But, in order to achieve this 'Great Leap Forward' we'd have to change not just Competition Policy but how we think about the Law at a fundamental level.
Sanjukta Paul is a rising star in the firmament of Competition Policy and Labor law. Her opinions- as expressed in an article in Aeon- may matter if the Democrats win big in 2020. On the other hand, her brand of imbecility may scare a few elderly people like me into accepting a Trump second term.
This is because she says 'if coordination rights are effectively a public resource, then they should both be allocated and regulated according to the public interest.' Though she is thinking of business enterprises- which Socialists believe ought to be controlled by the State in the Chinese manner- her argument extends to people as well. It may be in the public interest that fat slobs like me are compelled to come out on to the streets and run naked at a certain time every day, much to the merriment of slimmer people, till we see the error of our ways and embrace a meager, punitively vegan, diet.
Thankfully, Paul is wrong about the Law- at least in America. The thing can't happen. What is her central mistake? She thinks 'coordination rights' exist as a result of the Law, specifically anti-trust law- and can be allocated by the law as it pleases. This is crazy. Anti-trust law must meet the due process test. It is not above the Constitution. It cannot and has not done anything corresponding to Paul's bizarre claims.
Firms have legal personality. When a big firm with many branches charges exactly the same price wherever it conducts business, from the legal point of view no 'coordinated action' occurred. A single entity took a single action.
However if a bunch of firms suddenly set the same price because of secret collusion, then some third party's rights, including due process rights, may have been violated. This justifies, from the Constitutional point of view, the existence of anti-Trust Law.
Price fixing is illegal though there is a 'state action' exception. Coordinated actions in restraint of trade were, in any case, historically penalized. There is no 'right' to break the law though it may not be in the public interest to prosecute every such breach.
No illegal collusion occurs if a single firm, of however gigantic a size, implements a single price or other course of action. Under Copperweld, this is also true of wholly owned subsidiaries. There may be other reasons- e.g. exclusionary conduct- for anti-Trust to investigate a firm or even order its break up but illegal collusion can't be the reason because it is impossible to collude with oneself.
Labor may be treated differently. There may be a right for a 'closed shop' to gradually price its members out of the labor market. There isn't a right for a bunch of closed shops to coordinate actions so as to hold the Nation to ransom. In Law, coordination or cooperation is not a justiciable matter save if it is specifically proscribed or has elements of joint enterprise of a tortious or criminal nature. There are no transferable Hohfeldian rights here whatsoever. The Law neither creates anything of that nature nor can 'reallocate' any such thing.
Turning to cases where legal threats have prevented formal collective bargaining by independent contractors, it must be recognized that the thing may succeed informally. Even with formal mechanisms which are per se illegal, it is possible for the court to excuse the arrangement on some public interest grounds. The question is, does the reward of adjudicating the matter justify the cost? That is an economic matter. I suppose, for lower wage contractors, community support would be of the essence. Local people don't want to be ripped off by tradesmen or other types of workers. However, they may support reasonable demands made against unreasonable, monopsonistic, employers. This means a test case can be fought and won.
Paul gives the following example of unfair allocation of soi disant 'coordination rights' which helps fat cat Corporations and hurts humble working folk.
Let me illustrate the fact of intra-firm coordination with an example. Many trucking firms in the United States buy truck-driving services from individuals & they sell trucking services to their customers. They typically have a few administrative employees, but their core product is the service performed by those individuals. Now consider the coordination performed by such a firm. The trucking firm gets to set the prices it charges its customers for trucking services. That seems natural enough. But is it? Functionally, this is a form of price coordination: the firm is setting the prices for the services performed by all, say, twenty drivers.This is not coordination. It is a command.
Imagine that in this particular market for trucking services, there are four other firms of twenty drivers each. Now suppose that instead of working for the first firm, these same twenty drivers begin working directly for customers, but form a bargaining unit for the purpose of negotiating their contracts with customers. They agree internally upon rates and they do not deviate from rates set by their designated bargaining agent. Without changing much, if anything at all, about the tangible economic activity that is taking place, we have moved from a situation in which the right to coordinate prices is uncontested for antitrust purposes, to one that courts and federal competition authorities would undoubtedly label a “garden variety price-fixing ring.”
