New Horizons in Law and Economics series
Chapter 8: Of Distributive Justice and Economic Efficiency: An Integrated Theory of the Common Law
8. Of distributive justice and economic efﬁciency: An integrated theory of the common law 8.1 GENERAL INTRODUCTION This chapter primarily applies two parts of axiom 5, the subsection deﬁning a good which requires that all values be included which can conceptually be measured by a WTP or a WTA (5a) and the concept of the regard for others (5c). Here I consider issues of common law efﬁciency. Recall that the regard for others refers to the value people place on projects that do not directly affect them but whose effects they care about, either because they care about those affected or because they care about the principles used in determining the project outcome. They may care about the principle or rule because it may affect them or others in the future. One of the more prominent theories of the common law is the theory that the common law is KH efﬁcient.1 That theory holds that the common law is best described as a system designed to promote the traditional notion of KH efﬁciency (Posner 1992b, p. 23).2 Although the traditional theory offers a persuasive explanation of how many common law rules have arisen (Bruce 1984), it has also ‘aroused considerable antagonism’ from critics who feel that the law should not be viewed as a product of economic forces (Posner 1992b, pp. 25–26). Yet its underlying validity remains.3 That validity is vulnerable, however, since the theory may be invalidated through the introduction of an...
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