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The Rule of Lawyers

Two recent books examining the interchange between law and economics make clear that the modern world cannot be understood, let alone governed, without a multidisciplinary perspective. Yet insofar as there is an ongoing dialogue between the two fields, it tends to be a one-way conversation.

BOSTON – Law professors are apparently chafing at the confines of traditional law and economics, an academic subfield that emerged when intermediate-level microeconomics was imported wholesale into law. Proponents of law and economics largely succeeded in displacing previous, ethics-based modes of jurisprudence and establishing economic efficiency as a key criterion for settling legal disputes.

But Katharina Pistor of Columbia Law School turns that change on its head. In The Code of Capital, she builds on her seminal 2013 paper, “A Legal Theory of Finance,” which argued that it is finance that should be importing principles from the law. Now, she is extending that contention to economics generally.

In Law and Macroeconomics, Yair Listokin of Yale Law School takes a more conventional approach, arguing that law should import not just microeconomics, but macroeconomics as well. The result, he submits, would be to supplement traditional monetary and fiscal policy with what he calls “expansionary legal policy.”