by Mark D. White (ed.). New York: Cambridge University Press, 2009. 302pp. Hardback. $85.00/£45.00. ISBN: 9780521889551. eBook format. $68.00. ISBN: 9780511460784.

Reviewed by Michael C. Macchiarola, Adjunct Professor, Seton Hall University School of Law and St. Francis College. Email: macchiarola [at]


As the modern law and economics movement enters its fiftieth year since Ronald Coase first offered his groundbreaking work, “The Problem of Social Cost,” it remains as relevant and vibrant as ever. Concerned that proponents of this approach to law “have been almost entirely unreflective on the methodological foundations of their field” (p.xv), and unsatisfied by the scattered nature of what critical appraisals there are of the law and economics ethos, Mark D. White offers a collection of fourteen essays from contributing philosophers, law professors and economists in the THEORETICAL FOUNDATIONS OF LAW AND ECONOMICS.

Professor White does a real service by gathering these works into a single volume, especially since – as Peter Huang tells us – “most academic and professional lawyers do not know any microeconomics whatsoever” (p.170). While the essays do well, as a group, to highlight some of the achievements, developments, inadequacies and frustrations of the law and economics scholarship to date, one cannot help but be humbled by how much remains unanswered. Against the backdrop of our current Great Recession, then, the arguments offered in these works have real context – with the next round of academics, policymakers and judges playing with the highest of stakes. One can only hope that the assertion made by Richard Epstein’s foreword holds true, that “in the grand scheme of things the negative consequences of wrong decisions are outweighed by the positive consequences of the correct ones” (p.x).

The volume is divided into four sections. The first, concerning “The Role and Use of Law and Economics in Legal Studies” begins with Lewis Kornhauser’s “Modeling Courts,” which examines the manner in which judges make decisions. Kornhauser views “case space” (treating cases as fundamental, where individual facts and circumstances dominate) as the bedrock of good decision-making. “Policy space,” by contrast, (where judges care exclusively about “policies”) is more mischievous for Kornhauser. Next comes, “Is There A Method to the Madness?” – Michael Dorff and Kimberly Kessler Ferzan’s enjoyable attempt at examining three of the more controversial claims of earlier law and economics scholarship. The authors probe the limits (if any) of welfare maximization in the eclectic worlds of baby selling, racial discrimination and insider trading. Along the way, the essay grapples with the real dilemma at the heart of law and economics: how best to calculate something not easily reduced to a number? The piece does well to illuminate the problems that rise from an uncompromising application of the law and economics framework, [*361] arguing that “legal economists who fail to take fairness preference into account are ignoring a variable essential to their calculations” (p.40). The first section of the book closes with the highly skeptical “Legal Fictionalism and the Economics of Normativity.” Horatio Spector examines government coercion, arguing that “the law’s justified normativity is a fiction created by the state’s ideological apparatus as a mechanism for the reduction of policing and enforcement costs” (p.57).

The second section, entitled “Efficiency,” opens with one of the book’s best essays – Mark Tunick’s “Efficiency, Practices and the Moral Point of View: Limits of Economic Interpretations of Law.” Tunick examines the roots of what he calls a “totalizing viewpoint” that remains unsympathetic to any considerations apart from efficiency, utility or welfare. Characterizing such a mindset as “deeply problematic” (p.80), Tunick walks the reader through a series of examples to highlight that there are non-utilitarian reasons for a policy that are not simply mysterious, unfathomable or unintelligible, as the totalizer might have us believe. While the author concedes that “[t]he reasons may not convince the economist,” he notes that his purpose is “to show not that they are decisive reasons, only that they are worthy of consideration” (p.93). Building on the notion that law must be born of more than just a spreadsheet, Sarah Holtman offers “Justice, Mercy and Efficiency.” This essay makes for quite an interesting read against the backdrop of President Obama’s stated desire to appoint “empathetic” judges to the bench. In her essay, Holtman describes an individual judge’s application of principles of “mercy” in a baby shaking case in Massachusetts, and argues for conceptions that “are richer and more true” (p.135) than the simple efficiency that might result from the reflexive, unemotional and mechanical application out of the law and economics toolbox.

The highlight of the “Rationality and The Law” section of the book is Peter Huang’s appealing essay “Emotional Reactions to Law and Economics, Market Metaphors, and Rationality Rhetoric.” Huang distinguishes between those schooled in microeconomics and those practicing without training in mathematics. For Huang, the mathematics provides a level of abstraction, rigor and precision that does not exist in the “language of anecdotes, metaphors, rhetoric and stories” (p.172) applied by too many in the field. Huang believes that, armed with this more proper foundation, many would come to see that the arguments in this field of study are far more nuanced than we have appreciated thus far. As one of those practicing without a license (so to speak), I was happy to see that Huang stops short of answering whether we are better off practicing as amateurs – or whether the entire playing field should be ceded to those schooled in the hard science.

Part Four concerns “Values and Ethics in Civil and Criminal Law.” The section contains compelling pieces from Brian Bix and Mark Geistfeld concerning the operation of law and economics to the worlds of contract and torts, respectively. It is only fitting, however, that the finest essay in the book’s final section is the editor’s own effort, “Retributivism in a World of Scarcity.” White shows the application of the law [*362] and economics methodology to a real world example, while exploring the two primary justifications for criminal punishment – deterrence and retributivism. After acknowledging the allure of retributivism, White uses basic law and economics principles to conclude that retributivism, while appealing, requires “unrealistic degrees of government intelligence and tremendous allocation of scarce societal resources” (p.270).

At times, the volume can seem uneven – as the essays range from the interesting and timely to the somewhat more vague and convoluted. All in all, however, the large majority of the contributions tend toward the former. Each of the contributors brings a unique perspective to the law and economics genre and each falls at a different point on the spectrum – ranging from pure skeptic to true believer. None can eschew, however, (and none tries!) the notion that the law and economics movement has had a profound influence on legal education and legal doctrine in the last half-century. Moreover, there is no denying that the application of law and economics principles has had welfare maximizing effects in many different arenas. What remains unsettled instead, is a question of degree and limitation. Are there some things that simply transcend efficiency and defy the mathematician Philolaus’ assertion that “[e]verything that can be known has a number?” After all, as the story goes, even the Almighty inefficiently rested on the seventh day!

White has advanced the discourse in this lively field. His collection offers a fine law and economics primer, framing the arguments and leaving the reader better equipped to understand the theoretical underpinnings of the difficult accommodations that continue to be made in a world of scarcity.

Coase, Ronald H. 1960. “The Problem of Social Cost.” 3 JOURNAL OF LAW AND ECONOMICS 1-44.

© Copyright 2009 by the author, Michael C. Macchiarola.