Abstract
One of the persistent problems surrounding the discipline of law and economics is the role of economic arguments in legal reasoning. The problem has been extensively discussed in the literature but has not been ultimately solved. The present paper is a contribution to this ongoing discussion. The argument goes as follows. First, I will argue that insights from law and economics, to the extent that they claim to be directly relevant for legal reasoning, should carry a jurisprudential preface that states that this very relevance is limited and conditional. Secondly, I will introduce the concept of consequence-based reasoning and show that the typical normative claims of law and economics based on economic efficiency can be interpreted as consequence-based arguments of a special kind. Finally, in the analytical core of the paper, the conceivability, feasibility and desirability of the judicial appreciation of general social consequences of legal decisions will be considered. Referring to the philosophical, jurisprudential and institutional dimensions of the issue I will argue that in a modern constitutional democracy the scope of consequence-based judicial reasoning is limited mainly by the expertise of courts. A more general implication of this analysis is that the impact of law and economics scholarship on law can only be understood through a close look at legal reasoning in general and consequence-based arguments in particular.
This paper was written as part of the research project on Convergence and Divergence of National Legal Systems (project number 100-16-503) at Tilburg Law and Economics Centre, sponsored by The Hague Institute for Internationalization of Law. I am grateful to Mátyás Bódig, Alon Harel, András Jakab, Pierre Larouche, Giuseppe Martinico, Bert van Roermund, Stefan Vogenauer, and participants at the First Central and Eastern European Forum of Young Legal, Social and Political Philosophers (Silesian University Katowice), Seminar on Legal and Economic Reasoning (Université de Paris Ouest Nanterre la Défense), Post-doctoral Conference in Law and Economics (Universität Hamburg), TILEC research seminar (Tilburg), the Hamburg Lectures in Law and Economics, and the Tilburg Philosophy of Law Colloquium for helpful comments and suggestions on previous versions of the paper.
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Notes
- 1.
See, e.g. Wald, ‘Limits on the Use of Economic Analysis in Judicial Decision-making’; Ulen, ‘Courts, Legislatures, and the General Theory of Second Best in Law and Economics’, and in more specific contexts, Breyer, Economic Reasoning and Judicial Review (American constitutional law); Sibony, Le juge et le raisonnement économique en droit de la concurrence (French and European competition law).
- 2.
Patterson, ‘The Pseudo-Debate over Default Rules in Contract Law’; Craswell , ‘Default Rules, Efficiency, and Prudence’. It should be noted that my argument is different from and not relying on the discussion about the reception of law and economics in legal academia, legal education and legal practice in various countries. On this, see e.g. Ackerman, ‘Law, Economics, and the Problem of Legal Culture’; Symposium, ‘Economic Analysis in Civil Law Countries: Past, Present, Future’; Posner, ‘The Future of the Law and Economics Movement in Europe’; Dau-Schmidt and Brun, ‘Lost In Translation: The Economic Analysis of Law in the United States and Europe’; Gazal-Ayal, ‘Economic Analysis of Law in North America, Europe and Israel’; Garoupa and Ulen, ‘The Market for Legal Innovation: Law and Economics in Europe and the United States’; Grechenig and Geltner, ‘The Transatlantic Divergence in Legal Thought: American Law and Economics vs. German Doctrinalism’.
- 3.
Patterson, pp. 239 f.
- 4.
Patterson, pp. 267 f.
- 5.
Patterson, p. 268.
- 6.
Arguably, in certain contexts this answer is the only convincing one. For instance, an economic analysis or a feminist interpretation of a doctrine of ancient Roman law can be enlightening but it is hard to imagine it as a part of ancient Roman legal practice. References to Pareto efficiency or “phallogocentrism” do not seem to fit into the ancient Roman canon of acceptable arguments. Cf. Harris, ‘The Uses of History in Law and Economics’.
- 7.
On the canon of acceptable arguments see Honoré, pp. 64 ff.; Bell, ‘Acceptability’; Cserne, pp. 11 ff.
- 8.
Craswell, p. 293. In his paper, Craswell actually formulated a preface that law and economics articles should carry but he also argued that if each article is tacitly understood to stand under this proviso, it would be superfluous to articulate it each time.
- 9.
On this debate see the still enlightening overview by Kornhauser, ‘A Guide to the Perplexed Claims of Efficiency in the Law’.
- 10.
Patterson, pp. 241 f., p. 280 n. 164.
- 11.
Burton, p. 307.
