DOCSLIB.ORG

Contract Theory and the Limits of Contract Law

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Contract Theory and the Limits of Contract Law Columbia Law School Scholarship Archive Faculty Scholarship Faculty Publications 2003 Contract Theory and the Limits of Contract Law Alan Schwartz Robert E. Scott Columbia Law School, [email protected] Follow this and additional works at: https://scholarship.law.columbia.edu/faculty_scholarship Part of the Contracts Commons Recommended Citation Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 YALE L. J. 541 (2003). Available at: https://scholarship.law.columbia.edu/faculty_scholarship/339 This Article is brought to you for free and open access by the Faculty Publications at Scholarship Archive. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarship Archive. For more information, please contact [email protected]. Article Contract Theory and the Limits of Contract Law Alan Schwartz* and Robert E. Scottt* CONTENTS I. IN TROD U CTION ................................................................................. 543 II. JUSTIFYING AN EFFICIENCY THEORY OF CONTRACT ........................ 550 A . W hat Firms M axim ize .................................................................. 550 B. Why the State Should Help Firms ................................................ 555 III. THE ENFORCEMENT FUNCTION ........................................................ 556 A. Enforcement Often Is Unnecessary.............................................. 557 B. EncouragingRelation-Specific Investment .................................. 559 C. ContractingTo Avoid Disruption: The Case of Volatile Markets ........................................................................... 562 D. Enforcement and Duress.............................................................. 565 IV. THE INTERPRETATION FUNCTION ..................................................... 568 t Sterling Professor of Law, Yale Law School; Professor, Yale School of Management. tt David and Mary Harrison Distinguished Professor of Law, University of Virginia School of Law; Justin W. D'Atri Visiting Professor of Law, Business and Society, Columbia Law School. This Article benefited from comments received at workshops at the Law Faculty, Cambridge, England, at the 2003 American Law and Economics Association meetings, and at the Harvard, Pennsylvania, Texas, Toronto, Virginia, and Yale Law Schools. We also are grateful to Bruce Ackerman, Scott Baker, Richard Brooks, Jules Coleman, Victor Goldberg, Sam Issacharoff, John Jeffries, Jason Johnston, Paul Mahoney, Tom Nachbar, Eric Posner, Andrew Postlewaite, Henry Smith, Paul Stephan, William Stuntz, and George Triantis for helpful comments. 541 Imaged with the Permission of Yale Law Journal The Yale Law Journal [Vol. 113: 541 A. The Relevant Interpretive Question ............................................. 568 B. Two InterpretiveIssues: Problems of Meaning and of Language .......................................................................... 570 C. The Parties'PreferencesRegarding InterpretiveStyles .............. 573 1. The Continuous-PayoffCase ................................................. 574 2. The Discontinuous-PayoffCase ............................................ 578 3. Sum m ary ................................................................................ 583 D. PrivateLanguages, Linguistic Defaults, and the Parol Evidence R ule ............................................................................. 584 1. The PreferredLinguistic Default .......................................... 584 2. The ParolEvidence Rule ....................................................... 590 3. Course-of-PerformanceEvidence ......................................... 592 V. THE LEGAL DEFAULT PROJECT ........................................................ 594 A. The Casefor Defaults .................................................................. 595 B. The Cost Concern and Default Rules ........................................... 598 C. The MoralHazard Concern and Default Standards.................... 601 D. The Asymmetric Information Concern......................................... 605 E . Sum m ary ...................................................................................... 608 VI. MANDATORY RULES ......................................................................... 609 A. Parties CannotBan Modifications............................................... 611 B. PartiesMust Accept SubstantialPerformance ............................ 614 C. Parties CannotAgree to Penalties............................................... 616 V II. C ON CLU SION ..................................................................................... 