Why would these 20 drivers not form a limited liability company to conduct their business? It reduces their risk and increases their reward. A bunch of truck drivers bound together only by a verbal agreement may be viewed with suspicion- maybe they beat up rival truck drivers or transport illicit goods. All they need to do is spend a few hundred dollars and form a company and they are on the path to not just respectability but capital gains and prosperity. Paul says it is 'likely' that these truckers would still be regarded as price-fixers. This may be true in some jurisdictions. However, on the facts, this is not likely to be upheld by higher courts. The fact that the poor don't have the money to fight such cases does not mean that the Law says they don't have certain rights. It means that access to the Law is a function of economic power. In other words, Paul is wrong. First comes economic power and only then comes case law- which may or may not rely upon some particular type of legal scholarship- which supports that economic power because that is what it is paid to do.
On the other hand, it is only fair to point out that Paul, following Lynn Stout, believes Corporations are self owning. So if these poor truckers set up a limited company instead of their owning shares in the company the company will own shares in them! How sinister is that! This is yet another example of how neoliberalism has reintroduced slavery through the back door! We are all the slaves of self-owning Corporations who owns shares in us!
Paul also gives a more realistic example- one based on a recent case involving the American Guild of Organists which agreed to give up the noxious practice of forcing the consumer to pay for both the organist he was allotted and the one he actually wanted.
Organists who band together to engage in price coordination or market allocation are denied such coordination rights by antitrust, as indeed a recent prosecution by the FTC confirmed.These guys were not doing 'price coordination', they were forcing customers to pay twice if they wanted a particular organist by using their monopoly power. This disincentevised quality competition. The rude and incompetent organist still got paid though she did nothing. The polite and skilled organist received no higher reward.
On the other hand, if investors jointly create a corporation that then hires the same organists, their price-setting (or internal market allocation) activity is deemed untouchable by antitrust.Because you can sue a firm which charges you for two organists when you needed just one.
Paul has fixated on a conspiracy theory involving evil ideologues who seduced The Sovereign Lady Law and got her to side with the rich against the poor. But, if the poor are too stupid to form a limited liability company then they are also too stupid to settle their disputes without cracking each other's heads open.
The Law may indeed discriminate against poor people in this manner, but poor people discriminate against each other in exactly the same manner. They don't want to be in business with stupid Neanderthals who may crack their head open. They want to work for nerdy guys wot bin to Collidge and who'll have their check ready for them when they clock off.
Turning from the Law- which has more idiographic features- to a nomothetic type of Economic theory, we find different 'terms of art'. Here we speak of coordination mechanisms like the Market or Central Planner. More generally, in game theory- and (following David Lewis) philosophy- there is a game theoretic analysis of coordination and dis-coordination games.
Conventions are an example of a 'focal' solution to a coordination game.
Currently we coordinate our actions by using watches and calendars. The Law recognizes the conventions underlying such coordination. It does not create them. No doubt, from time to time, some nutjob may seize power somewhere and decide to change the calendar and the length of the week and so forth. However, this is not possible in a strong and prosperous Democracy under the Rule of Law.
I suppose, a despot could say that every Truesday (as Tuesday would have been renamed) all those who were born on an even numbered day must go and cook and clean for all those born on an odd numbered day. This would be a case where 'coordination rights' have not just been appropriated by the state, they are also being used to reallocate resources. But, this way madness lies.
What Paul forgets is that wherever there is a coordination problem for Society- which corresponds to a pooling equilibrium associated with 'cheap talk'- there may also be (if there is a large enough 'income effect') an incentive to hedge on a dis-coordination game such that a separating equilibrium based on a 'costly (at least for some agents) signal' also arises. There is likely to be arbitrage between the two giving rise to income and hedging effects such that the underlying equilibrium is 'anything goes'. In other words, there is an a priori reason to believe that 'coordination rights' can't be allocated in a predictable way or by a deterministic mechanism. It would be as foolish as passing a law saying all coin tosses must be heads on Truesday.
