Law and Economics for Civil Law Systems
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Law and Economics for Civil Law Systems

Ejan Mackaay

Ejan Mackaay offers a comprehensive look at the essential points of economic reasoning, the Coase Theorem, and legal institutions such as intellectual property, extra-contractual civil liability and contracts. The book’s structure mirrors the way law is taught in civil law countries, with structured presentations, references to civil code articles paired with non-technical explanations, and limited reliance on graphs. This English-language version builds on the success of the author’s 2008 French-language textbook on law and economics from a civil law perspective.
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Chapter 5: The political order

Ejan Mackaay


Economic theory explains how markets allow different participants to coordinate their plans, while procuring them the benefits of specialisation and innovation. It considers most human activities through the lens of explicit or implicit markets. What is the proper role of the State in this view? From the very beginnings of economic analysis, that question has preoccupied economists. At first blush, the State is obviously a special player. It has the power of coercion to impose its designs; indeed it has a monopoly on the legitimate use of violence or force. At a minimum, the State must ensure public order, justice and other unquestionably collective goods. But this does not get us very far since the State actually does much more in modern societies. A legal theorist, when asked about the State’s role, might say that the State must look after the public interest, which implies that markets are not, or not always, able to do so. State action should take on tasks the private sector cannot undertake, or correct the interplay of private actions in the market where it produces harmful effects.

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