Edited by Ugo Mattei and John D. Haskell
Chapter 20: The political economy of court-based regulation
With the rise of the modern state came increasing demands on the state to provide justice – to regulate the risks individual citizens increasingly present to one another, to ensure that contracts are enforced, or to ensure that individuals respect each other’s fundamental civil rights. Much of law can be seen as political decisions about whether and how to satisfy these demands. Over the last two decades political scientists and economists have become aware that courts are active participants in this process. Rather than delegate enforcement to administrative agencies, which might lead to partisan infighting as well as agency capture or drift, Congress has increasingly crafted statutes (especially those on controversial subjects) that create private rights of action. In so doing, Congress bypasses the traditional regulatory enforcement apparatus and instead makes individuals the enforcers of their statutory rights and courts the forum for enforcing regulatory rights. But the courts also act as regulators through the exercise of their traditional common law powers. Choices to adopt new theories of liability or relax causation requirements, for example, are driven by perceptions about the gap between governmentally provided and socially demanded levels of risk regulation, and this demand is transmitted to the courts through individual decisions to litigate. When courts act as a forum for rights enforcement, they play part of the role that an agency would normally play.
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