Chichilnisky and Heard have clarified under what circumstances 'local arbitrage' is efficient because preference and endowment heterogeneity meets a 'Goldilocks' condition. Nevertheless, we know that some markets must be characterized by 'turbulent flow' for the system as a whole not to crash. This is mathsy stuff so ideologues gave up on it decades ago and have gone off to remote University depts. to drool over their never to be completed magnum opi.
Paul, somewhat strangely, imagines that the Law is all powerful. Sadly, Ideology confuses it, so the Law does bad things- like helping Big Corporations while being mean and nasty to small farmers and worker's collectives. She has written a paper in which she names and shames that naughty ideology which misled the Law and pleads with the latter to stop letting Google and Amazon and so forth have such a big advantage, just coz they employ smart people who know about Computers. Instead, the Law should create a level playing field for billions of subsistence farmers and day laborers and communes for LGBTQYXZ survivors of epistemic rape. Why should these poor and suffering people not be given a chance to launch their own Operating System featuring recycled goat manure? The Law must step in and tell the big companies to stop letting their staff coordinate their actions so that LGBTQYX epistemic rape survivors get to promote their Social Media Apps featuring recycled goat dung.
Though I agree with much of Paul's critique of the 'Law & Econ' tradition, I feel she hasn't grasped the 'Law' or 'Econ' part. But she's spot on about recycled goat dung. My Support Group is launching a new epistemic rape sharing App which runs only on devices recycled from goat excreta- a pallet of which my cousin in Hampstead has threatened to send me for my birthday.
Paul writes-
Where does economic power come from? Does it exist independently of the law?Economic theory is best represented by the Myerson general feasibility theorem or 'folk theorem of repeated games'. It looks at equilibria arrived at without any coercive or compliance mechanism whatsoever. Economic power nevertheless exists. Amazon or Ebay may have no coercive power over me. But they may have a great deal of 'market power'.
Indeed, the Law recognizes that this is the case and has a notion of unconscionable contracts even if there is nothing written down. It is sufficient that both parties have a clear idea of what is being agreed to and that consideration passed. The court may find that one side has abused its market power and apply a remedy.
Thus, the obvious answer is 'yes, economic power exists independently of the law'. A 'robber baron' may choose to become a 'stationary bandit' levying taxes but there is no obligation for the regime that results to have anything we would recognize as Law. All may depend on the whim of the despot.
It seems obvious, even undeniable, that the answer is no. Law creates, defines and enforces property rights.The strong right arm enforces property rights. If the arm is not strong it can hire arms that are.
Law enforces private contracts.This is seldom the case. The threat of taking your business elsewhere is generally one's only effective remedy.
It charters corporations and shields investors from liability.Passive investors were always shielded from liability save by express stipulation. Entrepreneurs with equity participation were given limited liability by Joint Stock Company Acts. A separate Corporation tax could be considered the 'price' of availing of this type of legal expedient. However, investors' effective liability could have been limited by other expedients. It was not the case that a wholly novel type of immunity was being created.
Law declares illegal certain contracts of economic cooperation between separate individuals – which it calls ‘price-fixing’ – but declares economically equivalent activity legal when it takes place within a business firm or is controlled by one.This is perfectly reasonable. The Law distinguishes between things done secretly and with an intention to deceive, from actions which are open and above board albeit self interested. Consider the recent attempt to hold Boris Johnson legally accountable for his statements during the Brexit campaign. The English High Court has quashed it because Boris acted in full public view. If he was telling lies it was for a purpose all could see was self-interested. There was nothing covert about his actions.
Each one of these is a choice made by the law, on behalf of the public as a whole.That is not true. A 'General Eyre' could make such choices but the public very piteously begged that this type of nuisance be curbed. Since then the Law is purely a Service industry. It responds to claims made by members of the public and applies an 'artificial reason' of a stare decisis sort. It chooses nothing ; rather it implements what had been previously chosen by immemorial custom or Legislative action. The gates of Equity were shut long ago. No Eyre has been held for over seven hundred years. Instead we have had the slow evolution of Parliamentary Democracy where the Legislature chooses on behalf of the people as a whole.