618 Imaged with the Permission of Yale Law Journal 2003] Limits of Contract Law 543 I. INTRODUCTION Contract law has neither a complete descriptive theory, explaining what the law is, nor a complete normative theory, explaining what the law should be. These gaps are unsurprising given the traditional definition of contract as embracing all promises that the law will enforce. Even a theory of contract law that focuses only on the enforcement of bargains must still consider the entire continuum from standard form contracts between firms and consumers to commercial contracts among businesses. No descriptive theory has yet explained a law of contract that comprehends such a broad domain. Normative theories that are grounded in a single norm-such as autonomy or efficiency-also have foundered over the heterogeneity of contractual contexts to which the theory is to apply.' Pluralist theories attempt to respond to the difficulty that unitary normative theories pose by urging courts to pursue efficiency, fairness, good faith, and the protection of individual autonomy. Such theories need, but so far lack, a meta-principle 2 that tells which of these goals should be decisive when they conflict. 1. For a broad discussion of this problem, see MICHAEL J. TREBILCOCK, THE LIMITS OF FREEDOM OF CONTRACT 241-68 (1993). Autonomy theories require elastic notions of consent in order to regulate the full scope of contracting behavior with one norm. See, e.g., Randy E. Barnett, A Consent Theory of Contract, 86 COLUM. L. REv. 269 (1986); Randy E. Barnett, The Sound of Silence: Default Rules and Contractual Consent, 78 VA. L. REV. 821 (1992); Peter Benson, Abstract Right and the Possibility of a Nondistributive Conception of Contract: Hegel and Contemporary Contract Theory, 10 CARDOZO L. REv. 1077 (1989); Peter Benson, Contract, in A COMPANION TO PHILOSOPHY OF LAW AND LEGAL THEORY 24, 33-43 (Dennis Patterson ed., 1996); Peter Benson, The Idea of a Public Basis ofJustification for Contract, 33 OSGOODE HALL L.J. 273 (1995). Efficiency theories tend to have a more limited scope. Positive articles analyze broad doctrinal patterns in an attempt to find fundamental consistency between these patterns and the efficiency norm, but the authors do not purport to provide a fully descriptive theory of contract law. See, e.g., Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L.J. 87 (1989); Charles J. Goetz & Robert E. Scott, Enforcing Promises: An Examination of the Basis of Contract, 89 YALE L.J. 1261 (1980). Normative economic theories, on the other hand, typically evaluate discrete doctrines by the efficiency norm. See, e.g., Charles J. Goetz & Robert E. Scott, Liquidated Damages, Penalties and the Just Compensation Principle:Some Notes on an Enforcement Model and a Theory of Efficient Breach, 77 COLUM. L. REv. 554 (1977) [hereinafter Goetz & Scott, LiquidatedDamages]; Christine Jolls, Contracts as Bilateral Commitments: A New Perspective on Contract Modification, 26 J. LEGAL STUD. 203 (1997); Alan Schwartz, The Case for Specific Performance, 89 YALE L.J. 271 (1979); Robert E. Scott, The Casefor Market Damages: Revisiting the Lost Profits Puzzle, 57 U. CHI.L. REv. 1155 (1990). 2. The problems that pluralist theories without meta-norms pose are nicely illustrated in Melvin Eisenberg's effort, which purports to solve the broad-scope-of-contract problem by proposing overlapping sets of norms. See Melvin Aron Eisenberg, The Bargain Principleand Its Limits, 95 HARv. L. REv. 741 (1982); Melvin A. Eisenberg, The Theory of Contracts, in THE THEORY OF CONTRACT LAW: NEW ESSAYS 206 (Peter Benson ed., 2001) [hereinafter Eisenberg, Theory of Contracts]. For example, Eisenberg's schema restricts the domain of freedom of contract by norms of reciprocity, trust, and fairness. He recognizes that this multivalue approach can generate conflicting social propositions. When conflicts actually occur, "the lawmaker must make a legal rule that gives a proper weight and role to each of the conflicting values or goals in the context at hand." Eisenberg, Theory of Contracts, supra, at 244. Further, "when social propositions conflict the Legislator must exercise good judgment concerning the weight and role Imaged with the Permission of Yale Law Journal The Yale Law Journal [Vol. 113:541 We attempt to make progress here with a more modest approach-to set out and defend a normative theory to guide decisionmakers in the regulation of 3 business contracts. The theory's affirmative claim, in brief, is that contract law should facilitate the efforts of contracting parties to maximize the joint gains (the "contractual surplus") from transactions. The theory's negative claim is that contract law should do nothing else. Both claims follow from the premise that the state should choose the rules
Load more

Recommended publications
  • Training Contracts, Employee Turnover, and the Returns from Firm-Sponsored General Training
    DISCUSSION PAPER SERIES IZA DP No. 10835 Training Contracts, Employee Turnover, and the Returns from Firm-Sponsored General Training Mitchell Hoffman Stephen V. Burks JUNE 2017 DISCUSSION PAPER SERIES IZA DP No. 10835 Training Contracts, Employee Turnover, and the Returns from Firm-Sponsored General Training Mitchell Hoffman University of Toronto and NBER Stephen V. Burks University of Minnesota, Morris and IZA JUNE 2017 Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world’s largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. IZA – Institute of Labor Economics Schaumburg-Lippe-Straße 5–9 Phone: +49-228-3894-0 53113 Bonn, Germany Email: [email protected] www.iza.org IZA DP No. 10835 JUNE 2017 ABSTRACT Training Contracts, Employee Turnover, and the Returns from Firm-Sponsored General Training* Firms may be reluctant to provide general training if workers can quit and use their gained skills elsewhere.
