The Normativity of Law in Law and Economics

The Normativity of Law in Law and Economics Péter Cserne* 1. Introduction This paper is about some theoretical and methodological problems of law and economics (economic analysis of law, EAL). More specifically, I will use game theoretical insights to answer the question, relevant both for law and economics and legal philosophy, how should a social scientific analysis of law account for the normativity of law (the non-instrumental reasons for rule-following) while retaining the observer's (explanatory or descriptive) perspective. The goal is to offer a constructive critique of both traditional law and economics scholarship and mainstream analytical legal philosophy (the "Jurisprudence of Orthodoxy", see Leith and Ingham, 1977) in this respect. I will try to find out what EAL has to do with the "internal aspect of law", i.e. the fact or the claim that law provides specific reasons for action, in order to successfully challenge mainstream legal theory. EAL can be conceived either as a (consequentialist) normative legal philosophy, as an explanatory/descriptive theory about law (rational choice theory applied to law) or as a set of propositions for legal reform (legal policy). In this paper I will concentrate on the second, explanatory branch. In this second sense, EAL seeks to explain, first, how law influences human behaviour by changing incentives (law as explanans) and, second, to analyse legal (and possibly non-legal) rules as the outcome of individual actions (law as explanandum). This explanatory/descriptive approach has to confront a clear and central problem, often raised as a (self)critique of standard EAL: its inability or inadequacy to deal with the internal perspective on law. In fact, even if this approach has several more or less sophisticated versions what seems to be common to all of them is to treat legal rules (rule-following) instrumentally. Thus the case of rule-guided behaviour is either included in these theories in an ad hoc manner or is missing altogether. On the other side, contemporary analytical legal philosophy which is (at least in the English-speaking world) generally considered as a branch of practical philosophy, usually treats legal rules as specific non-instrumental reasons for action. In this view, even if empirically there are different motives why people obey the law (including conformism, fear of sanctions, etc.), the nature of law is defined by this specific reason, while the further motives are not reasons in a genuine sense for compliance with the law. Now, in order to be taken seriously as an explanatory legal theory, EAL has to account for this feature i.e. that law offers reasons for action, and to answer (or at least take side in the current philosophical debate on) some fundamental questions about the normativity of law. These questions are both conceptual/analytical ('What is the conceptual difference between regularity of behaviour and rule-following?', 'What does it mean to follow a rule?') and explanatory ('Why people obey the law if they do?'). At the same time, in order to be taken seriously as sound social science, EAL has to stick to the methodological principles of rational choice theory as explanatory social science. In the following I shall enquire whether EAL can fulfil this double challenge. One consequence of these methodological principles should be emphasised right at the beginning. The normative or justificatory question, central to mainstream analytical legal philosophy conceived as a part of normative practical philosophy, 'Is there a (moral) duty to obey the law?' should remain outside the scope of this paper (and in general, explanatory/descriptive EAL). But the moral or prudential standpoint of the participants who face this question in some form should, of course, be recorded and included in the analysis as an object of explanation. To repeat, I shall be speaking about EAL throughout only in the second sense as an explanatory enterprise. As a different enterprise, it might be possible to work out a full-fledged normative legal philosophy as a version of EAL, based roughly on welfarist (consequentialist) principles, which would have to answer that justificatory question. But this prospect doesn't concern me here.1 In the last decades serious efforts have been made within rational choice theory (especially game theory) to deal with norms both as explananda and as explanantia. In these analyses norms are often denoted more specifically as 'social norms' and considered explicitly as non-legal, i.e. in contradistinction to legal norms. As it will be clear, these models are still highly relevant for my purposes. In part, but not only because the mechanisms exposed in these rational choice models are general enough to be applicable to legal rules too. My question is now, whether the incorporation of these results of rational choice theory in EAL makes it possible to approach the abovementioned basic problems of legal theory in a new way. In a broader perspective it might be possible that also the gap between explanatory social science and normative practical philosophy can be bridged via evolutionary game theory, especially the indirect evolutionary approach. The structure of the paper is the following. Section 2 presents how rule-following is modelled in standard EAL scholarship. Section 3 is about the jurisprudential meaning, importance and explanations of the normativity of law. Instead of the detailed analysis of jurisprudential and legal philosophical issues related to the normativity of law I will restrict myself to sketch the most characteristic standpoints. Section 4 overviews rational choice models of norms and normativity and discusses some features of the legal system in view of the previous insights. This section is intended to be systematic (maybe at some price of details and originality) but is evidently far from exhaustive. Section 5 concludes.

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Does Rational Choice Theory (RCT) have something important to contribute to the humanities? Jon Elster and others answer affirmatively, arguing that RCT is a powerful tool that will lend clarity and rigor to work in the humanities just as it (presumably) has in economics. This essay examines the disciplinary values according to which the application of RCT in economics has been judged a “success,” and suggests that this value system does not deserve general approbation. Richness and realism must be retained as important values alongside precision and elegance, if anti-scientific dogmatism and absurd conclusions are to be avoided.

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