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The Encounters of Economic History and Legal History

Published online by Cambridge University Press:  28 October 2011

Extract

After the rise to dominance of the neo-classical school in economics in the 1920s and 1930s, legal historians manifested very little interest in economic theory. After the cliometric revolution of the early 1960s, most legal historians expressed declining interest in economic historians. After the rise of Critical Legal History and cultural legal history in the late 1970s and early 1980s, many legal historians showed diminishing interest in the economy. This trend was augmented by the expansion of law and economics as a leading jurisprudence and methodology within the law schools. Most legal historians viewed themselves as part of a camp in the law schools, whether of the humanities oriented scholars, of post modernists, or of critical scholars, who were antagonists of the law and economics camp. These legal historians often identified all economists with law and economics and further disassociated themselves from economic historians. Ironically, the less legal historians consider economic history, economic theory, and the economy itself as relevant to their purposes, the more economic historians are discovering the relevancy of the law and of legal history to theirs. This article suggests to legal historians that the time is ripe to revisit economic history and theory and to reconsider their long-established indifference toward them.

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Copyright © the American Society for Legal History, Inc. 2003

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References

1. See Snooks, Greame Donald, “The Lost Dimension: Limitations of the Timeless Economics,” in Historical Analysis in Economics, ed. Snooks, Graeme Donald (London: Rout-ledge, 1993), 4166Google Scholar, for a recent account of this process.

2. There were early indications of some economists' growing interest in regulation, in transactions, in firms, and in nonmarket settings, but these trends were still in their infancy in the 1950s. They gathered momentum in the 1960s, but this was already after the emergence of the new economic history. Viewed from the perspective of dominant economic theory, on the eve of the cliometric revolution, legal change was inapplicable to economists' models of change.

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29. Ibid., 51–72.

30. It is interesting to compare Libecap's work on the far West with Hurst's work on Wisconsin. In Hurst's Wisconsin a homestead policy fell prey to the lumber industry. According to Hurst, the working of the market played a major role in bringing about this outcome. I believe that implementation of Libecap's framework could benefit Hurst's interpretation. It would put more emphasis on the working of conflicting interest groups that facilitated the legal and political outcome and on the distributional effects of this outcome. It is somewhat ironic that an interaction with an economist (though of the HNIE brand) would take a legal historian in such a direction. Even if the application of Libecap's framework would not have changed Hurst's conclusions, as Hurst's analysis is very rich and multifaceted, it might have drawn in marginal factors. It could lead, at a second stage, to an enlightening comparison, based on common theoretical and methodological grounds, of the cases of Wisconsin and the far West. See Hurst, James Willard, Law and Economic Growth: The Legal History of the Lumber Industry in Wisconsin, 1836–1915 (Cambridge, Mass.: Belknap Press of Harvard University, 1964), 62107, 117–42.Google Scholar For an application of Libecap's framework, in an earlier form, to Hurst's territory, see Johnson, R. N. and Libecap, G. D., “Efficient Markets and Great Lakes Timber: A Conservation Issue Reexamined,” Explorations in Economic History 17 (1980): 372–85.CrossRefGoogle Scholar

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34. Maristella Botticini and Aloysius Siow, “Why Dowries?” American Economic Review (forthcoming) http://people.bu.edu/maristel/dowriessrn2003.pdf (January 2003).

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39. 347 U.S. 483 (1954).

40. Roback, Jennifer, “Southern Labor Law in the Jim Crow Era: Exploitative or Competitive?University of Chicago Law Review 51 (1984): 1161–92CrossRefGoogle Scholar, is mid-way variation. She argues that Jim Crow laws, not the market or social norms, were the chief oppressors of blacks. But what was needed was a prohibition on discriminatory action by government, not by individual employers. This is what the Civil Rights Act provided and this was enough, because market competition did the rest.

41. Donohue, John J. and Heckman, James, “Continuous versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks,” Journal of Economic Literature 29 (1991): 1603–3.Google Scholar See also Heckman, James J., “The Value of Quantitative Evidence on the Effect of the Past on the Present,” American Economic Review 87, no. 2 (1997): 404–8.Google Scholar

