Sunday, January 24, 2010
Cognitive Science, Contracts, Entrepreneurship, and A Tale of Two Karls (It Was the Best of Formalism; It Was the Worst of Formalism)
Posted by Jeff Lipshaw
I continue to plug away at my work on judgment, worrying most of the time that I'm going to create something that looks like Norma Desmond's script of Salome (see Sunset Blvd.). As I mentioned in previous posts, I'm reading Steven Winter's A Clearing in the Forest (now at page 237 of 357), and again want to give it a plug as perhaps the smartest, most original, and most satisfying attempt to reconcile foundationalism and indeterminacy in the law I've yet seen. As I mentioned to Professor Winter in an e-mail several weeks ago, it's a book I wish I could have written.
Coincidentally, as I began putting together this post, Larry Solum posted an abstract of a piece that looks to embody what Professor Winter calls the "antinomial capture" of traditional rationalist and reductivist jurisprudential thinking. That is, either you think law is a coherent and rational matrix of positive rules (i.e., a "formal" system, though not formal in the deductive sense) that largely guides the decision-maker, or you are a realist, believing that results are wholly indeterminate, and there is no middle ground. I think this is a meta-issue that goes to the tensions between orthodoxy and reform in any tradition or institution, whether it be Judaism, constitutional interpretation, or faculty governance. For example, if we don't have a foundational anchor that says being a Jew means a particular Halakhic observance of all 613 commandments, then does it mean that anything goes and there is no meaningful determinant of what it means to be Jewish? To me, the Lubavitchers (very Orthodox) versus the Hebrew Union College (very liberal) looks a lot like Scalia versus Breyer!
Professor Winter calls on developments in cognitive theory to eliminate the antinomial capture. To oversimplify his point, is there a way to anchor how we make sense of the world without resorting to the extremes of either "p or ~p" thinking, on one hand, or complete indeterminacy on the other? No, judgments are not reducible, but that very irreducibility can be explained in a way that is "scientific" or "non-transcendental." We are free (as Kant would suggest), not because our minds are disembodied, but because our embodied brains give us irreducible capacity for imagination. The law seems to radiate both aspects of the paradox - a bindingness to the past with an apparent indeterminacy for the future.
The antinomy that nevertheless pulses through A Clearing in the Forest is the one between:
(a) rationalist, reductivist thinking - something is or is not within a category; something fits the proposition or not; semantic meaning requires objective reference to something - and
(b) an enlightened understanding that human beings are hardwired to make and extend meaning in a socially constrained, non-formalistic, yet non-indeterminate, way. We think not in fixed categories, but by way of evolutionary and culturally developed basic schema - "idealized cognitive models" - complete with prototype effects. In my doctrinal area, I see this most explicitly in the "what is a security?" cases like SEC v. Howey. Rational, reductivist legal thinking wants a p or ~p definition: "a security is a contract under which a person invests money in a common enterprise with the expectation of a return on the investment through the efforts of others." Yet at the margins we find ourselves throwing out the propositional, linguistic model, and returning to analogies or metaphors to the prototype of the ICM: how much does this instrument look and feel like a share of common stock?
It's fair to say that Professor Winter would categorize most traditional legal theory under (a) versus (b), although it's a subtle categorization - one that argues (a) springs from the same cognitive building blocks as (b), except that the (a)s don't recognize it. I am just now getting my mind around how this stacks up with a thesis I've advanced both in contract theory and the attempts to develop a field of law and entrepreneurship (as recently noted by Gordon Smith at Conglomerate and Jeff Yates at PrawfsBlawg, Duke Law School just announced it's offering an LL.M. in law and entrepreneurship). [UPDATE: Danny Sokol and Larry Ribstein also chiming in on the law and entrepreneurship program.]
I will get to the two Karls - Popper and Llewellyn - below the fold.
Both Karls struggled with the antinomy of authority and indeterminacy. Popper's was that he rejected all argument from foundation or authority (in science and politics) in favor of arguments from merit, yet refused to give up on the idea there is an objective truth. His foundational fulcrum was the process of seeking truth, not truth itself. That process depends, whether in science, politics, or philosophy, on an orientation to truth, namely being open to criticism.
If we thus admit that there is no authority beyond the reach of criticism to be found within the whole province of our knowledge, however far it may have penetrated into the unknown, then we can retain, without danger, the idea that truth is beyond human authority. And we must retain it. For without this idea there can be no objective standards of inquiry; no criticism of our conjectures; no groping for the unknown; no quest for knowledge. (Conjectures and Refutations, 2002, p. 39)
In Winter's account, Llewellyn's critique of formalism arose from the same antimony. In his 1934 Columbia Law Review essay, Llewellyn observed that an institution like the Constitution "is in first instance a set of ways of living and doing. It is not, in first instance, a matter of words.” Adjudication was not a matter of making order, but maintaining it when things when awry. And the mediation of the formalism of legal structures with the fluidity of living and doing was something called "situation sense," a subjective yet constrained ability to adapt to the antinomy by way of a particular craft or process. According to Winter, Llewellyn simply didn't have the conceptual tools to explain the mediation between formal rules and "living and doing." Winter argues instead that most legal rules already incorporate understood social constraints: what lawyers and judges do and produce is law, but it’s not unconstrained. Law is already the product of reified custom, tradition, and social practice by the time lawyers and judges start working with it. As Winter interprets Llewellyn, he couldn’t articulate the structure that mitigated against legal indeterminacy, so he erred the other way. “In the absence of a formalized construct like an ICM, Llewellyn could not capture the automatic, tacit sense of validity described by his concept of situation-sense.”
My argument about contracts, both generally and as they appear in the entrepreneurial setting, follows on this: it gets the cart before the horse, probably because it's the cart driver and not the horse who's doing the thinking and writing about it. Why do venture capital term sheets and contracts work even though there's almost no real world force to them? Why do most real world contracts work even though they are rarely litigated? Why do business people have a far more fluid reaction to contract terms than the lawyers? It is for the reasons Steve Winter argues: the social constraints reified in the contract predate the contract. The contracts may be important to the lawyers who write them (and the professors who teach them), but they are merely one way human beings make sense (or attempt to control) a highly contingent and uncertain future. Contracts are attempts to create law. Law is authority in the Popperian sense. Contracts are attempts to impose formal structures on the world. They work because it's not just judges, but good transactional lawyers and business people who use "situation sense" to mediate between formal linguistic mappings and the fluidity of the real world. Once again, to answer Gordon Smith's question,"law and entrepreneurship: do courts matter?", the fundamental answer is "no."
I think I part company with Steve Winter in his ardent naturalism; I'm simply more agnostic. Whence comes this embodied and constrained capacity for irreducible imagination? He believes there's no transcendental nonsense; we were simply built this way. Moreover, he thinks justifying any kind of mind-body dualism (even the weak mysterious kind, rather than the Cartesian strong kind) is just another reflection of "the distorting rationalist apparatus of the subject-object dichotomy." I'm not yet satisfied to buy into the inductive argument that since science has so far explained lots of mysteries, it will explain this one too (eventually). That's because I don't understand how a mind in the world, but nevertheless considering itself, can ever relieve itself of the subject-object dichotomy, however distorting it may be. That's why I think judgment continues to be such a mystery, but that's a subject for another day.
Okay, Mr. DeMille, I'm ready for my close-up.