Of course, it can be argued, ...that while the laws themselves don’t differentiate between the wealthy and the poor, enforcement is most certainly influenced by economic class.
Emergence of a Discipline and its Essence
Every academic discipline-irrespective of what its practitioners subsequently make of it, must have its history. Paul H. Rubin has provided an informed picture of our subject in the piece, ‘Law and Economics’, shared via Econlab on February 5, 2018, on how Law and Economics emerged as an academic discipline, recalling, that:
Modern law and economics dates from about 1960, when ronald Coase (who later received a Nobel Prize) published “The Problem of Social Cost.” Gordon Tullock and Friedrich Hayek also wrote in the area, but the expansion of the field began with Gary Becker’s 1968 paper on crime (Becker also received a Nobel Prize). In 1972, Richard Posner, a law and economics scholar and the major advocate of the positive theory of efficiency, published the first edition of Economic Analysis of Law and founded the Journal of Legal Studies, both important events in the creation of the field as a thriving scholarly discipline.
Just as a footnote, the reader may wish to be reminded about Ronald Coase cited above, recalling the Coase theorem which addressed the problem of 'externalities' in the theory of welfare economics. As we know, the definition of externality is contentious but it may be said to exist when 'some activity of party A imposes a cost or confers a benefit on party B for which party A is not charged or compensated by the price system'. As illustrated by David Partlett, “If, for instance, a railway company does not pay the damage caused by the sparks emitted from its engines it creates a cost for which the price system does not charge the railway company; this is an externality.” The main point of relevance is that externalities represent a market failure which may require invocation of the law in instances of resultant conflict surrounding the incidence of liability; hence prominence of tort and liability issues in the modern law and economics literature.
Perhaps the most exact recall of the history of law and economics is the one provided by Martin Gelter Kristoffel Grechenig, appropriately titled: “History of Law and Economics”, in the following words:
The contemporary law and economics school is typically traced back to around 1960, specifically to the work of Ronald Coase and Guido Calabresi. However, from an institutional perspective, the basis was laid at the University of Chicago in the 1940s and 1950s, when economists first taught at the law school. Most prominently, Aaron Director began to teach at Chicago in 1946 and initiated interdisciplinary discussions both inside and outside of the classroom, most significantly in antitrust law. He was the first editor of the Journal of Law and Economics.
According to Wikipedia, by definition, “Law and economics or economic analysis of law is the application of economic theory (specifically microeconomic theory) to the analysis of law that began mostly with scholars from the Chicago school of economics. Economic concepts are used to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated”. Interestingly, the online medium traces the origins of the discipline to a more distant era even as it acknowledges the rapid popularity to be much more recent, asserting that:
The historical antecedents of law and economics can be traced back to the classical economists, who are credited with the foundations of modern economic thought. As early as the 18th century, Adam Smith discussed the economic effects of mercantilist legislation. David Ricardo opposed the British Corn Laws on the grounds that they hindered agricultural productivity. And Frédéric Bastiat, in his influential book The Law, examined the unintended consequences of legislation. However, to apply economics to analyze the law regulating nonmarket activities is relatively new.
A great albeit unintended merit of this offer by Wikipedia is the implicit revelation that economics, right from its classical days, has been a class-focused discipline that registers less ambiguously with its original name, Political Economy, from which Karl Marx took his point of departure leading to his text of eternal relevance, Das Capital-A Critique of Political Economy.
Defining Law and its Purpose
Let us to take the basic step of addressing the question: what is law and its purpose? The simple rendition by Google, is: “the system of rules which a particular country or community recognizes as regulating the actions of its members and which it may enforce by the imposition of penalties”. We are reminded on the platform of Law Corner that law has four main purposes, namely:
- Maintaining Order;
- Establishing Standards;
- Resolving Disputes; and
- Protecting Liberties and Rights
All the four ascribed purposes of law look valuable to the sustenance of a harmonious society although at each level, personal and group or class interests influence proceedings; this is especially true when the poor is in dispute with the rich. On the Quora.com blog page, there’s this question: Does the law favour the rich? Two answers are offered-shooting out from two conflicting standpoints-one is that, “the law is not more favourable, it doesn’t see money”; then there is the other: “the justice system and how those laws are enforced are ridiculously skewed in favour of the rich at all levels”. Curiously, displayed prominently and close to these diverging answers are the following question and explanation, respectively: Question: “Why are there so many poor people in the world?” Explanation: Poverty exists not because we cannot feed the poor, but because we cannot satisfy the rich”-which set me thinking about the futility of reconciling the rich and the poor in a society where it’s difficult to ascertain the wealth of some individuals and organizations. This is just to tickle the reader’s brain.
