February 2, 2006
Introduction to the Law & Economics Blog
We first extend our thanks and appreciation to Paul Caron of the University of Cincinnati Law School for giving us the opportunity to edit this web-log. Several legal web-logs are already operational, both in Professor Caron’s network and in others, and some even deal with law and economics. Colleagues we have talked with, as well as students, report on the usefulness of a well-produced web-log in putting forth new ideas, concepts, theories and views, reporting results of work and in exchanging comments on current work in a matter of hours or days, instead of months or even years, as would be usual for journal publications. Many an idea for new scholarship has sprung from web-logs and timely and free-standing entries in web-logs.
The web-log that we have been fortunate enough to edit and produce is entitled “Law and Economics.” It would be appropriate in this introductory entry to clarify the scope of this particular web-log. If our ideas border on topics selected by editors of other web-logs, we hasten to assure you that we have no intention of usurping other areas or engaging in unhealthy competition.
Our notion of this particular web-log is not limited to theoretical economic analysis of law, although that area is certainly encompassed in this web journal. We also intend to include contributions dealing with (a) Law and Finance, (b) International Economic and Monetary Law, (c) Law and Socio-Economics, and most certainly (d) Applications of empirical methods to any area of the law and public policy. Contributions drawing upon other related areas, such as International Political Economy, Public Choice, Political Economy, and Industrial Organization, are also included. In sum, the scope of this web-log is very broad. The only limitation is that there be some recognizable and relevant interface between economic tools and methodology and legal or public policy issues, as these terms are commonly understood.
Ultimately, the users and contributors of this web-log will determine the future direction and primary function of these pages, and we await their wise and seasoned choices.
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I teach law and economics to law students on a regular basis, and I have developed an interesting and apparently pedagogically effective means of broadening my four-credit course beyond the usual month-long critical review of basic microeconomics descriptive models and normative criteria, and their subsequent application to various legal doctrines until time runs out. After completing the theoretical microeconomics material and before turning to its applications to property law, contracts, torts and the like, I now insert an about two-week (8 50-minute classes or so) module introducing, elaborating upon and critiquing Austrian perspectives on economics and their application to law and social issues more generally. I have the students first read and discuss Hayek's classic 1945 article on "The Use of Knowledge in Society" to fully appreciate the Austrians' fervent embrace of the price system, then read an article that I wrote for the Notre Dame Law Review in 1998 explicating Austrian concepts for the relatively uninitiated, then read Thomas Sowell's entire excellent book "Knowledge and Decisions" which applies Austrian concepts (while not always candidly acknowledging their obvious Austrian genesis) to a very wide range of legal and social issues, then close by reading and discussing a provocative chapter from Steven Pinker's "Blank Slate" that endorses Sowell''s overall tragic vision perspective on the basis of the findings of modern cognitive neuroscience. Students generally find the richer and more unruly Austrian framework of analysis to be intuitively appealing and a helpful complement to the more austere and often less intuitive neoclassical framework, and thereby feel empowered to be able to critically evaluate legal doctrines from more than one economic perspective throughout the remainder of the course. I welcome comments from anyone else who has attempted to mesh Austrian concepts into the traditional applied microeconomics framework of law school law-and-economics courses, or who is interested in considering doing so. Greg Crespi, Dedman School of Law, Southern Methodist University
Posted by: Greg Crespi | Feb 18, 2006 11:54:48 AM
THE INEFFICIENT CONTENT OF THE INTRODUCTORY LAW SCHOOL BUSINESS LAW COURSE: I regularly teach the four-credit Business Enterprise course at the SMU School of Law, our basic introductory course to corporation law. I have found that I now have to spend two full weeks at the outset covering in some detail the basic principles of agency law and partnership law, since those topics are essential for understanding most of the relevant governing frameworks for the many other entity forms, and are no longer covered in a dedicated Agency and Partnership-type course in our curriculum. In addition, I have to spend at least one class covering basic accounting principles, one or two classes covering basic federal and state entity taxation principles, and two full weeks of basic finance and statistical concepts (discounting, expected values and variances, risk analysis, diversification and portfolio theory, the capital asset pricing model, option pricing theory, the efficient capital market hypothesis, etc.), since as Bernard Black, Roberta Romano and numerous others in the field have made clear at least a basic grasp of all of those concepts is now absolutely essential for one to be able to provide competent transactional and legislative/administrative representation in the large law firm setting. This all means that fully 20 of my 56 50-minute class periods are already committed before I can begin to delineate the major features of each of the now many proliferating legal entities, and to address corporation or securities law issues. The price that I and my students must pay for this breadth of introductory treatment is obviously more limited coverage of significant corporate and securities law issues, and of larger jurisprudential themes such as what economic analysis has to offer in these areas. It is unfortunate (and probably inadvertent) that the basic business law course at SMU (and, I suspect, elsewhere as well) has had to become in recent years the primary locus of very concentrated and consequently somewhat superficial remedial education for aspiring corporate lawyers who either do not have other access to, or are not advised of the importance of, or who simply unwisely choose not to first take more extensive preparatory courses in these areas I have noted above before enrolling in corporation law courses that necessarily must presuppose some such background if cutting-edge issues are to be discussed. I wonder what the underlying economic dynamic is that has resulted in this awkward curricular configuration. It would be far more efficient, in my opinion, were law schools to offer dedicated courses that covered these topics and eased the burden on the basic business law course. I welcome comments regarding my observations. Greg Crespi
Posted by: Greg Crespi | Feb 18, 2006 9:49:29 PM