The Elgar Companion to Social Economics
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The Elgar Companion to Social Economics

Edited by John B. Davis and Wilfred Dolfsma

As this comprehensive Companion demonstrates, social economics is a dynamic and growing field that emphasizes the key role that values play in the economy and in economic life. Social economics treats the economy and economics as being embedded in the larger web of social and ethical relationships. It also regards economics and ethics as essentially connected, and adds values such as justice, fairness, dignity, well-being, freedom and equality to the standard emphasis on efficiency. The Elgar Companion to Social Economics brings together the leading contributors in the field to elucidate a wide range of recent developments across different subject areas and topics. In so doing the contributors also map the likely trends and directions of future research. This Companion will undoubtedly become a leading reference source and guide to social economics for many years to come.
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Chapter 31: Law and Social Economics: A Coasean Perspective

David Campbell and Matthias Klaes


David Campbell and Matthias Klaes Introduction Iudex non calculat: before the 1960s, legal doctrine, in the common law tradition at least, had developed largely innocent of insights from economics. But during the subsequent half-century, the use of such insights to elucidate legal doctrine has become so widespread, albeit far more so in the USA than in other jurisdictions (Landes and Posner, 1993; Ogus, 1995; Symposium, 1991), that ‘law and economics’ is now one of the principal forms of jurisprudence, as is evidenced by the large number of existing introductions to the subject (Bowles, 1982; Cooter and Ulen, 2004; Hirsch, 1988; Malloy, 1990b; Mercuro and Medema, 1997; Mercuro and Ryan, 1984; Polinsky, 1989; Posner, 2007; Shavell, 2004; Veljanovski, 1982, 2006). Much of the intellectual substance of modern law and economics derives from the application of microeconomic principles to legal reasoning, informed by what the main currents of economic analysis have argued since the time of Ricardo: compared to alternative institutional arrangements, properly functioning markets yield superior allocative outcomes in terms of aggregate wealth. Law and economics largely accepts the depiction of markets in neoclassical welfare economics, and uses perfect markets as the basic yardstick with which to compare alternative forms of allocating goods. There is, of course, a serious and well-known problem in doing this. With suitably restrictive assumptions on how individuals and markets behave, the economic efficiency of perfect markets can be established with great rigour in modern welfare economics. But there is no hope that those assumptions can...

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