    [Show full text]
  • The Federal Trade Commission and Online Consumer Contracts
    SMITH – FINAL THE FEDERAL TRADE COMMISSION AND ONLINE CONSUMER CONTRACTS Hilary Smith Consumer contracts have long posed a challenge for traditional contract enforcement regimes. With the rise in quick online transactions involving clickwrap and browsewrap contracts, these challenges only become more pressing. This Note identifies the problems inherent in the current system and explores proposals and past attempts to improve online consumer contract interpretation and enforcement. Ultimately, this Note identifies the Federal Trade Commission (“FTC”) as an appropriate and effective agency to provide the much-needed change to online consumer contract enforcement. Based upon its authority under Section 5 of the Federal Trade Commission Act to regulate unfair business practices, the broad discretion that Congress has afforded the FTC, and its successful incursion into the related field of online privacy law, the FTC is uniquely situated to promulgate a new online consumer contracting regime. This Note illustrates the basis and precedent for such a step and explores the form and effects of FTC involvement in online consumer contracts. I. Introduction ............................................................... 513 II. Background on End User License Agreements and Consumer Contracts .................................................. 514 A. Impact of Online Contracting on Consumer Contracts ............................................................. 514 B. Problems with Online Consumer Contracts ....... 517 J.D. Candidate 2017, Columbia Law School; B.A. 2014, Columbia University. Many thanks to Professor Robert Scott for his guidance throughout the research and writing process. Additional thanks to the staff and editors of the Columbia Business Law Review for their assistance in preparing this Note for publication. SMITH – FINAL No. 2:512] THE FTC AND ONLINE CONSUMER CONTRACTS 513 III.
    [Show full text]
  • 4000 Contract Law: General Theories
    4000 CONTRACT LAW: GENERAL THEORIES Richard Craswell Professor of Law, Stanford Law School © Copyright 1999 Richard Craswell Abstract When contracts are incomplete, the law must rely on default rules to resolve any issues that have not been explicitly addressed by the parties. Some default rules (called ‘majoritarian’ or ‘market-mimicking’) are designed to be left in place by most parties, and thus are chosen to reflect an efficient allocation of rights and duties. Others (called ‘information-forcing’ or ‘penalty’ default rules) are designed not to be left in place, but rather to encourage the parties themselves to explicitly provide some other resolution; these rules thus aim to encourage an efficient contracting process. This chapter describes the issues raised by such rules, including their application to heterogeneous markets and to separating and pooling equilibria; it also briefly discusses some non- economic theories of default rules. Finally, this chapter also discusses economic and non-economic theories about the general question of why contracts should be enforced at all. JEL classification: K12 Keywords: Contracts, Incomplete Contracts, Default Rules 1. Introduction This chapter describes research bearing on the general aspects of contract law. Most research in law and economics does not explicitly address these general aspects, but instead proceeds directly to analyze particular rules of contract law, such as the remedies for breach. That body of research is described below in Chapters 4100 through 4800. There is, however, some scholarship on the general nature of contract law’s ‘default rules’, or the rules that define the parties’ obligations in the absence of any explicit agreement to the contrary.
    [Show full text]
  • Positivism and the Separation of Law and Economics
    Columbia Law School Scholarship Archive Faculty Scholarship Faculty Publications 1996 Positivism and the Separation of Law and Economics Avery W. Katz Columbia Law School, [email protected] Follow this and additional works at: https://scholarship.law.columbia.edu/faculty_scholarship Part of the Business Organizations Law Commons, and the Law and Economics Commons Recommended Citation Avery W. Katz, Positivism and the Separation of Law and Economics, 94 MICH. L. REV. 2229 (1996). Available at: https://scholarship.law.columbia.edu/faculty_scholarship/610 This Essay is brought to you for free and open access by the Faculty Publications at Scholarship Archive. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarship Archive. For more information, please contact [email protected]. POSITIVISM AND THE SEPARATION OF LAW AND ECONOMICS Avery Wiener Katz* INTRODUCION The modem field of law and economics - that is, the application of economic analysis to legal subjects other than trade and business reg- ulation - is now over thirty years old, but it remains controversial in the legal academy and, to a lesser extent, in the profession at large. Since its beginnings in the early 1960s, the economic approach has pro- voked substantial opposition and antagonism. The sources of this resis- tance, however, are a matter of dispute. Many economists and economi- cally influenced lawyers attribute it to more traditional lawyers' reluctance to learn a new and unfamiliar set of concepts and techniques. Critics of the economic approach offer a variety of other explanations. Some are skeptical of the utility of abstract theoretical modeling in the social sciences,' others object to economics' central behavioral assump- tion of rational choice,2 still others criticize economics' supposed liber- tarian politics and ideological allegiance to laissez-faire.
