CONGRUENCY OF BOTH
The rational study of Law the black-letter man may be the man of present, but the master of economics and man of statistics is the man of the future. We learn that for everything we have to give up something else, we are taught to set the advantage we gain against the other one where we lose, and to have a rational mind needs to elect.
As we can illuminate Law is a social institution of great significance, and I can deduce no reason as to why Law should not be made malleable to scientific study. Amongst social sciences field, most progressive of them is Economics and the legal system is equipped with many parallels to and overlaps with the systems that the economists have scrutinized successfully. The jurisprudence of Economics lies at the heart of science of production and distribution of wealth and law is a tool for enforcement of the same.
Until recently it was observed that the study of economics was confined to the field of anti-trust laws, industrial law and taxation and principles of economics in these spheres were applied. In the early 1960s, this limited interaction of Law and Economics has expanded its grip and entered the domain of traditional areas of law concerning tort law, contract law, criminal law and procedure.
The theme is how the economic analyses of law succeeded so spectacularly. Just like a vacant niche, economics has found its place in “intellectual ecology” in field of law and throng it in the timeliest manner. The nexus between the fields of Law and Economics is rational decision making. In order to understand this we need to encounter the proposition- Law is an obligation backed by state action, economics dispenses a touch of scientific inquisitorial conjecture to anticipate reverberations of legal authorizations imposed on behavior. From the perspective of Economics, Economists observe sanctions at par with prices, presumably, responsiveness of people to extravagant goods is by lesser consumption, in a similar way people respond by doing less of the sanctioned activity to a more critical legal sanction.
Responsiveness of people to laws is an effective mechanism to check the efficacy of laws. Economics generally strives to provide a behavioral theory. The response of people is always pertinent to modifying, appealing and explicating laws. A characteristically famous essay on Law and Economics recount the law as a cathedral- a large, ancient, mysterious building. The mortar which is the supporting structure is the behavioral sciences which connects the cathedral.
In response to this efficiency is always must for the officials and the law makers as they do not advocate wastage of resources and money. Efficiency is the central theme for Law and Economics. Besides achieving efficiency economics is loaded with predictions too. For evaluation of effects of law on prominent social values. Judicial officers and other officials too require such method. Economics anticipates the effects of law on another significant value to have a critique on inequality how is the distribution of income carried out. How law affects distribution of income across various classes is best analyzed by an economist than the other social scientists.
Instead of achieving efficiency the businessmen aim to maximize profits. By confirming to the activities of making deals, avoiding litigation and obeying regulations lawyers aim to increase the profits of businessmen. These three inherent practices correspond to three areas of legal practice: transactions, litigation and regulation. Economic efficiency is a term of comprehensive signification which measures public benefits includes profits made by firm, wages of workers and consumer’s well being. The logic of maximising the efficiency is very congruent to maximising profits. Legal system should work in such a way that the profitability of business and the welfare of people are aligned in a linear manner, so that the derived benefits would also in turn aid the public.
The economic analysis of law integrates two immensely significant fields and ease the understanding of each one of them. You probably think law as an instrument to achieve the ends of justice on the other hand, economics connotation for law is more of an incentive for changing behaviour and as instruments to fulfil the set policy objectives. In absentia of an authoritative contracts and no security of property these aspects basically incapacitate the economies of poor nations.
Law needs aid of elements of economics to understand its behavioural consequences, and economics needs law to decipher the various underpinnings of market. The nexus of the two great fields give us the systematic interaction of rationality and increasing the efficiency which is the core area of the study.
Stay tuned to this section for diving further deep into the relationship between Law and Economics.
Law Community, Opening New Horizons For You!
Best Platform for Legal Professionals