42. With this they can contribute to the ongoing debate among legal historians and lawyers, ranging from CLS to libertarians, about the actual effects of Brown. For this debate see, e.g., Klarman, Michael J., “Brown, Racial Change, and the Civil Rights Movement,” Virginia Law Review 80 (1994): 7150CrossRefGoogle Scholar; Gerald N. Rosenberg, “Brown Is Dead! Long Live Brown!: The Endless Attempt to Canonize a Case,” ibid., 161–71; Mark Tushnet, “The Significance of Brown v. Board Of Education,” ibid., 173–84; Rosenberg, Gerald N., “The Implementation of Constitutional Rights: Insights from Law and Economics,” University of Chicago Law Review 64 (1997): 1215–23.CrossRefGoogle Scholar Paradoxically, while some of the authors call for nonlegal approaches to the question, and the last article even aims at demonstrating the relevance of economic approach, none makes use of Heckman and Donohue's methods or empirical findings. This is a good example for a legal history debate that can definitely be enriched by a more intensive interaction with economic history. Legal historians can benefit from their own methodologies when studying what happened in the court, how the Brown decision was interpreted in later cases, what was its symbolic value, and what were the legal measures that were taken for implementing it. However, their methodology falls short when it serves for examining Brown's social and economic impact.

43. Wright, Gavin, “The Civil Rights Revolution as Economic History,” Journal of Economic History 59 (1999): 267–89.CrossRefGoogle Scholar

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45. Some of these tools were used in earlier work of the authors and were the foundation of the present project. See, for example, Hoffman, Phillip T., Growth in a Traditional Society: The French Countryside, 1450–1815 (Princeton, N.J.: Princeton University Press, 1996)Google Scholar; Rosenthal, Jean-Laurent, The Fruits of Revolution: Property Rights, Litigation, and French Agriculture, 1700–1800 (Cambridge: Cambridge University Press, 1992).CrossRefGoogle Scholar

46. Historians of early modern Britain have already recognized the role of attorneys as matchers between lenders and borrowers. But they did not use economic theory in their analysis. Sec Anderson, B. L., “The Attorney and the Early Capital Market in Lancashire,” in Liverpool and Merseyside: Essays in the Economic and Social History of the Port and Its Hinterland, ed. Harris, J. R. (London: Frank Cass, 1969), 5077Google Scholar; Miles, M., “The Money Market in the Early Industrial Revolution: The Evidence from West Riding Attorneys, c. 1750–1800,” Business History 23.2 (1981): 127–46CrossRefGoogle Scholar; Mathias, Peter, “The Lawyer as Businessman in Eighteenth-Century England,” in Enterprise and History: Essays in Honour of Charles Wilson, cd. Coleman, D. C. and Mathias, Peter (Cambridge: Cambridge University Press, 1984). 151–67.CrossRefGoogle Scholar

47. It is interesting to compare this de facto pragmatism to the argued pragmatism of Posner, Overcoming Law, 427. It is not clear to me how Posner can defend the unified and coherent paradigm of the Chicago school's law and economics as a pragmatic approach while at the same time deploring some of the institutionalists as antitheoretical. See also Getzler, Joshua, “Pragmatism and the End of Ideology,” Oxford Journal of Legal Studies 17 (1997): 525–35.CrossRefGoogle Scholar

48. We can, of course, find the combination of law, economics, and history in the work of Adam Smith and Karl Marx, in the sociological-historical approaches in the traditions of Maine and Durkheim, and in the extensive synthesis between legal and economic history and theory in the work of Max Weber.

49. In the late nineteenth century and early twentieth, interaction between the legal and economic branches of this school took place in Germany and, to some degree, also in England. In England, Cunningham and Ashley on the economic side, and Maine, Maitland, and Vinogradoff on the legal side, had some interaction. In Germany the familiar names in the younger historical schools are Schmoler on the economic side and Gierke on the legal side, and some of Sombart's work.

50. In the U.S., traditions that originated with Thorstein Veblen and Oliver Wendell Holmes eventually met in the institutionalist-legal realist interaction of the 1920s and early 1930s in the works of John Commons, Robert Hale, and their contemporaries. But the American interaction between legal and economic thought was less historically oriented than the European one (yet with some evolutionary stance). See Hovenkamp, Herbert, “The First Great Law and Economics Movement,” Stanford Law Review 42 (1990): 9931058CrossRefGoogle Scholar; Pearson, Heath, Origins of Law and Economics: The Economist's New Science of Law (New York: Cambridge University Press, 1997)CrossRefGoogle Scholar; Fried, Barbara, The Progressive Assault on Laissez Faire: Robert Hale and the First Law and Economics Movement (Cambridge, Mass.: Harvard University Press, 1998).Google Scholar

51. A few externalist legal histories were undoubtedly written before Hurst in the U.S. and even in Britain, but these were the exception. A number of manifestos calling for a new approach to legal history were published in the early 1940s. See Boorstein, Daniel, “Tradition and Method in Legal History,” Harvard Law Review 54 (1940): 424–36CrossRefGoogle Scholar, who mounts a straightforward criticism of lawyers' legal history; and James Hurst, Willard, “Legal History: A Research Program,” Wisconsin Law Review (1942): 323–33Google Scholar, for a more constructive program for an alternative approach.

