Table of Contents

Law, Economics and Evolutionary Theory

Law, Economics and Evolutionary Theory

Edited by Peer Zumbansen and Gralf-Peter Calliess

Law and economics has arguably become one of the most influential theories in contemporary legal theory and adjudication. The essays in this volume, authored by both legal scholars and economists, constitute lively and critical engagements between law and economics and new institutional economics from the perspectives of legal and evolutionary theory. The result is a fresh look at core concepts in law and economics – such as ‘institutions’, ‘institutional change’ and ‘market failure‘ – that offer new perspectives on the relationship between economic and legal governance.

Foreword

Edited by Peer Zumbansen and Gralf-Peter Calliess

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

Extract

The self-interested behavior that lies at the heart of economic theories of why firms exist and grow manifests itself in two very different variants, both of which were recognized by the Nobel Committee last year. One is opportunistic behavior of the kind that Oliver Williamson in particular paid attention to, which necessitates the construction of legal and hierarchical safeguards to minimize the costs of opportunism in exchange relations. The other is cooperative or even altruistic behaviour, that has been the focus of Elinor Ostrom’s work, which results in the possibility of transactions taking place, even when the prevailing conditions do not provide sufficient formal support. One way to conceptualize the ways in which firms mitigate the problems arising from both opportunism as well as cooperation is to view them as co-evolutionary processes. The essential feature of these co-evolutionary processes is that firms are not merely subject to selection rules, but through their own agency, they are in a position to influence the content of the rules they are governed by. The outcome of these processes is dependent on the variety of self-interested behaviour in question. If such co-evolutionary processes are driven by self-interested behaviour of the opportunistic kind, the result is likely to be something like destructive lobbying or regulatory capture. If, on the other hand, they represent a cooperative variety, this can result in new solutions to persistent problems of underinvestment and lack of technological capability, such as in the context of public–private partnerships as a tool for...