rulings in about 75% of district court criminal case appeals and about 67% of district court civil case appeals. In discretionary jurisdiction cases, the ISC rarely granted review. It agreed to review about 6% of petitions in criminal cases and about 10% of petitions in civil cases. In discretionary cases in which the ISC did grant review, it tended to reverse at a much higher rate than in mandatory jurisdiction cases, with an affirmance rate of 55% in criminal cases and 14% in civil cases. The government fared far better than other litigants in obtaining reversals of lower court rulings and in securing review of those rulings. Sentencing issues dominated the criminal docket and criminal cases predominated over civil cases. Reversal rates were not substantially different from those in cases with analogous jurisdiction in U.S. state courts of last resort except in discretionary jurisdiction civil cases. The ISC tended to reverse such cases at a higher rate than U.S. courts.

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In the last part of the paper I will focus on the challenges that the legal academia must face if it strives to maximize the jurisprudential potential of the law and society scholastic movement.

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In the present paper I suggest to examine how legal scholars and scholars from other disciplines, particularly economists and historians approach the new historical questions that were defined by the institutional turn. I will identify specific historical debates in which scholars from more than one of the disciplines were involved. I will pay particular attention to the question whether a topical or a methodological division of labor was created. If this was the case what is the unique voice that lawyers have to offer at an era at which the content of legal theory is being challenged and "law and" scholarship is being praised? If what we witness is another manifestation of the imperialistic tendencies of economics what can we learn from this experience about the future prospects of legal scholarship?

I will discuss three debates that contain different characteristics. The first deals with commercial law and an assertion that the law is imperative, the second with public law and with the assertion that the law is one of several institutional devices, the third with the apparent irrelevancy of law.

The first is the legal origins debates. This debate was sparked by a series of papers published starting in the late 1990s by Andrei Shleifer and his co-authors (LLSV). The papers integrated the comparative law literature into the finance literature.  They argued that common law legal systems provided the strongest and French systems the weakest protection to investors offered in their corporations and securities regulation law. Ultimately the extent of development, governance structure and liquidity of stock market, and possibly economic development in general, can be explained by its law. They explained these findings historically, in the legal origins of each of the legal families and at characteristics they acquired in those formative periods. They reached the top of the lists of most cited articles in economics. Gradually legal scholars and historians were also attracted to the debate.

The second debate is about to conveyance of credible commitments. North and Weingest, in a seminal article published in 1989, identified the failure of early modern states to convey credible commitments to its subjects. The absolutist nature of monarchies made them predatory states that pose threat to the property rights of the subjects and would not respect agreements with these subjects. This predatory threat ultimately harmed the state itself as this could not win the trust of its potential lenders, could not borrow in the open market, and could not finance and win wars. England following the Glorious Revolution was able to design its political institutions, rule of law and constitutional arrangements in a manner that sufficiently constrain its predatory powers to allow the emergence of government bond market and the rise of the fiscal-military state. The original argument was made by an economists and a political scientist, but soon scholars from other disciplines entered the debate and criticized the argument from a variety of perspectives. As the debate touches upon important constitutional issues the examination of the role of legal scholars in the debate can be illuminating.

The third debate is about the possibility of effectively monitoring agents without a support of a state and of law. The debate began with a series of very influential articles by economic historian Greif which studies the way in which North African Jewish merchants (the Maghribis) and Italian merchants monitored their overseas agents in the medieval Mediterranean and enforced their contracts with them. He demonstrated how the combination of reputational mechanisms and sanction inflicting coalitions of merchants were able to provide the Maghribis with well functioning self enforcing agency contracts. A debate was recently waged with respect to the role of law in this context. It was argued that both legal norms and legal tribunals, Jewish and Muslim, governed the agency relationships and should be taken into account. In this debate as well scholars from several disciplines take part. Lawyers are quite absent in the debate and I will try to explain their silence.