Each of them creates or maintains someone’s economic power, and often undermines someone else’s.Nonsense! Economic power pre-exists. That is why the rich defendant walks free while the poor man, even if innocent, cops a plea.
Each also plays a role in maintaining a particular distribution of economic power across society.Only in the sense that Language plays such a role. One may as well say 'Poets are the World's legislators. It is because they prefer to write about Love rather than Working Class solidarity that the World is such a terrible place'. Indeed, Paul's parents or grandparents would have heard plenty of such arguments in their ancestral homeland- one more reason for them to pack their bags and get out of a country which did not understand that Economics is about freedom and choice, not endless moralizing and a paranoid theory of Power.
Yet generations of lawyers and judges educated at law schools in the United States have been taught to ignore this essential role of law in creating and sustaining economic power.Everybody else ignores this mishegos because it is stupid and paranoid. Apparently lawyers have to be taught to ignore it. Why? Is it because they would attempt to have sex with it if they were not taught to ignore its sultry provocations?
Instead, we are taught that the social process of economic competition results in certain outcomes that are ‘efficient’ – and that anything the law does to alter those outcomes is its only intervention.It is very sad that delicate young snowflakes, like Paul, are taught anything at all. They resent it bitterly. They feel they have been brain-washed and used 'by the System' in a disgraceful way. In this case, Paul is right to complain- because she is a teacher- a bad one who does not understand that Econ 101 says Market failures arise under certain conditions and that 'intervention' can improve allocative efficiency when this occurs.
These peculiar presumptions flow from the enormously powerful and influential ‘law and economics’ movement that dominates thinking in most areas of US law considered to be within the ‘economic’ sphere. Bruce Ackerman, professor of law and political science at Yale University, recently called law and economics the most influential thing in legal education since the founding of Harvard Law School.Most people would say the Federalist Society is the most influential school of thought at present. In the case of Henry Manne there is an overlap with Law & Econ. However, the latter is not tied to American jurisprudence and rejects 'originalism'.
The Economics Institute for Federal Judges, founded by the legal scholar Henry Manne, has been a hugely influential training programme in the law and economics approach. A recent paper found, through extensive data-gathering and statistical analysis, that the many judges who attended the training were more likely thereafter to ‘render conservative verdicts in economics-relevant cases’ and ‘to rule against regulatory agencies, in particular the EPA (Environmental Protection Agency) and NLRB (National Labor Relations Board)’.Paul does not mention a factor of far greater relevance in determining what sort of judgments Justices deliver viz. how they get to become Judges in the first place. Thanks to a plethora of TV shows about sexy attorneys, we all know that Judges aren't influenced by books or lectures or seminars. Such things are merely window-dressing. Economic power- money- buys Justice. If money is put into electing pro-Labor Judges, or pro-Environment Judges, or pro-abortion Judges, then and only then will we see a return to the spirit of the Warren Court.
Paul does not have the nous to attack the 'Law & Econ' approach because she does not know Econ. She thinks it is just old wine in new bottles.
The real reason the Coase/Posner approach prevailed was because of things like 'Agency Capture' & 'Corporate Welfare'- i.e. the fat cats demand that the Govt. supply everything and take the downside risk in return for the appearance of compliance. It's like Whitey Bulger turning C.I in order to grow his criminal empire with the help of the Feds.
That's why ordinary people turned against the Naders of this world. They wanted cooler stuff for a lower price. They weren't interested in lining the pockets of bureaucrats.
Law and economics in fact revives an earlier legal ideology that also cast an affirmative preference for hierarchy and inequality as non-intervention.Coase was British. He went to the LSE with the intention of training as a Solicitor. How could he revive a legal ideology of which the Brits knew nothing?
The infamous Lochner v New York decision of 1905 has come to represent this ideology. In that case, the US Supreme Court overturned a maximum-hours law for bakery workers on the grounds that it violated principles of ‘freedom of contract’. But of course this sort of judicial action is in fact intervention by government in private affairs or in ‘the market’: it’s simply a particular type of state action.This was an intervention by the Judiciary to overturn an intervention by another branch of Government. Further legislative change limited such Judicial intervention. The fault here is not with some 'epistemic' evil concerning an invidious Economic theory but with the Law itself- in particular a notion of 'due process' which was Lockean and metaphysical (because no opportunity cost was considered) not economic or Coasian in any sense.
