Cultural Contingency and Economic Function: Bridge-Building from the Law & Economics Side

By McAdams, Richard H. | Law & Society Review, June 2004 | Go to article overview

Cultural Contingency and Economic Function: Bridge-Building from the Law & Economics Side


McAdams, Richard H., Law & Society Review


Lauren Edelman's presidential address is artfully provocative. Given my membership in both the Law & Society Association and the American Law & Economics Association, I endorse her twin suggestions that law and society (L&S) scholars give more attention to the economy and that L&S and law and economics (L&E) scholars consider building bridges between their divergent methods. But there is a tension in the way Edelman frames these recommendations. Edelman proposes that L&S spend more time studying the economy partly because she finds the existing study, dominated by L&E, so inadequate. One might wonder why L&S should seek any reconciliation or interaction with economic methodology if it does not offer something that L&S currently lacks. I respond here to Edelman's respectful critique by attempting to demonstrate that economics has sufficient value to L&S as to make worthwhile the efforts at collaboration. Indeed, I will provocatively assert that, because L&S is, methodologically speaking, a "big tent," the difference between alternative branches of L&S methodology within that "tent" is as great as the difference between the more positivist branches of L&S scholarship and certain elements of L&E scholarship. In any event, I seek to identify a specific and unexpected convergence between the schools, where the theoretical topography is best suited for building collaborative bridges.

There are several points of possible convergences other than the one I will address. Worth noting, for example, are the trends in economics toward greater complexity of behavioral assumptions and greater empiricism. Many economists are replacing the more reductionist assumptions of homo economicus with models of boundedly rational and boundedly selfish individuals, based on the steady stream of psychological and economic experiments finding powerful evidence of cognitive biases and nonselfish motivations, and the importance of context to each (Camerer 2003; Fehr & Fischbacher 2002; Korobkin & Ulen 2000). Another trend-weaker than I would like-is a move toward the study of inequality. Perhaps the first to recognize the potential for using game theory to explore issues of inequality was the philosopher Ullmann-Margalit (1977:134-97). But there is increasing interest in using games to model social inequalities, especially those related to sex. See Rose (1992), Hadfield (1999), and Wax (2000).

My primary focus, however, is on the contrast Edelman draws between L&E and L&S on the grounds of what I will term contingency. Edelman says that L&S uniquely emphasizes "the social embeddedness and politics of markets" (Edelman 2004:183), "the social, political, and legal construction of rational economic behavior" (2004:184, emphasis in original), and "social action as responsive to institutions, norms, and historical context" (2004:187). Addressing one aspect of the market, for example, Edelman asks "why we bargain at the car dealership or the flea market but not at the pharmacy or the grocery store" (2004:192). She answers that pricing practices "are governed by culturally ingrained practices as well as, and sometimes instead of, preference maximization" (2004:192). Although Edelman may mean other things by this contrast I believe she means also to emphasize contingency: that there was no necessity to arriving at the existing pricing practices, but that arbitrarily small changes in history and culture could produce very different patterns of contemporary behavior. We can understand pricing practices and other economic behavior only by understanding the history that has led us to them.

Here is where I wish to sketch out a possible ground of unexpected convergence. To a degree not fully appreciated, economic theory embraces the idea of contingency, and with it, the importance of history and culture. After describing how contingency arises in game theory, I return to a source of divergence: whether L&S can embrace the converse-that the noncontingent practicality or "function" of market practices sometimes explains their persistence better than contingency.

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