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Game theory has been a mainstay in the international relations litera-ture for several decades, but its appearance in the international law literature is of a far more recent vintage. While game theory simply offered theorists of international relations a model for explaining their accounts of state relations, the methodology has had a far more explosive effect among international law-yers. Recent accounts have harnessed alleged lessons learned from game the-ory in service of a new brand of “realism” about international law. These skep-tical accounts conclude that international law loses its normative force be-cause states that “follow” international law are simply participants in a Pris-oner’s Dilemma seeking to achieve self-interested outcomes. Such claims are not just vastly exaggerated; they represent a profound misunderstanding about the significance of game theory. Properly conceived, the best way to un-derstand international law is as a Nash Equilibrium – a focal point that states gravitate towards as they make rational decisions regarding strategy in light of strategy selected by other states. In domains where international law has the greatest purchase, the strategy is reciprocal compliance with interna-tional norms. This picture is entirely consistent with international law’s nor-mativity. Simply put, the Prisoner’s Dilemma also provides a model to explain morality itself (self-interested actors who accept reciprocal moral constraints on action as a social contract), and this cannot be taken as a reason to deny morality’s normativity, on pain of a reductio ad absurdum to complete moral skepticism. The paper concludes by briefly rejecting other alleged reasons why states need not follow international law, including the supposed inability of collective entities to bear moral or legal duties.

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Fifty years after the inception of the law and economics school, many people are still hostile to law and economics. We propose some (serious) claims that could be the  engine for this hostility, explain why most of them are not persuasive, but also suggest a few modifications to law and economics in response to some parts of those claims. In particular we discuss the claims that law and economics analysis wrongly equates sanctions with prices, that it mistakenly assumes that all goods and bads are commensurable, that it is based on unrealistic assumptions about human behavior. Our discussion also suggest some explanations as to why the law and economics school was so successful in some fields, but much less so in others.

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* Schwab is the Allen R. Tessler Dean and Professor, Cornell Law School; Heise is Professor, Cornell Law School.  JoAnn Lee (Cornell Law School ‘06), along with Cornell Law School reference librarians, provided excellent research assistance.

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The essay offers a critical intellectual history of the rise of neoclassical law and development in theory and practice.

Part I describes the origination and diffusion of neoclassical law and development from the academy to “the field.” Stemming from Coasian analysis of the relationship between institutional environment and microeconomic behavior, neoclassical law and development emerged out of the elaboration of that analysis into a series of prescriptions against macroeconomic governmental controls on trade and investment -- the “New Political Economy” (NPE) -- and for the establishment of legal institutions to enforce property rights and support commerce -- the “New Institutional Economics” (NIE). Bound up with Anglo-American political movements, the ideational constructs NPE and NIE “took power” when those movements did, as evidenced by the “rule of law revival” in development  policy from the early 90s to the present day.

Part II evaluates the neoclassical law and development model in terms of its relationship to policy and empirical evidence. The thesis that institutional quality determines economic growth suffers from a series of troubling flaws. One problem is the analytical vagueness of the asserted causal relationship: how does institutional quality improve economic growth? The range of possible answers (enforcement of property rights, effective judiciary systems, democratic participation) impedes the formulation of effective development policy. Beyond this vagueness is the uncertainty that causality even exists: empirical studies have so far been unable to prove it.  Finally, even if one could be confident that one knew what “institutional quality” meant, and confident that it would indeed cause economic growth, a number of issues apparently pervasive in the field of development policy – neoclassical or otherwise -- would still inhibit the success of any reform program: these problems include the manipulation of programming by entrenched interests in both the donor and beneficiary countries, the inability to design contextually responsive and informed programs in the face of the continued temptation to implement “one-size-fits-all” directives, and the lack of effective self-evaluation and long-term assessment in programming choices reducing prospects for improvement of development “knowledge” over time.

These impediments resemble the kinds of obstacles that the eminent institutional economist Douglass North would identify as transaction costs to institutional efficiency. The prolongation of law and development programs that are demonstrably ineffective (according to veterans of the field such as Thomas Carothers and Linn Hammergren) suggests precisely the kind of suboptimal path dependence that North identified as a barrier to economic growth in the developing world.

In other words, as Part III argues, there appears to be a need for an institutionalist analysis of “institutionalism” in the field of development. Although the neoclassical law and development policy matrix was intended to improve institutional quality in poor countries, it appears that the institutions of development policy themselves – the formal and informal “rules of the game” that shape organizational and individual behavior in the field - may need to be examined if the underlying project is to find success.