52. Reid, John Philip, “Legal History,” Annual Survey of American Law (1962): 742–55Google Scholar; Gordon, Robert W., “Introduction: J. Willard Hurst and the Common Law Tradition in American Legal Historiography,” Law and Society Review 10 (1975): 956Google Scholar; Horwitz, Morton, “The Conservative Tradition in the Writing of American Legal History,” American Journal of Legal History 17 (1973): 275–94.CrossRefGoogle Scholar

53. Hurst, James Willard, The Growth of American Law (Boston: Little, Brown, 1950).Google Scholar

54. Hurst, James Willard; Law and the Condition of Freedom in the Nineteen Century United States (Madison: University of Wisconsin Press, 1956)Google Scholar; Hurst, James Willard, Law and Social Process in the United States History (Ann Arbor: University of Michigan Law School, 1960)Google Scholar; and Hurst, Law and Economic Growth.

55. Reid, “Legal History,” 742–55.

56. Ernst, Daniel R., “William Hurst and the Administrative State: From Williams to Wisconsin,” Law and History Review 18 (2000): 136.CrossRefGoogle Scholar

57. In a recent article, Christopher Tomlins examines law's encounters with social science from the late nineteenth-century American Social Science Association to the 1970s CLS. One of the sites of encounters he examines is the law and society field. Hurst and Wisconsin are considered the greatest success of the field, at least with respect to the encounter between law and sociology. When discussing the greatest success of the most promising encounter, Tomlins concludes: “There, however, the field did not ‘return’ to law: law had been its central focus from the start.” Tomlins, Christopher, “Framing the Field of Law's Disciplinary Encounters: A Historical Narrative,” Law and Society Review 34 (2000): 911–72 at 958.CrossRefGoogle Scholar For a different view of Hurst's encounter with sociology, see Novak, William, “Law, Capitalism, and the Liberal State: The Historical Sociology of James Willard Hurst,” Law and History Review 18 (2000): 97145.CrossRefGoogle Scholar

58. Compare Hurst, James Willard, Law and Markets in United States History: Different Modes of Bargaining among Interests (Union, N.J.: Lawbook Exchange, 1982)Google Scholar that has no reference to North, or to cliometricians, to North, Structure and Change in Economic History, that cites Hurst, Horwitz, and Scheiber.

59. The most extensive and influential of Hurst's historical studies is his Law and Economic Growth. Here one would expect most the implementation of a two-sided model of change. The model is presented in brief in the preface, vii–xv, and the theme of reciprocity echoes throughout the book. An outline of the various interactions between the law and the economy with respect to money can be found in Hurst, James Willard, A Legal History of Money in the United States: 1774–1970 (Washington D.C.: Beard Books, 1973).Google Scholar The outline appears in the widest and most elaborated, but also synthetic and abstract, form in Hurst, Law and Markets in United States History.

60. The following criticism relies partly on Scheiber, Harry N., “At the Borderland of Law and Economic History: The Contribution of Willard Hurst,” American History Review 75 (1970): 744, 754–56CrossRefGoogle Scholar; Tushnet, Mark, “Lumber and the Legal Process,” Wisconsin Law Review 114 (1972): 121–23Google Scholar; Gordon, “Introduction: J. Willard Hurst and the Common Law Tradition,” 52–54.

61. Lawrence Friedman's 1973 book and Morton Horwitz's 1977 book are often cited in order to demonstrate the rise of the functional model in the 1970s. Friedman, Lawrence, History of American Law (New York: Simon and Schuster, 1973)Google Scholar; Horwitz, Morton, The Transformation of American Law, 1780–1860 (Cambridge, Mass.: Harvard University Press, 1977).Google Scholar This is not to say that either Friedman or Horwitz were strictly functional; they had more complex models of change and responded to changing contexts and to historical records. Later critics often relied on provocative statements that the two made in an attempt to shake the older lawyers' legal history autonomous model of change. In other places, the two presented more complex and less functional models of change. See Friedman, Lawrence, The Legal System: A Social Science Perspective (New York: Russel Sage Foundation Publication, 1975)Google Scholar, particularly chap. 10. But on the whole, their work in the 1970s was closer to the functional end of the spectrum than was earlier and later work (their own later work included).

