Law and Economics from an Evolutionary Perspective

Law and Economics from an Evolutionary Perspective

New Horizons in Institutional and Evolutionary Economics series

Glen Atkinson and Stephen P. Paschall

Law and economics are interdependent. Using a historical case analysis approach, this book demonstrates how the legal process relates to and is affected by economic circumstances. Glen Atkinson and Stephen P. Paschall examine this co-evolution in the context of the economic development that occurred in the nineteenth and early twentieth centuries as well as the impact of the law on that development. Specifically, the authors explore the development of a national market, the transformation of the corporation, and the conflict between state and federal control over businesses. Their focus on dynamic, integrated systems presents an alternative to mainstream law and economics.

Chapter 1: Evolutionary method in law and economics

Glen Atkinson and Stephen P. Paschall

Subjects: economics and finance, economic psychology, evolutionary economics, law and economics, law - academic, law and economics

Extract

Law and the economy evolve together. Changes in one affect the other purposefully, but not predictably. The evolutionary path of the economy as affected by law has been “driven by artificial selection of changing customs that ignited sets of endogenous forces” (Atkinson 2010, p. 290). The evolutionary path of the law as affected by the economy has been the result of changing economic circumstances, particularly and historically the widening of markets. EVOLUTIONARY ECONOMICS Understanding the role of evolution in society, such as the economy, requires first overcoming the conventional wisdom which might equate evolution of the economy with what has been identified as “Social Darwinism” that developed during the nineteenth century. This coarse application of the biological evolution theory of Charles Darwin, which promoted such concepts as “natural selection,” “struggle for existence” and “survival of the fittest,” to society conveniently acknowledged that the state of affairs at that time with all of its inequities was still the best attainable and could not be improved through the actions of government. This was not the only application of Darwinian evolutionary principles to society. Those critical of the status quo also used Darwinian arguments (Hodgson 2004, p. 430). A principal advocate for this view of the application of evolutionary principles to society, Herbert Spencer, originated the term “survival of the fittest” (Hodgson 2004, p. 432). Spencer did not associate his evolutionary approach with Darwin “because he believed that he had published a valid theory of evolution prior to Charles Darwin” (Hodgson 2004, p. 432). Spencer took the evolutionary concepts which were considered to be a radical departure from conservative and religious principles and applied them to promote the laissez-faire status quo (Hofstadter [1944] 1955, pp. 44–7). Hofstadter revived the term “Social Darwinism” in his 1944 book. It became a term of opprobrium applied to “racism, fascism, imperialism or sexism” (Hodgson 2004, p. 428).