Edited by Peter G. Klein and Michael E. Sykuta
Chapter 7: Commons, Hurst, Macaulay, and the Wisconsin Legal Tradition
D. Gordon Smith In art ‘negative space’ is the space between, around, and behind the positive forms in a visual composition (Rockman, 2000, p. 22). While our brains are conditioned to recognize, name and categorize objects, negative space helps to define those objects, and artists consider both positive shapes and negative space in arranging a composition (Edwards, 1989, pp. 98–100). Perhaps the most famous illustration of negative space is Rubin’s vase, an optical illusion in which a white vase is formed by opposing black silhouettes. When first presented with the composition, most people see the opposing faces, but when the shading is reversed – so that the vase is black and the faces are white – the vase is easily perceived. Over a period of a half century, scholars at the University of Wisconsin focused our attention on the negative space surrounding contract law (Gilmore, 1974, p. 3, n. 1). What they found there was a fascinating world of contracting behaviour – or, in more modern parlance, private ordering – that Ian Macneil (1974, 2000) subsequently explored in developing his relational theory of contracts. Oliver Williamson was aware of the work of the Wisconsin scholars (Williamson, 1985, p. 3) and Macneil (Williamson, 1996, p. 355), and in this chapter I trace the legal precursors of transaction cost economics (TCE) by focusing on three prominent faculty of the University of Wisconsin: John Commons, Willard Hurst, and Stewart Macaulay. This focus necessarily omits some of the connective tissue in the intellectual history, from Oliver Rundell...
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