XII

Economic Analysis of Law

Richard Posner brought an economic analysis of the law to be noticed by the general
law academy around the 1970s and his work caused controversy. The controversy led to a
debate among philosophers of economic analysis of the law.
Posner issues two claims:
1. Common Law law rules, in fact, are efficient
2. The rule of law must be efficient
From both claims, efficient means maximizing the "willingness to pay" from the
community.
In the course of the controversy, two other claims were issued by Kornhauser, namely:
1. The legal process of choosing an efficient rule (efficient here means "pareto
efficient")
2. Individuals respond to the rule of law economically
Then there is another claim, that is, on the best interpretation of law, Common Law
doctrine advances efficiency. This is different from Posner's first claim. On the basis of this
latter claim, the economic interpretation is in accordance with the doctrine not because of the
rule of law as stated in Posner's first claim, but because it will encourage efficient behavior in
a world view that seems to underlie judicial decisions. Posner's first claim is an empirical claim
that requires analysis to determine whether the actual behavior caused by rule of law is
efficient, this requires knowledge of how individuals behave efficiently. The latter claim
requires only knowledge of the content of legal opinion; the analysis interprets these opinions
to take an economic model underlying the decision. The latter claim may be true even if the
rule of law causes inefficiency behavior in the real world because the announcement of the rule
of law may be efficient with the implicit model used by judges.
The five claims above do not directly answer the traditional question in legal philosophy. The
evaluative statement, Posner's second claim, that the rule of law should be efficiency, if
addressed to the judges, qualifies as an adjudication theory, one of the main concerns of Anglo-
American legal philosophy. Claims of behavior or evolutionary claims (the first claim proposed
by Kornhauser) and positive claims (the second Posner claim), on the other hand, pay attention
to the empirical question that legal philosophers are generally ignored. Nevertheless,
controversy within the academy of law has generally considered legal analysis of law as a
comprehensive theory of law that cast doubt on traditional views of law. [1]