62. For the ideological and methodological characteristics of this critical school see Hay, Douglas, “Property, Authority and the Criminal Law” in Hay, Douglas et al., Albion's Fatal Tree: Crime and Society in Eighteenth-Century England (Harmondsworth, Middlesex: Penguin Books, 1977), 1763Google Scholar; Langbein, John, “Albion's Fatal Flaws,” Past and Present 98 (1983): 96120CrossRefGoogle Scholar; Linebaugh, Peter, “(Marxist) Social History and (Conservative) Legal History: A Reply to Professor Langbein,” New York University Law Review 60 (1985): 212–43.Google Scholar For research that combines this critical social history approach to legal history with economic history see Johnson, Paul, “Class Law in Victorian England,” Past and Present 141 (1993): 147–69.CrossRefGoogle Scholar For a review that laments the desertion by CLS scholars of E. P. Thompson's tradition and their loss of interest in material history and in Capitalism see Ireland, Paddy, “History, Critical Legal Studies and the Mysterious Disappearance of Capitalism,” Modern Law Review 65 (2002): 120–40).CrossRefGoogle Scholar

63. For the connection of these groups to the CLS movement, see below, 333–34.

64. For a seminal work that maps the terrain and groups together as functionalist much of modem legal history scholarship, liberal as well as Marxist, see Gordon, Robert, “Critical Legal Histories,” Stanford Law Review 36 (1984): 57125.CrossRefGoogle Scholar For an English oriented map see Sugarman, David and Rubin, G. R., “Towards a New History of Law and Material Society in England: 1750–1914,” in Law, Economy and Society, 1750–1914: Essays in the History of English Law, ed. Rubin, G. R. and Sugarman, David (Abingdon: Professional Books, 1984), 1123.Google Scholar

65. Getzler, Joshua, “Theories of Property and Economic Development,” Journal of Interdisciplinary History 26 (1996): 639–69.CrossRefGoogle Scholar

66. Crespi, Gregory S., “Does the Chicago School Need to Expand Its Curriculum?Law and Social Inquiry 22 (1997): 149–69CrossRefGoogle Scholar and the following responses.

67. Ulen, Thomas, “Firmly Grounded: Economics in the Future of the Law,” Wisconsin Law Review (1997): 449–55.Google Scholar

68. See Duxbury, Patterns of American Jurisprudence, 421–91; Schlegel, John Henry, “Notes towards an Intimate, Opinionated, and Affectionate History of the Conference on Critical Legal Studies,” Stanford Law Review 36 (1984): 391411.CrossRefGoogle Scholar

69. A sign of this trend can be found in the shift between Horwitz's first and second book— Horwitz, Morton, The Transformation of American Law, 1870–1960 (New York: Oxford University Press, 1992).Google Scholar The author in his preface acknowledged the greater weight of the cultural and intellectual in his account, and reviewers found this shift as indicative of more general trends in the field. See Ernst, Daniel, “The Critical Tradition of American Legal History,” Yale Law Journal 102 (1993): 1019–76CrossRefGoogle Scholar; Moglen, Eben, “The Transformation of Morton Horwitz,” Columbia Law Review 93 (1993): 1042–59CrossRefGoogle Scholar; Kloppenberg, James T., “The Theory and Practice of American Legal History,” Harvard Law Review 106 (1993): 1332–51.CrossRefGoogle Scholar For a survey of recent trends in intellectual legal history, see Fisher, William, “Text and Context: The Application to American Legal History of the Methodologies of Intellectual History,” Stanford Law Review 49 (1997): 10651110Google Scholar; for distinguishing cultural legal history from Wisconsin legal history and critical legal history, see Grossberg, Michael, “Social History Update: ‘Fighting Faiths’ and the Challenges of Legal History,” Journal of Social History 25 (1991): 191CrossRefGoogle Scholar; Tomlins, Christopher, “A Mirror Crack'd? The Rule of Law in American History,” William and Mary Law Review 32 (1991): 353–97.Google Scholar

70. Dan Klerman conducted recently a broad quantitative study of the use of economics and statistics in legal history. He found very few regressions and references to leading economists, including law and economics and NIE scholars, in legal history journals, law review journals classified as legal history, and legal history books. He found a trend toward more resort to economics and statistics in most recent articles and books. Klerman's study did not aim at measuring interest in the economy as such or in non-cliometric economic history. Klerman, Dan, “Statistical and Economic Approaches to Legal History,” University of Illinois Law Review (2002): 1167–76.Google Scholar

71. See Klerman, “Statistical and Economic Approaches to Legal History,” for a presentation of four studies that used economics and statistics in the study of legal history. There is only partial overlap between Klerman's survey and my map because his extends to statistics while mine is limited to economics, because his covers economists with interest in legal history questions while mine is limited to legal historians, and because mine is interested in the influence of HNIE while his inclination is towards law and economics. See also Harris, Ron, “The Uses of History in Law and Economics,” Theoretical Inquiries in Law 4.2 (Forthcoming 2003).Google Scholar

72. This is not to say that the legal historians mentioned in this paragraph confine their research to legal-economic history. Most of them do other sorts of legal history as well, but this is not discussed here.