The decision represents a policy favouring the robust enforcement of property rights and private contracts, and disfavouring both the public, legislative ordering of the market and workers’ organisations.No. The decision had nothing to do with enforcing property rights or private contracts. It prevented the State from interfering, in an unwarranted manner, in certain employment practices. Lochner was protesting against a rule enforcing a 60 hour working week for bakery workers. He was not suing individual workers for breach of contract or a Trade Union for tortious interference or anything of that sort.
We can say the decision had the effect of favoring employers fighting the provisions of what was known as Labor law as well as what was separately classed as Public Health Law. But we can't say the ratio in the case represented a policy of robust property right enforcement because the argument was not 'Lochner should be free to do what he likes on his property' but rather 'The State should not be free to decide is or isn't unhealthy with respect to a profession on the basis of the whim of a legislative majority'. If it holds that it is unhealthy for bakers to work more than 60 hours a week, what is to stop a law banning lawyers from working more than 40 hours a week? Why not a law banning women from complex cognitive work on the grounds that this would affect their reproductive health? If a 'legislative majority' knows what's best for bakers, why not for female Law Professors?
During the period that this legal ideology dominated courtrooms in the US, a group of lawyers and economists who called themselves legal realists and institutionalists made just these points.Legal realists say ideology does not matter. Results do. What elicits results? Money. Organized labor wasn't paying top dollar for the Legal decisions it wanted. Big Business was. That's it. That's the whole story.
There is a lot of commonality between Robert Lee Hale, Wesley Newcomb Hohfeld & the genuine Coase as opposed to the Chicago phantom invoked by the eponymous theorem. What is severely missing from its voluminous literature (which has a negative externality!) is Knightian Uncertainty. But Frank Knight’s 'Some Fallacies in the Interpretation of Social Cost' came out in 1924!
If not property rights, then appropriable control rights matter and, where there is asymmetry of information, the incidence of Pigouvian taxes should be upon the latter. However, there may be good reason to find a different mechanism, so that no moral hazard for the Fiscal authority is created, such that the externality is internalized.
In other words, rather than letting the State enrich itself by levying fines for anti Competitive infractions, it may be better for the guilty party to directly fund the requisite remedial action. A mechanism can be devised to make this incentive compatible.
The ‘Lochner era’ in the US courts – from roughly the turn of the 19th century through to the New Deal of the 1930s – signified an affirmative preference for governmental intervention to enforce contracts against weaker parties.Economically weaker parties. Thus the Law was not creating the inequality. It was itself suborned by ill-gotten gains.
Moreover, the State did not enforce any contract, it struck down some practices as illegal and thus not representing valid contracts at all.
These were often contracts into which people entered in order to access the necessities of life, for example by working for pay.Did the Law compel people who, driven by necessity, contracted to work x number of hours per day in return for a piece of bread and a glass of water, to stick at their posts even after they had inherited a million dollars?
What exactly did the police do to workers who ran away from their place of employment? Were they arrested? Were they whipped?
If not, it is wholly untrue to say that the American government intervened to enforce contracts made by economically weaker parties. The fact is, such people were free to quit their jobs and try their luck elsewhere.
On the other hand, it is certainly true that economically weaker people in America were forced to comply with contracts concerning the necessities of life. Thus, if a starving hobo walked past the Waldorf Astoria, the police would catch him and take him inside the restaurant and force him to consume the necessities of life for which, naturally, he would have to pay the market price- thus severely depleting his Trust Fund. This is what caused so much poverty during the Great Depression.
Such contracts infamously included the ‘yellow-dog contracts’ of the coalmine operators, by which mine workers agreed not to join a union. One party to such a contract, namely the mine operator, already possessed many more property rights than the other party, the worker. The government had created and enforced the advantage in rights that the mine owner held.Consider the Battle of Blair Mountain which is was part of the wider 'Coal Wars'. The Government did not create or enforce property titles. Company owners hired goons and suborned State officials to fight it out with the miners. What gave the Company owners the advantage? Money. They used it to buy goons and guns.
