Chapter 36: Securing an ethical foundation for law and social economics
The economic approach to law, otherwise known as ‘law and economics’, is by many measures the most successful instance of economic imperialism, the application of economic principles to an ‘outside’ field. However, law and economics is very closely tied to traditional, neoclassical economics, in terms of both its consequentialist standard of efficiency, embodied (variously) in Pareto optimality and Kaldor–Hicks efficiency, and its utility-maximizing economic agent, his/her choices completely determined by his preferences and constraints. Most social economists take issue with these foundational concepts, both of which reflect a basic negligence of the humanity and dignity of the persons whose behavior economists model. This chapter will survey the existing social-economics work on law and economics, identify key issues social economists may have with the mainstream economic approach to law, and suggest three avenues for further work in this area by social economists.
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