    [Show full text]
  • Law and Political Economy in a Time of Accelerating Crises
    Angela P. Harris, School of Law, UC Davis James J. (“Jay”) Varellas III, Department of Political Science, UC Berkeley* Introduction: Law and Political Economy in a Time of Accelerating Crises Abstract In this time of accelerating crises nationally and worldwide, conventional understandings of the relationships among state, market, and society and their regulation through law are inadequate. In this Editors’ Introduction to Volume 1, Issue 1 of the Journal of Law and Political Economy, we reflect on our current historical moment, identify genealogies of the Law and Political Economy (LPE) project, articulate some of the intellectual foundations of the work, and finally discuss the journal’s institutional history and context. Keywords: Law and Political Economy I. Introduction Ernest Hemingway’s 1926 novel The Sun Also Rises contains this famous exchange: “How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.” In the United States and around the world, we are facing intertwined crises: skyrocketing economic inequality, an increasingly destabilizing and extractive system of global finance, dramatic shifts in the character of work and economic production, a crisis of social reproduction, the ongoing disregard of Black and brown lives, the rise of new authoritarianisms, a global pandemic, and, of course, looming above all, the existential threat of global climate change. From the vantage point of mid-2020, it is impossible to avoid the sense that these crises, like Mike’s bankruptcy, have emerged both suddenly and as the result of problems long in the making. It is also clear that these interlocking crises are accelerating as they collide with societies whose capacities to respond have been hollowed out by decades of neoliberalism.
    [Show full text]
  • 1 FTC Perspectives on the Use of Econometric Analyses in Antitrust
    FTC Perspectives on the Use of Econometric Analyses in Antitrust Cases∗ David Scheffman and Mary Coleman1 I. Introduction This paper discusses our perspectives, as FTC economists and experienced litigation economists, on how to make econometric analyses more useful in antitrust investigations and litigation. We first briefly discuss the role of econometrics and empirical analyses generally in antitrust. Sound empirical analyses can (and should) provide important evidence in an antitrust investigation or litigation. Based on our experience at the FTC and as litigation economists, we then suggest “best practices” for developing econometric studies that will be useful to the FTC in its decision making. We also provide some examples of the types of useful econometric analyses that are frequently conducted in FTC investigations. Finally, expanding on some the issues raised in the recent FTC working paper,2 we discuss the use of scanner data for demand estimation, the use of merger simulation models, and the use of manufacturer level data in consumer products cases. A. Quantitative Analyses, Generally Before discussing econometric analyses, we begin with a more general perspective on quantitative analyses. Some of the most important issues in antitrust cases often hinge on quantitative evidence (e.g., levels and trends in prices, market shares, sales, margins, profitability, and shipment patterns). These types of quantitative analyses are often very important and frequently do not involve statistical/econometric analyses. We begin with this basic point because although there has been much attention in recent years to the use of formal modeling and econometric estimation in antitrust, we should not lose sight of the fact that quantitative analyses of various kinds are useful.