Greater economic power easily turns into greater coercive power which in turn can yield superior property endowment. But enforcing appropriable and residuary control rights is a costly business. If economic power wanes, the underlying asset may be abandoned to squatters. However, the squatters will need some economic power to gain title by adverse possession and, by then, it may not be worth having.
Focusing on who owns what is silly. You have to look at who can gain appropriable control rights and how they can use those rights to increase their economic power.
Otherwise you end up talking nonsense like this-
Generally, superior property endowments allow one party to bargain a contract favourable to their own interests, particularly when the other party is impoverished.Where in the world will you find a rich guy who spends his time bargaining a contract unfavorable to his own interests? You may find a poor guy doing this because he is stupid or ignorant or desperate. But that's what's keeping him poor. He needs to be less stupid, less ignorant, and have some prudential savings so as to be less desperate. Also, he shouldn't have a lot of babies because their lot will be miserable.
In the vision of Lochner-era judges, government intervention ought to consist primarily in enforcing property rights and enforcing contracts bargained in the shadow of those asymmetric property rights.No. If the State had undertaken to enforce everybody's property rights they would quickly have run out of money. That's why mine owners had to hire goons and factories had to hire Pinkertons and Mansions had to have security guards.
Obviously, the effect is to magnify inequalities in economic power.The outcome was the reverse. Since enforcing the law is costly, Governments renege on doing so save for an increasing inducement. Inequalities of economic power- if sustained by Governmental action- feature the increasing capture of rent by Government agents. Thus the thing stops 'paying for itself'. It is better to disintermediate the Law and pay an 'efficiency wage'.
The genius of law and economics, whose influence in legal institutions became really ascendant in the 1970s, was to resuscitate the key elements of the Lochner-era approach but to clothe them in connections to a supposedly objective and neutral social science, rather than to a particular political and moral vision.By the Seventies, the Trade Unions had overplayed their hand and were the chief locomotive of 'cost-push' inflation. Voters stopped finding them sympathetic. It wasn't the bosses who bumped off Jimmy Hoffa. It was the Mob.
What was the outcome? Thatcher and Reagan permitted unemployment to reach Great Depression levels so as to squeeze out inflationary expectations and decimate the Labor Movement. There was no voter backlash. On the contrary, 'workfare' was welcomed as a replacement for 'welfare'. Only absolute, not relative, poverty was judged to matter. Gone was any talk of 'solidarity wages'. Some blue collar workers continued to be feather bedded but had the good sense to keep quiet about it. The vast majority had to accept more precarious life-chances.
In this way, law and economics obscured its own activism on behalf of the powerful.This sounds very sinister. It may be that there are elite campuses where you have to 'obscure your activism'. But elite campuses don't matter. Nobody ever got thrown out of a golf club, or a merchant bank, or a white shoe firm, for not obscuring their activism on behalf of the rich and powerful.
In the US in particular, where lawyers have always played an outsized role in public life, law and economics provided much of the intellectual (and legal) language and thought for the rise of conservative economic policy.If intellectual and legal language mattered, we would be ruled by Eco-Feminist nutjobs. Money talks, bullshit walks. The law is a service industry. Politics is a business. P.A.Cs are fueled by moolah not moonshine.
The political projects of dismantling public rights over markets, diminishing working peoples’ influence by attacking unions, and delegitimising the social provisions of the welfare state, all drew upon the law and economics movement.Which was funded by whom? Ronald Coase? He had no money- no Economist has had any money since Ricardo, which is why they have to be economists instead of using them to wipe their butts.
In Econ, as in Jurisprudence, effective demand creates its own Supply- i.e. flash a wad of cash and Econ or Law Professors will throng around you begging to perform whatever perversion takes your fancy.
Following neoclassical economic theory, law and economics suggested that society’s resources are best allocated by permitting competition to set prices, and that market ordering through legislatures or workers’ organisations interferes with this optimal ‘natural’ process.This suggestion was persuasive because people could see with their own eyes that things like rent controls had a devastating effect on neighborhoods. It was clear that endless Government intervention was a recipe for 'stasis'- i.e. class conflict- and Latin American style hyper-stagflation.