- 12.
The canon of acceptable arguments is not homogeneous but domain specific and changes over time, see Cserne, pp. 16 ff. For comparative analyses of legal reasoning , especially in statutory interpretation see MacCormick and Summers, Interpreting Statutes. A Comparative Study; Vogenauer, Die Auslegung von Gesetzen in England und auf dem Kontinent; Hage, ‘Legal Reasoning’.
- 13.
See, e.g. Luhmann, Rechtsdogmatik und Rechtssystem.
- 14.
Luhmann, Rechtsdogmatik, cited in Teubner, ‘Folgenkontrolle’, p. 181.
- 15.
Teubner, ‘Folgenkontrolle’.
- 16.
Teubner, Entscheidungsfolgen; Luhmann, ‘Legal Argumentation’; Kirchner, ‘Zur konsequentialistischen Interpretationsmethode’.
- 17.
On legal formalism see Kennedy, ‘Formality’; ‘Form’.
- 18.
Cf. Bell, ‘Policy’, p. 95 n. 2: “an ‘autopoietic’ perspective merely confirms the view that law is open to external influences in a significant manner.”
- 19.
MacCormick, Reasoning, p. 12.
- 20.
Honoré, p. 64.
- 21.
Bell, ‘Acceptability’.
- 22.
MacCormick, Reasoning, p. 34.
- 23.
In analogy to the distinction in the philosophy of science (see e.g. Schiemann, ‘Inductive Justification and Discovery. On Hans Reichenbach’s Foundation of the Autonomy of the Philosophy of Science’), this difference is sometimes referred to with juxtaposing the ‘context of discovery’ and the ‘context of justification’, e.g. MacCormick, Reasoning, pp. 15 f.; Anderson, ‘Context of Discovery, Context of Decision and Context of Justification in the Law’.
- 24.
See, e.g. Sajó, ‘How the Rule of Law Killed Hungarian Welfare Reform’.
- 25.
The classic reference is, of course, Schauer, Playing by the Rules.
- 26.
To be more precise, this is a definition of consequence-based reasoning within a system of rule-based reasoning.
- 27.
On the distinction between “subjective” and “objective” teleological interpretation in German legal theory see Koch and Rüßmann, pp. 220 ff. While at first sight the normative standard which has to be used in the evaluation of consequences seems well-determined in both variants, there is an extensive jurisprudential literature to show that the identification of both the legislative intent and the ratio legis behind a rule runs into serious theoretical and practical difficulties.
- 28.
Bell, ‘Policy’, p. 88.
- 29.
Cane, pp. 41 f.
- 30.
As a matter of normative theory, there are good reasons for setting such constraints. This is, however, beyond the scope of the paper.
- 31.
Rudden, p. 194. In the German literature, Gertrude Lübbe-Wolff makes a similar distinction (Lübbe-Wolff, Rechtsfolgen und Realfolgen. Welche Rolle können Folgenerwägungen in der juristischen Regel- und Begriffsbildung spielen?).
- 32.
Cane, p. 41.
- 33.
MacCormick, ‘Decisions’, p. 239.
- 34.
Cane, p. 41.
- 35.
MacCormick, ‘Decisions’, p. 240.
- 36.
MacCormick, ‘Decisions’, p. 240.
- 37.
Luhmann, Risk, p. 59.
- 38.
MacCormick, ‘Decisions’, p. 239.
- 39.
Systemic juridical consequences have been thoroughly discussed in previous literature. Professor Neil MacCormick who wrote extensively on consequence-based reasoning, focused almost exclusively on these. See MacCormick, Reasoning, ch. 6; ‘Decisions’; Rhetoric, ch. 6. Rudden argued that by focusing on juridical consequences, MacCormick “frames his case too narrowly” (Rudden, p. 193). Cane focuses on behavioural consequences.
- 40.
Parker et al., p. 4.
- 41.
In fact, similar dichotomies can be multiplied. One can juxtapose output-oriented and input-oriented decisions; ex ante and ex post perspective; substantive and formal rationality; standards and rules; utility and rights; voluntas and ratio; interdisciplinarity and operational autonomy; Lebensnähe and Lebensfremdheit. See Kennedy ‘Formality’, ‘Form’; Luhmann, Rechtsdogmatik, ‘Legal Argumentation’; Koch and Rüßmann, Juristische Begründungslehre; Teubner, Entscheidungsfolgen.
- 42.
MacCormick, ‘Decisions’, pp. 242 f.
