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Richard Posner, Ronald Coase, Henry Manne, Australian Centre for Law and Economics, Empirical legal studies


Law and Economics | Legal Education


Any discussion about law and economics ought to begin with a definition or at least an explanation of what it is we are talking about. There is, however, a risk in starting there. Just as classics scholars may debate endlessly about who precisely should be counted as a classicist or philosophers might debate who can properly be counted as a Kantian, there is likely to be no consensus about precisely what counts as law and economics or who is doing it. Indeed, the acknowledged superstar and chief guru of the law and economics movement, Judge Richard Posner, has argued that, for centuries, judges, guided by ‘an invisible hand’, have unwittingly been deciding common law cases ‘as though’ they were applying economic principles (Posner, 1992:chs. 18, 19). So, as The Honourable Sir Anthony Mason observed in his Monash Law School Foundation Lecture in 1992, some of the distinguished judges in the audience tonight, just like M. Jourdain in Molière’s Le Bourgeois Gentilhomme who discovered that he had been speaking prose all his life, may deserve at least honorable mention on the list of who is ‘doing’ law and economics (Mason, 1991).

In order to avoid major controversy at the outset, I will define the law and economics movement simply as the conscious application of economic principles to problems arising in connection with the resolution of legal issues, recognizing that this definition is too general to be of much help in deciding what gets counted and what does not. The significance of the word ‘conscious’ is simply to exclude all of the judges who, in Posner’s view, at least, have been doing God’s work by accident rather than design. In this article, I discuss the past, the present, and the future of the movement and report on some efforts to assess the impact it has had to date. Most of my material concerns the law and economics movement in the United States, where it began and where it has had the greatest impact. It is my hope that a review of the US experience will provide some sense of the potential that exists for the Australian Centre for Law and Economics and its members and followers to shape the future of law and legal scholarship in Australia.

Publication Citation

George A. Hay, "The Past, Present, and Future of Law and Economics", 3 Agenda: A Journal of Policy Analysis and Reform (1996)