Few other social scientists believe this, and a growing number of economists do not believe it either.There are no 'social scientists'. There are stupid pedagogues who know less than the average layman. We don't expect a Professor of Comp. Lit to be able to write a decent sentence in any language. Our opinion of Professors of Social Science is even lower. We are content if they don't masturbate in public.
Around the same time as the rise of law and economics, a group of thinkers that came to be known as the critical legal studies (CLS) movement in the 1970s argued (as the realists had done in the Lochner era) that the policy prescriptions of law and economics in fact relied as much upon law as they did on economics.Yes. They were stupid, stoned, 'cultural Marxists' who were hoping to get laid. They failed abysmally and almost immediately. The cretinous Roberto Unger- who wouldn't vote for Obama second time round- represents their posterity. Unger's native Brazil is now ruled by Bolsonaro. It is people like Unger that Obama is pointing to when he speaks of the Left as a 'circular firing squad'. These idiots may yet get Trump a second term.
The ideology of law and economics revolves around the concept of competition – suggesting to the world that this is the main value it seeks to promote, thus also seeking to limit governmental intervention with that process.Law & Econ is a research project, not an ideology. Competition does not matter. Elasticity does. The higher the elasticity of demand and supply, the smaller the trade-off between incentive compatibility and allocative efficiency. The Law is about public signals which improve Aumann correlated equilibria. It can 'pay for itself' even absent any coercive power. This is important in the context of ambiguous jurisdiction.
But competition does not take place in a vacuum: it always requires rules, from property to contract to antitrust, that are themselves, logically speaking, limits upon competition.Sheer nonsense! There are no rules when it comes to competing for Mummy's affection or Teacher's good graces. One can have plenty of rules and no competition and vice versa.
All of these rules in essence authorise economic coordination that is necessary to make competition work.Why 'authorize' something which will happen anyway? Paul was breathing air as she wrote this shite. Who authorized to breathe it? Did the authorizing body test the air for breathability before issuing that authorization? If not they were most remiss in their duties. It is unconscionable that just because Paul is a brown skinned female, the relevant authorities are authorizing her to breathe air which may not be fit for purpose. What if someone had just farted into that air? Suppose Paul is a Hindu and thus forbidden to ingest beef. Then, if the farter had consumed a lot of beef, Paul may have been authorized to ingest particles of beef containing fecal matter. Why is Trump's America violating the rights of Hindu women to breathe air which has been tested and found to be such as Hindus are authorized to use for respiratory purposes?
For example, property rights authorise control over economic activity to the extent of their bounds.Nonsense! You can't control the activity of a tenant. You may be able to prevent it in the future. It depends. But it is not the case that everybody on your property is a robot whom you control.
A contract too is a form of economic coordination.So is using language- because scarce cognitive resources are used up in uttering and apprehending words. Why make contracts appear sinister when the same thing could be said about love letters?
And competition law itself authorises all kinds of in-firm economic coordination that it prohibits out-of-firm.For the excellent reason that in-firm actions are interpreted as self-interested. Out-of-firm actions may not be known to have this property.
In short, it’s governmental intervention all the way down.Very true! Govt. is intervening in Paul's decision to breathe air. It authorizes her to breathe a beef-eater's fart because it is remiss in the proper testing of ambient air in the vicinity of Paul. She should sue the Legal System or, if she has insufficient capacity, I could do so on her behalf. My opening statement will be a loud and noisy fart.
The law from the outset makes choices about where and how it will limit competition, and those choices can either balance economic power or create imbalances.Speaking generally, the Law acts on the basis of complaints it receives. It may take suo moto cognizance of a case but, if India's experience is any guide, its actions may worsen the situation.
The ideology of law and economics is that only interventions that help to balance power in society are in fact government interventions – but this is not true.Nonsense. The Coasian approach is wholly different.
Unlike the first generation of realists and institutionalists, who helped to shape the New Deal, their latter-day heirs unfortunately did not, largely, shape public policy.Because they were shit.