    [Show full text]
  • Labor Law, Antitrust Law, and Economics Professors' Comment
    Boston College Law School Digital Commons @ Boston College Law School Boston College Law School Faculty Papers 1-14-2019 Labor Law, Antitrust Law, and Economics Professors' Comment on the National Labor Relations Board's Proposed Joint-Employer Rule Hiba Hafiz Boston College Law School, [email protected] Brishen Rogers Temple University Beasley School of Law, [email protected] Kenneth G. Dau-Schmidt Indiana University Maurer School of Law, [email protected] Kate Bronfenbrenner Cornell University, [email protected] Follow this and additional works at: https://lawdigitalcommons.bc.edu/lsfp Part of the Antitrust and Trade Regulation Commons, and the Labor and Employment Law Commons Recommended Citation Hiba Hafiz, Brishen Rogers, Kenneth G. Dau-Schmidt, and Kate Bronfenbrenner. "Labor Law, Antitrust Law, and Economics Professors' Comment on the National Labor Relations Board's Proposed Joint-Employer Rule." (2019). This Article is brought to you for free and open access by Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College Law School Faculty Papers by an authorized administrator of Digital Commons @ Boston College Law School. For more information, please contact [email protected]. Labor Law, Antitrust Law, and Economics Professors’ Comment on the National Labor Relations Board’s Proposed Joint-Employer Rule January 14, 2019 Submitted via www.regulations.gov John F. Ring, Chairman National Labor Relations Board 1015 Half Street, SE Washington, D.C. 20570-0001 Attn: Roxanne Rothschild,
    [Show full text]
  • Law-And-Political-Economy Framework: Beyond the Twentieth-Century Synthesis Abstract
    JEDEDIAH BRITTON- PURDY, DAVID SINGH GREWAL, AMY KAPCZYNSKI & K. SABEEL RAHMAN Building a Law-and-Political-Economy Framework: Beyond the Twentieth-Century Synthesis abstract. We live in a time of interrelated crises. Economic inequality and precarity, and crises of democracy, climate change, and more raise significant challenges for legal scholarship and thought. “Neoliberal” premises undergird many fields of law and have helped authorize policies and practices that reaffirm the inequities of the current era. In particular, market efficiency, neu- trality, and formal equality have rendered key kinds of power invisible, and generated a skepticism of democratic politics. The result of these presumptions is what we call the “Twentieth-Century Synthesis”: a pervasive view of law that encases “the market” from claims of justice and conceals it from analyses of power. This Feature offers a framework for identifying and critiquing the Twentieth-Century Syn- thesis. This is also a framework for a new “law-and-political-economy approach” to legal scholar- ship. We hope to help amplify and catalyze scholarship and pedagogy that place themes of power, equality, and democracy at the center of legal scholarship. authors. The authors are, respectively, William S. Beinecke Professor of Law at Columbia Law School; Professor of Law at Berkeley Law School; Professor of Law at Yale Law School; and Associate Professor of Law at Brooklyn Law School and President, Demos. They are cofounders of the Law & Political Economy Project. The authors thank Anne Alstott, Jack Balkin, Jessica Bulman- Pozen, Corinne Blalock, Angela Harris, Luke Herrine, Doug Kysar, Zach Liscow, Daniel Markovits, Bill Novak, Frank Pasquale, Robert Post, David Pozen, Aziz Rana, Kate Redburn, Reva Siegel, Talha Syed, John Witt, and the participants of the January 2019 Law and Political Economy Work- shop at Yale Law School for their comments on drafts at many stages of the project.
    [Show full text]
  • Module 4: Moral Hazard - Linear Contracts
    Module 4: Moral Hazard - Linear Contracts Information Economics (Ec 515) George Georgiadis · A principal employs an agent. ◦ Timing: ◦ 1. The principal o↵ers a linear contract of the form w (q)=↵ + βq. – ↵ is the salary, β is the bonus rate. 2. The agent chooses whether the accept or reject the contract. – If the agent accepts it, then goto t =3. – If the agent rejects it, then he receives his outside option U, the principal receives profit 0, and the game ends. 3. The agent chooses action / e↵ort a A [0, ]. 2 ⌘ 1 4. Output q = a + " is realized, where " (0,σ2) ⇠N 5. The principal pays the agent, and the parties’ payo↵s are realized. The principal is risk neutral. His profit function is ◦ E [q w (q)] − The agent is risk averse. His utility function is ◦ r(w(q) c(a)) U (w, a)=E e− − − ⇥ ⇤ with a2 c (a)=c 2 Rationality assumptions: ◦ 1. Upon observing the contract w ( ), the agent chooses his action to maximize his · expected utility. 1 2. The principal, anticipating (1), chooses the contract w ( ) to maximize his expected · profit. First Best Benchmark: Suppose the principal could choose the action a. ◦ – We call this benchmark the first best or the efficient outcome. – Equivalent to say that the agent’s action is verifiable or contractible. Principal solves: ◦ max E [a + ✏ w (q)] a,w(q) − r(w(q) c(a)) s.t. E e− − U Individual Rationality (IR) − ≥ ⇥ ⇤ Solution approach: ◦ rx rEx[x] – Jensen’s inequality = Ex [ e− ] e− ) − – Because the principal chooses the action, optimal wage must be independent of q; i.e., w (q)=↵ – Because a higher w (q) decreases the principal’s profit and increases the agent’s payo↵, (IR) must bind.