The more immediately relevant issue is whether the justice system favours the rich. On this, an interesting scenario of real life experience was provided in 2018 by Barigwe Riddick of Uganda Christian University, while addressing the question, Is justice for the rich and powerful?- reproduced below:
I attended a court case last year where the defendant shot and killed the deceased. Reason: The poor man while trying to exit the parking lot dented the rich man’s car. As he came out to apologize he was shot dead. Note: The shooting took place in the parking lot of shopping mall and was captured on a security cam (CCTV-AM). The deceased’s family brought a criminal case against the defendant seeking the maximum penalty which is death in our Penal Code Act. They tendered in video evidence of the shooting and the murder weapon (Gun). Fast forward-the defendant is in prison for a few months as investigations are ongoing. A few weeks later the murder weapon disappeared from police custody. No murder weapon, no strong case. The defendant then applies for bail and is granted. He’s now free, and the case seems to have stalled. The deceased’s family is hurting and in pain as no justice has been delivered. Comment: In low developing countries justice is for the rich and powerful. With just the right amount of money, you can buy justice-thanks to the level of corruption in the judicial system.
Of course, it can be argued, as attempted by Don Emerson on the same Quora platform, that while the laws themselves don’t differentiate between the wealthy and the poor, enforcement is most certainly influenced by economic class. Undeniably, the fact remains that the wealthy class and the corporations control the government- as registered in Adam Smith’s Lecture to be invoked shortly- and therefore control the laws produced by respective governments, it should be of no surprise to anyone that laws are regularly enacted that suppress the behaviour of the poor, while ignoring worse behaviour by the wealthy class. In effect, tilting the scale of justice.
In what appears as an innocuous report by Basil Zafiriou on a Workshop held on April 1, 1982-organized by the Centre for the Economic Analysis of Property Rights of the Department of Economics, University of Western Ontario, titled: “Tradition as Social Capital”, and tagged ‘Economics and Law Workshop’, the German sociologist, Theodor Geiger is quoted as making what in retrospect is a direct pointer to the essence of the law and the preservation of order, in the following words:
The concept of ‘society’ implies interrelationship and interdependence between a number of individuals, a community life which involves an infinite chain of actions and reactions. In order to live together, people must be able to predict with reasonable certainty how others will behave in recurrent typical situations. These predictions then become the basis for the conjectural disposition of our own conduct. The behavior of other members of a social group, especially their reactions to my conduct, must to a certain extent be predictable.
The message from the above citation is in essence that, ‘without some degree of predictability, without some degree of minimum consistency in social interaction, rational behavior becomes impossible’. To be taken along with this seemingly trite message is the fact that some of the assumed expected behaviours and reactions are what consolidate the right to property and its now avowed sanctity. This explains how the reporter on the Workshop so smoothly moved on to remind his audience that: “The social order most familiar to economists is of course the order of the market, the spontaneous order generated out of the independent actions of many individuals in pursuit of different ends’-which is direct reference to Adam Smith’s illustration of the market harmonizing disparate actions of economic agents in various fields of specialized production. This links logically with the issue of the economy and our understanding of its logic.
Economics and its Detour from Political Economy
The reader may be familiar with the largely bankrupt definition of economics as the study of scarcity and the resulting challenge of resource allocation but may not be aware of the fact that this characterization and focus of the subject resulted from an ideological effort to empty the discipline of any pretense to class affiliation when it indeed became more of a rationalization of private property ownership in which the state, or loosely, government, becomes a biased umpire. As variously defined, political economy deals with understanding how the state affects the market, a good example being the concept of wealth distribution within a country. Alternatively, the term refers to a branch of social sciences that focuses on relationships between individuals, governments, and public policy. It is also used to describe the policies set by governments that affect their nations' economies.
As recalled in Britannica Encyclopedia, the term political economy is derived from the Greek polis, meaning “city” or “state,” and oikonomos, meaning “one who manages a household or estate.” Political economy thus can be understood as the study of how a country—the public's household—is managed or governed, taking into account both political and economic factors. Britannica brought out clearly how economics emerged literally as a narrowed representation of political economy with the note, that:
The holistic study of political economy that characterizes the works of Smith, List, Marx, and others of their time was gradually eclipsed in the late 19th century by a group of more narrowly focused and methodologically conventional disciplines, each of which sought to throw light on particular elements of society, inevitably at the expense of a broader view of social interactions.