73. Scheiber, Harry N., “The Road to Munn: Eminent Domain and the Concept of Public Purpose in State Courts,” Perspectives in American History (Cambridge, Mass.: Charles Warren Center for Studies in American History, Harvard University, 1971), 5:329402Google Scholar; Scheiber, Harry N., “Federalism and the American Economic Order, 1789–1910,” Law and Society Review 10 (1975): 57118CrossRefGoogle Scholar; Scheiber, Harry N., “Doctrinal Legacies and Institutional Innovations: Law and the Economy in American History,” Law in Context 2 (1984): 5072Google Scholar; Scheiber, Harry N., “Private Rights and Public Power: American Law, Capitalism, and the Republican Polity in Nineteenth-Century America,” The Yale Law Journal 107 (1997): 823–61.CrossRefGoogle Scholar

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75. Take, for example, Tony Freyer's study of debtor-creditor relations. Here he discusses the unavailability of credit worthiness information as an obstacle in the further development of a capitalist interstate credit market and in the persistence of an associational local credit market. In this context he examines the appearance of the first credit-reporting agency (R. G. Dun & Co.). He even mentions briefly the service provided by local attorneys to the agency but cuts the discussion short by saying that this reliance was a source of friction and uncertainty. Freyer, Tony, Producers versus Capitalists: Constitutional Conflict in Antebellum America (Charlottesville: University Press of Virginia, 1994): 6163.Google Scholar An interaction with HNIE literature could open up the whole world of lawyers' networks, information transmission, and the evolvement of impersonal credit institutions that was studied by Hoffman, Postel-Vinay, and Rosenthal and was briefly presented above in the example of HNIE study of the legal profession. See above, 320–21. Obviously this framework can not be implemented simplistically in Freyer's context because of some obvious differences: the nineteenth-century U.S., unlike eighteenth-century France, was a constitutional federation and its legal profession did not include Frenchtype notaries. But, nevertheless, HNIE can inform legal historians, of all historians, of new ways of examining the legal profession. It should also force them to critically examine their too rigid distinction between premodern communal credit and modern impersonal market credit. Lastly, it should remind them that institutional developments are not necessarily linear and progressive.

76. Banner, Stuart Alan, “The Origin of the New York Stock Exchange, 1791–1860,” Journal of Legal Studies 27 (1998): 113–40CrossRefGoogle Scholar; Banner, Stuart Alan, Anglo-American Securities Regulation: Cultural and Political Roots, 1690–1860 (Cambridge: Cambridge University Press, 1998).CrossRefGoogle Scholar

77. Wahl, Jenny Bourne, The Bondsman's Burden: an Economic Analysis of the Common Law of Southern Slavery (Cambridge: Cambridge University Press, 1998).Google Scholar It is important to mention that Wahl expressly excludes from her analysis the effects of the legal rules on the slaves themselves for reasons explained in the book.

78. Daniel Klerman, “The Selection of Thirteenth-Century Criminal Disputes for Litigation,” last draft, Jan. 17, 2001 (USC Law School) http://www.yale.edu/law/leo/012001/klerman.pdf. See also Klerman, Daniel, “Settlement and the Decline of Private Prosecution in Thirteenth-Century England,” Law and History Review 19 (2001): 166CrossRefGoogle Scholar, for a quantitative and statistically sophisticated research that is less influenced by law and economics theory.

79. Getzler, “Theories of Property and Economic Development,” 639–69; Getzler, “Pragmatism and the End of Ideology,” 525–35; Getzler, “The Legal Enforcement of Property Rights: A Critique of Douglass North” (unpublished manuscript); and a forthcoming book, A History of Water Rights (Oxford: Clarendon Press).

80. Kostal, Rande W., Law and English Railway Capitalism, 1825–1875 (Oxford: Clarendon Press, 1994).Google Scholar

81. Harris, Ron, Industrializing English Law: Entrepreneurship and Business Organization (Cambridge: Cambridge University Press, 2000)CrossRefGoogle Scholar; Harris, Ron, “Political Economy, Interest Groups, Legal Institutions and the Repeal of the Bubble Act in 1825,” Economic History Review 50 (1997): 675–96.CrossRefGoogle Scholar

82. For a recent book in which numerous, mostly British, economic historians examine the history of the subfield (and its future), see Living Economic and Social History, ed. Hudson, Pat (Glasgow: The Economic History Society, 2001).Google Scholar