- 43.
The terminology comes from Robert Summers, quoted in MacCormick, ‘Decisions’, p. 243.
- 44.
Dworkin, Taking Rights Seriously.
- 45.
Note, ‘Dworkin’s “Rights Thesis”’; Greenawalt, ‘Policy, Rights, and Judicial Decision’; MacCormick, ‘Decisions’, pp. 243 f.
- 46.
MacCormick, ‘Decisions’, p. 245, interpreting Dworkin .
- 47.
Greenawalt, p. 1010, n. 51.
- 48.
Cf. Barnett, ‘Foreword: Of Chickens and Eggs – The Compatibility of Moral Rights and Consequentialist Analyses’; Cane, p. 43; Sinnott-Armstrong, ‘Consequentialism’; Hooker, ‘Rule Consequentialism’.
- 49.
See, e.g. Posner, The Economics of Justice. On the normative claim see Kornhauser, ‘Guide’; ‘Wealth’. On the positive claim see the articles in Rubin, The Evolution of Efficient Common Law. For a Rawlsian argument for an efficiency -oriented corporate law see Farber, ‘Economic Efficiency and the Ex Ante Perspective’.
- 50.
See Wälde, Juristische Folgenorientierung; Coles, Folgenorientierung im richterlichen Entscheidungsprozess; Deckert, Folgenorientierung in der Rechtsanwendung.
- 51.
See, e.g. Hensche, pp. 105 ff.
- 52.
Cane, p. 45. Cane provides the example of English law lords referring to potential over-deterrent effects of an extensive liability for medical malpractice without any actual reference to empirical data. Certainly, the point here is not whether such an effect could be demonstrated or made plausible. Rather the question is whether judges should be allowed to justify their decisions in a purely intuitive way, with no reference to empirical evidence.
- 53.
Cane, p. 43.
- 54.
See, e.g. Dhami, ‘Psychological Models of Professional Decision Making’. For a systematic overview of the role of heuristics in law see Gigerenzer and Engel, Heuristics and the Law.
- 55.
On ‘intuitive experts’ see the results of the MPI Research Group led by Andreas Glöckner, http://www.coll.mpg.de/intuitiveexperts/max-planck-research-group-intuitive-experts, accessed on 4 April 2011.
- 56.
For a thorough analysis see Engel, ‘The Impact of Representation Norms on the Quality of Judicial Decisions’.
- 57.
On debiasing see Jolls and Sunstein, ‘Debiasing Through Law’.
- 58.
Cane, p. 43.
- 59.
Cf. Komesar, Imperfect Alternatives.
- 60.
It can even be argued that this should remain the case. As the expertise in assessing the systemic consequences of legal rules, i.e. the human capital of those who are knowledgeable in both legal and technical or social scientific questions, is a scarce resource, this human capital is more effectively used in legislative drafting ex ante than in case-by-case interpretative corrections ex post. Cf. Eidenmüller, ‘Rechtswissenschaft als Realwissenschaft’.
- 61.
Pfaff and Guzelian, ‘Evidence Based Policy’; Verschuuren, The Impact of Legislation.
- 62.
Larouche, ‘Ex ante evaluation of legislation torn among its rationales’.
- 63.
Cf. Epstein, Simple Rules for a Complex World.
- 64.
On the normative relevance of behavioural research, see Tor, pp. 298 ff.
- 65.
Rachlinski, ‘A Positive Psychological Theory of Judging in Hindsight’.
- 66.
Bell, ‘Policy’, p. 73.
- 67.
Koch and Rüßmann, p. 229.
- 68.
Parker et al., ‘Introduction’.
- 69.
Parker et al., p. 11. Although the authors also mention distributive justice as conflicting with consequentialism , this is an evidently consequence-based consideration.
- 70.
Cf. Searle, Speech Acts.
- 71.
Arrunada and Andonova, ‘Judges’ Cognition and Market Order’; Kornhauser, ‘Modelling Courts’; Posner, How Judges Think?
- 72.
La Porta et al., ‘The Economic Consequences of Legal Origins’.
- 73.
Hadfield, p. 45.
- 74.
Hadfield, p. 46.
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Cserne, P. (2012). Consequence-Based Arguments in Legal Reasoning: A Jurisprudential Preface to Law and Economics . In: Mathis, K. (eds) Efficiency, Sustainability, and Justice to Future Generations. Law and Philosophy Library, vol 98. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-1869-2_2
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