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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.

Chapter 3: The Law Merchant’s Story: How Romantic is it?

Bruce L. Benson

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


Bruce L. Benson Lex Mercatoria, the ‘Law Merchant,’ usually refers to the rules and procedures developed within merchant communities to support trade in medieval Europe, without the assistance of government.1 While a very large literature describes and analyses Lex Mercatoria, an expanding literature argues that these descriptions are significantly over-romanticized stories, if not outright fabrications.2 Some of the controversy reflects an apparent lack of familiarity with or misinterpretation of historical context or evidence, but much of the conflict appears to be definitional (Coquillette 1987: 291–2; Epstein 2004: 3–4).3 The following presentation offers a focused examination of key aspects of Lex Mercatoria in an attempt to direct the debate toward actual tenets of and evidence supporting the story. Section 1 below focuses on definitions of law, customary law, merchant, and Law Merchant that generally apply in the literature. After that, an overview of the medieval Lex Mercatoria is presented in Section 2. Section 3 concludes. 1. WHAT IS THE LAW MERCHANT? Epstein (2004: 3) notes that those: 1 Lex Mercatoria also labels certain rules and procedures of modern international commercial activity. This modern Law Merchant is not discussed, but see Benson (2009). 2 E.g., Volckart and Mangels (1999), Donahue (2004), Kadens (2004), Drahozal (2005), and Sachs (2006). 3 The controversy actually appears to be part of the wider ideological debate about law, politics and legal regulation. The underlying issue is, should private substitutes for government law be allowed? Drahozal (2005: 525), for example states: ‘Customary law, Benson...

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