Magazine article The American Prospect

The Chicago Acid Bath: The Impoverished Logic of Law and Economics

Magazine article The American Prospect

The Chicago Acid Bath: The Impoverished Logic of Law and Economics

Article excerpt

The past two decades have brought ever-louder assertions that government should take a back seat to free markets. A resurgent libertarianism increasingly shapes policy, jurisprudence, and public and private debate. Congressional Republicans have tried to ban environmental and safety regulations that cost more than the monetary value of their benefits, an effort requiring the gloomy exercise of pricing human life. A widespread effort to designate government regulation as "takings" of private property gained ground when the Supreme Court ordered South Carolina to compensate a landowner for the expected income he lost when a new law stopped him from building houses on fragile beachfront acreage. And commentators and politicians have stepped up attacks on affirmative action, welfare, and other government programs that come between individuals and the market.

Both popular and intellectual forces have been at work in this onslaught. Beginning in the 1970s, tax revolts, the movement toward deregulation and privatization, and the apparent failure of Keynesianism all contributed to the resurgence of the free market idea. New schools of thought arose to provide analytical power to the movement. Among the less appreciated of these influences is an interdisciplinary endeavor called "law and economics" that, at the extreme, suggests that law exists only to help the market on its way. A pair of prolific Chicagoans, Richard Epstein and Richard Posner, have become the chief promoters of this marriage of libertarianism and law.

Posner is a Reagan-appointed federal judge, lectures at the University of Chicago's law school, and has written more than 25 books on topics ranging from jurisprudence, through the intersection of law and literature, to sex, by way of ancient history and intellectual biography. Epstein has taught law at Chicago for a quarter of a century and complements Posner's enthusiastic dilettantism with professional obsession. His six books have been devoted to elaborating a libertarian interpretation of common law, the body of inherited, judge-made legal custom that sets the backdrop of contracts, torts, and property rights. Only in the past year has he broadened his scope in a volume on health care reform, organ sales, and assisted suicide. Both men are erudite, intelligent (Posner was first in his class at Harvard Law School), and readable, although Posner's prose is much more lively than Epstein's. Both fall into the pernicious class of interestingly - and influentially-wrong thinkers.


The law-and-economics movement that the two men have helped galvanize is part of an ambitious expansion of economics. For generations, economists defined themselves by their topic: They were the people who studied markets. Refusing to be fenced in, economists have more recently taken to styling their field "the science of rational choice." For economists, "rational" simply describes someone who pursues her aims in consistent and reasonably effective fashion, so economics ends up as the study of how people go after what they want. Because economists assume - not unreasonably - that people are always doing this, the revamped economics can analyze any human activity. The fruits of this expansion include public choice theory, a branch of political science that treats deliberation, legislation, and regulation as nothing but the result of groups' pursuit of their self-interest through government; reconstructions of history as a function of changing economic incentives; and analyses of courting and romance under the rubric of "the marriage market."

This impressive-sounding enterprise - shedding the light of reason on dark and muddy fields - is at base an exercise in tautology. Economists presume that everything people do reveals what they want, that is, where their interest lies. Therefore, any action whatsoever gets counted as pursuing whatever preference it seems to aim at; irrational action, like raw toast, is nonexistent by definition. …

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