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Institutional economics, Neoclassical economics, Douglass North, New Institutional Economics, NIE, New Politicial Economy, NPE


Law and Economics


Institutionalism propounds a particular set of theoretical assumptions about the role of law in economic growth. In unpacking the development of those assumptions, this Essay adopts a model of intellectual history based on the Kuhnian argument that scientific knowledge evolves through key historical moments that establish theoretical paradigms. These paradigms are replaced only when awareness in the field of anomalies — problems that the existing theoretical paradigm cannot solve — presents a crisis for that paradigm that coincides with the emergence of an "alternate candidate."

The paradigm shift in law and development was enabled by dynamics in both the academy and the field. In the academy, the emergence of neoclassicism as an alternate candidate coincided with an internal intellectual crisis arising from the limitations of Keynesianism and, in development economics, statism. This shift was mirrored in the field by the emergence of neoclassicism as a political movement that engendered accompanying changes in the personnel and policy of the development institutions. As such, theory and practice in law and development were linked and mutually reinforcing in describing the arc from modernization to neoclassicism.

In adapting a historiographic method to its purposes, this Essay seeks to contribute to economic as well as legal histories of neoclassicism. In doing so, it seeks to specify how influential theories of law in development grew out of a highly idealized conceptual framework wedded to a particular economic policy agenda. Improving law and development discourse will require addressing the theoretical and practical particularities stemming from the field’s genealogical origins.

Publication Citation

Chantal Thomas, "Law and Neoclassical Economic Development in Theory and Practice: Toward an Institutionalist Critique of Institutionalism", 96 Cornell Law Review (2011)