Fifty Years After Richard Posner’s ‘Economic Analysis of Law,’ The Economist Reviews the Impact of the Chicago School of Economics on American Justice
How Chicago school economists reshaped American justice
In recent years the antitrust division of America’s Department of Justice has gone on a crusade against corporate mergers, filing a record number of complaints in an attempt to stop the biggest businesses from getting even bigger. With few exceptions, these efforts have been thwarted by the courts. That it is so hard to get a judge to intervene in business reflects the work of an institution known more for its free-market influence on economics than the law: the University of Chicago.
Fifty years ago this autumn Richard Posner, a federal judge and Chicago scholar, published his “Economic Analysis of Law”. Now in its 9th edition, the book set off an avalanche of ideas from Chicago school economists, including Gary Becker, Ronald Coase and Milton Friedman, which passed into the folios of America’s judges and lawyers. The “law-and-economics” movement made the courts more reasoned and rigorous. It also changed the verdicts judges handed out. Research has found that those exposed to its ideas are more opposed to regulators and less likely to enforce antitrust laws, and tend to impose prison terms more often and for longer.
Links between economics and the law have long been studied. In “Leviathan”, published in 1651, Thomas Hobbes wrote that secure property rights, which are needed for a system of economic exchange, are a legal fiction that emerged only with the modern state. By the late 19th century, legal fields that overlapped with economics, such as matters of taxation, were being analysed by economists.
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