At least not yet. These issues are resurfacing today in public discussion about competition law – or antitrust law as it’s known in the US – which is the area of law perhaps most colonised by law and economics.Nonsense. It is the theory of incomplete contracts which has gained salience as Law & Econ found itself colonized by Game theory and Mechanism Design. Meanwhile the cultural Marxists were getting stoned and babbling paranoid nonsense.
Public debates have centred around economic power and the role of the law in it, with renewed calls for the law to do more to ameliorate economic domination rather than exacerbate it.Elizabeth Warren may amount to something. That is what gives Paul's puerile essay some topicality. However, for her approach to work, Warren will have to go further down Trump's tariff raising road.
Defenders of the status quo regularly point to ‘economics’ as a defence.While opponents of the status quo gibber paranoid nonsense about how, like, the real Rapist is the Law, right?, coz like how the Law says some people gotta have dicks and others don't, you dig me?, and thus Rape only occurs coz the Law genders us and anyway how was I supposed to know the Pizza boy was 16? Anyway, ever since I took up Pilates, I could pass for 18 and so Romeo & Juliet law should apply.
They suggest that only the reformers have a moral and political vision.To whom do they make this suggestion? Not to me. Nobody comes sidling up to me at the bar saying 'look, I'd like to make a suggestion to you. It is that only the reformers have a moral and political vision. Non-reformers are sadly lacking in that department. What do you think?'
I suppose Paul moves in different circles. Still, it is rather sad to think of this young person fending off reformers who allude suggestively to their 'vision' rather than something more substantial in the trouser department. I suppose, my having made this observation will cause some of my readers to dismiss me as a 'lipstick lesbian'. Well, truth be told, only one of my readers will do so. Mum, I wish you'd stop reading my blog-posts. I will not marry a 'suitable boy'. Face facts. I'm into chicks. Sorry if I'm not the perfect little gay-boy who marries a nice American lawyer like your friend's son- Aatish Taseer.
But of course this isn’t true. Just as law and economics does generally, the current framework for antitrust law chooses certain legal rules over others, and takes them to define ‘the market’.This is nonsense. Antitrust law, like everything else, takes 'the market' as a Tarskian primitive. It is not a 'term of art'. It has no intentional definition.
Competition law makes the affirmative decision to organise economic coordination primarily through traditional capitalist firms, rather than through alternative forms.Competition law does not organize anything. It may hinder a type of organization from functioning in a particular way or break it up completely.
These alternatives might include looser forms of producer associations that are more dispersed in ownership and more democratic in decisionmaking.What is Paul saying? That Judges should set up worker's cooperatives? No. They must set up LBGTQWXYZ Collectives where everyone can nurture each other's sense of having been epistemically raped while taking turns to generate Electricity on an biodegradable hand crank.
Since the 1970s’ takeover by law and economics, antitrust law and institutions have intensified this preference for hierarchy and concentrated ownership.But hierarchy pre-existed and has been flattened somewhat to promote dynamic efficiency. Ownership has been diluted but 'Control rights' have been concentrated. Paul is talking palpable nonsense and has fastened on a bogeyman- 'Law & Econ'- which was itself taken over by Mechanism Design in the early Eighties. This is ignorant, outdated, fustian.
The unsurprising result is that economic coordination is increasingly accomplished through the mechanism of large, powerful firms, while economic cooperation among smaller players is increasingly disfavoured.Apple and Microsoft were small at the end of the Seventies. Google and Amazon didn't even exist. Plenty of large, powerful firms, are no longer as large and now have little market power
These choices are fundamental to the policy prescriptions made by the law-and-economics approach. Again, we find ourselves with a choice that is necessarily moral and political: we can allocate coordination rights in a way that exacerbates imbalances in economic power, or in a way that ameliorates them. What we cannot do is pretend not to make the choice.Wonderful! We can choose to go the way of Venezuela because some stupid Law Professor tells us to, or we can ignore her like every other sensible person.
Just in case you think I'm going after Paul coz she's a Lawyer not an Economist, I may mention that Kaushik Basu is ever stupider than her. He too thinks Schelling focal points can be 'allocated'. But then Basu has held a senior position with the Government of India. There is a certain tradition to be kept up in these matters. What is Paul's excuse?
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