Law and Economics Before the
“Unlike scholarly commentators, we have a duty to be faithful to
congressional intent when interpreting statutes, and are not free to
consider whether, or how, the statute should be rewritten.”
--- Justice John Paul Stevens
Texaco, Inc. v. Hasbrouck
By the late 1970s, then, the Chicago School had laid a firm foundation for its conquest of the judiciary and the enforcement agencies. Its price theory-based policy analysis threatened to bring on a full-scale revolution in antitrust, undercutting many of the assumptions upon which the regnant Harvard School of antitrust economics, and its deployment of structure-conduct-performance tests, had been built. If adopted by the Supreme Court, this analysis would seem to require a degree of judicial activism and disregard for the principle of stare decisis nearly unprecedented in the Court’s history, especially with respect to the jurisprudence of the Warren Court. Looking briefly beyond the narrow field of antitrust law, the Law and Economics movement championed by Richard Posner was showing signs of establishing itself as a legitimate subfield and area of study in first-tier law schools across America.1
Less than three decades after Aaron Director first began teaching his seminars in the University of Chicago’s Law School, the prospects for a synthesis of law and economics, and a revitalized and internally consistent antitrust policy, seemed very great indeed. But the distance between the seminar and the courtroom is easy to underestimate, and success in the former by no means guarantees triumph in the latter.