    [Show full text]
  • Incomplete Contracts and the Theory of Contract Design
    Case Western Reserve Law Review Volume 56 Issue 1 Article 9 2005 Incomplete Contracts and the Theory of Contract Design Robert E. Scott George G. Triantis Follow this and additional works at: https://scholarlycommons.law.case.edu/caselrev Part of the Law Commons Recommended Citation Robert E. Scott and George G. Triantis, Incomplete Contracts and the Theory of Contract Design, 56 Case W. Rsrv. L. Rev. 187 (2005) Available at: https://scholarlycommons.law.case.edu/caselrev/vol56/iss1/9 This Symposium is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law Scholarly Commons. It has been accepted for inclusion in Case Western Reserve Law Review by an authorized administrator of Case Western Reserve University School of Law Scholarly Commons. INCOMPLETE CONTRACTS AND THE THEORY OF CONTRACT DESIGN t Robert E. Scott George G. Triantist We are delighted to accept this invitation to write a short essay on the economic theory of incomplete contracts and to illuminate its cur- rent and potential impact on the legal analysis of contracts and con- tract law. Economic contract theory has made significant inroads in legal scholarship over the past fifteen years, and this is a good time to take stock of its strengths and weaknesses. Several recent publications in the Yale Law Journalhave offered evaluations of the contributions of contract theory.' In this essay, we offer our opinion as to its future path in legal scholarship.2 In particular, we suggest that economic contract theory should incorporate a more textured understanding of the process for judicial enforcement of contracts.
    [Show full text]
  • The Law and Microeconomics of the New Deal at 70 Steven A
    Loyola University Chicago, School of Law LAW eCommons Faculty Publications & Other Works 2003 The Law and Microeconomics of the New Deal at 70 Steven A. Ramirez Loyola University Chicago, School of Law, [email protected] Follow this and additional works at: http://lawecommons.luc.edu/facpubs Part of the Law and Economics Commons Recommended Citation Ramirez, Steven, The Law and Microeconomics of the New Deal at 70, 62 Md. L. Rev. 515 (2003). This Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Faculty Publications & Other Works by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. THE LAW AND MACROECONOMICS OF THE NEW DEAL AT 70 STEVEN A. RmiREz* Recent turbulence in the financial markets, first as a result of Sep- tember 11, 2001, and then as a result of the realization in the summer of 2002 that corporate America was plagued by pervasive corruption, once again has shown that capitalism needs government intervention to thrive.' The crisis in investor confidence in the summer of 2002 in particular refocused attention on the seventy-year-old regulatory infra- structure imposed upon the economy as part of the New Deal.2 In both instances, the federal government jumped to the rescue of so- called free markets that seemed to be spinning into the abyss of seri- ous adverse macroeconomic dysfunction.3 It wasn't always so. * Professor, Washburn University School of Law. Professor Bill Rich and Professor Alex Glashausser contributed many helpful insights to this Article.
    [Show full text]
  • “Turning the Social Contract Inside Out: Neoliberal Governance and Human Capital in Two
    “Turning the Social Contract Inside Out: Neoliberal Governance and Human Capital in Two Days, One Night” Robert E. Watkins, PhD Associate Professor of Political Science and Cultural Studies Columbia College Chicago For Presentation at the Annual Meeting of The Western Political Science Association San Diego, California March 24-27, 2016 Please do not cite without permission of the author (rwatkins[at]colum.edu) Introduction In place of the social contractarian promise—that the political aggregate (or an authorized precipitate of it) will secure the individual against life-threatening danger from without and within—individual homo economicus may now be legitimately sacrificed to macroeconomic imperatives. Instead of being secured or protected, the responsibilized citizen tolerates insecurity, deprivation, and extreme exposure to maintain the competitive positioning, growth, or credit rating of the nation as firm. Wendy Brown, Undoing the Demos Film critic and scholar Girish Shambu finds an increased willingness to critique capitalism in mainstream media and culture (2015). Films dealing the 2008 financial and housing crisis like The Big Short (2015), 99 Homes (2015), and Money Monster (2016) approach neoliberalism through the lens of headline narratives about money, credit, and houses as they try to bring into focus a large and complex system, particularly in the American context. Approaching the neoliberal economy from a different perspective than these other recent releases, the 2014 film from the Dardenne brothers Two Days, One Night (2014) tells an altogether smaller and symptomatic, but no less significant story that focuses on the fate of one woman’s job in one particular company over the course of one weekend.
    [Show full text]