We can see, therefore, how economics is presented as neutral between extant social classes as if indeed non-existent and all we do is assume purely independent economic units acting on self-interest. One of the indices of the broader and superior status of political economy over the modern day economics lies in the fact that it uses a diverse set of tools and methods drawn from across economics, political science, and sociology. The tortuous journey of political economy is captured in Britannica’s report, that:
In the second half of the 20th century, as the social sciences (especially economics but also political science) became increasingly abstract, formal, and specialized in both focus and methodology, political economy was revived to provide a broader framework for understanding complex national and international problems and events. The field of political economy today encompasses several areas of study, including the politics of economic relations, domestic political and economic issues, the comparative study of political and economic systems, and international political economy. The emergence of international political economy, first within international relations and later as a distinct field of inquiry, marked the return of political economy to its roots as a holistic study of individuals, states, markets, and society.
In this vein, it is pertinent to highlight the fact that whereas economics-now essentially its popular neoclassical version-is presented as a timeless discipline, it is in reality focused mainly, almost exclusively, on a particular mode of production, the capitalist economic system. It is reassuring to see that concerns have been expressed about the biased stance of the law in particular against the poor in society. For example, there is this provocative title of a 1995 article by J. Reiman that reads: “Rich Get Richer and the Poor Get Prison: Ideology, Crime, and Criminal Justice”-the content of which can be easily imagined. Similarly, the Time Magazine of March 3, 2020 had run the headline: “How the Supreme Court Favors the Rich and Powerful”, penned by Adam Cohen. I am sure the reader can relate conveniently with these cited topics even as they were in reference to distant countries.
Intersection of Law and Economics
In the perspective of Alessio M. Pacces and Louis Visscher in their article on “Methodology of Law and Economics”, “market failure in law and economics is regarded as the primary raison d’être of law”. In other words, the law is designed to fill a gap created by the failure of the market and the attendant transaction costs. As Paul Rubin has argued, “the law governing exchange is crucial for a market economy. Most of the doctrines of contract law seem consistent with economic efficiency. Law and economics study of contract law has shown that, in general, it is efficient for parties to be allowed to write their own contracts, and under normal circumstances, for courts to enforce the agreed-on terms, including the agreed-on price”.
To David Partlett, as offered in his piece, “Economic Analysis and Some Problems in the Law of Torts”, published in the Melbourne University Law Review Vol. 13, June '82, “the economic analysis of law views persons as rational utility maximizers. That is, faced with a choice, a person will opt for an alternative that tends to maximize his utility or welfare”. Needless to add, the so-called expected utility being maximized may be at the expense of other individuals and groups especially the oppressed classes.
Incidentally, for some time, law and economics was perceived in some quarters especially among academic lawyers as largely consisting “of a process of intellectual imperialism, specifically of the colonization of law by economics”. This derives from the fact that the key analytical tool underpinning economics is what serves as the point of departure for law; hence the argument that: “law and economics can be defined as the application of the rational choice approach to law”. Furthermore, even the standard representation of the discipline as “the economic analysis of law” makes clear the primary subject as being economics. But all this is by the way, the key point is that behind the two elements of law and economics stands the state which formulates and superintends over the enforcement of economic and other interests –typified by contracts- through the courts, funded by government.
The State in Defense of Propertied Class-assisted by Law and Economics
In his famously cited Glasgow Lecture delivered in 1776, Adam Smith, the foremost Classical Economist, in brutal honesty had declared:
. .. . Till there be property, there can be no government, the very end of which is to secure wealth and defend the rich against the poor . . .
Not many of Smith’s contemporaries or even successors-with the conspicuous exception of Karl Marx- appreciated the enormity of this assertion. Yet, this terse message is indeed profound and remains relevant to the understanding of contemporary political administrations across the globe. We illustrate this historic logic -operating within the broad standpoint of the role of ideology in society-with specific reference to the growing influence of the academic discipline of Economics and Law, similar to how governments help to facilitate the hold of the rich on their wealth and the levers of society.
It can be seen from all the foregoing that our laws are designed majorly to uphold and sanctify economic ideas and practices worked out in favour of the propertied classes and to engender respect for the order of property ownership and its reproduction over time so long as the capitalist socio-economic system prevails. This system effectively subjugates the masses, assisted by ideological indoctrination with the ingredients of the discipline of law and economics-thus serving as obedient disciple of oppression and exploitation. I come in peace, please.
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