PART I
LEGAL TRANSLATION IN THEORY Chapter 1
Translation vs. Decoding Strategies in Law and Economics Scholarship1
Mariusz Jerzy Golecki
In this chapter I will claim that methodology of law and economics should be changed from adopting economic analysis of law, namely translating legal concepts into economic models implementing price theory (economization of law), to other, more interdisciplinary and balanced strategies.
The point of departure for these observations consists in the existence of specific entanglement between the philosophical narration, the moral normative theory, and its recognition within a framework of legal discourse. Thus it could be envisaged that legal discourse is heavily dependent on the overlapping between the legal and moral vocabulary (Hart 1994). The most characteristic feature of this kind of discourse is heavily dependent on the linguistics constrains commonly accepted among law and economics scholars. My main thesis thus pertains to the distinctive features of the law and economics models as compared to typical jurisprudential narratives.
The key distinction to be implemented in this respect concentrates on the difference between translation and decoding. Whereas translation concerns the substitution of legal meanings and terms by economic assumptions and relations between some parameters, decoding is being developed and treated as a kind of linguistic game in the Wittgensteinian sense (Wittgenstein 1953). The economic model is being treated as the simplified representative of the interrelations between the objects (Maki 1998). Decoding deploys some metaphors used by both F. Nietzsche and L. Wittgenstein, whereas the model can never be based on the metaphor, simply because that the model is supposed to contain the direct representation of the given aspect of the object and this representation of the modelled object must be univocal. Decoding is a mutual operation transforming a primary message produced by legal or economic systems. This narrative is supposed to be overwhelming and thus satisfies the need for the ultimate answer to the given set of questions such as that about the nature of law, the essence of rights, and the character of justice, whereas from the perspective of the law and economics discourse those questions are senseless in a strong, Wittgensteinian sense, i.e., they cannot be addressed and answered according to the adopted verification procedure. This comparison between the two competitive frameworks of the legal theoryâthe narrative based discourse and the model based discourseâlead to two preliminary remarks. First, the narrative based discourses are general and their legitimacy is based on their integrity whereas the model based discourses are partial, do not claim integrity, and their legitimacy is based on their utility. Second, the two different discourses are legitimized in different ways. The narrative-based discourse derives its legitimacy from the completeness, coherence, and general plausibility of the narrative structure, be it philosophical or sociological. The model based discourses are founded on the coherence between the assumptions, the conclusions, and the control on a given object. In other words, models are based on coherence and legitimized by their usage and the effect of their predictive functions.
In this chapter, the term âeconomics of lawâ will be used in the same way as the majority of scholars use the term âlaw and economicsâ. However, I would like to avoid the association of this term with the theory purported by Posner. Therefore, Posnerâs theory will be named economic analysis of law.2 Economics of law as well as law and economics certainly have a broader meaning. The meaning is associated with a methodological approach: the economic analysis of law as well as the revision within economics itself. I prefer the name economics of law to law and economics because it seems more realistic at the moment; the insight of law in economics is either poor or redefined in economic terms. The impact of economics on law is enormous, and a realistic approach cannot neglect this fact.
1. Economic Analysis of Law as a Translation Strategy
Economics of law is most often associated with the so-called âChicago schoolâ of law and economics (Mercuro and Medema 1997: 3â24). According to R. Posner, the popularity of this approach results from two factors: the crisis of traditional legal doctrine, and the success of the economics of non-market behaviour (Posner 2001: 31â46). The starting point for economic analysis of law is the assumption that decisions may be based either on intuition and vague moral beliefs or on scientific data. If economics is just a theory of choice, it should prima facie be an excellent data provider for judges and legislators. Thus the rationale of the economic analysis of law is rather simple: to implement economics to legal decision-making process (Posner 1992: 10; Cooter and Ulen 1997: 41). The Chicago school implemented welfare economics with its theory of self-interest, price, and efficiency. The three major assumptions of this movement may be summarized in three parts. First, individuals act according to the theory of rational choice, which was presented by J. von Neumann and O. Morgenstern in the book of 1944 Theory of Games and Rational Behaviour.3 The notion of rationality of players means that both of actors aim at maximization of their functions of utility. Moreover, the concept of rationality is based on the theory of revealed preferences based on subjective theory of values. Hence, moral norms are limited to hypothetical imperatives and should be linked to the actions of a player aimed at maximalization of satisfaction. Therefore, the notion of rationality is a purely instrumental concept. It is connected to effective realization of aims rather than to autonomous choice of those aims.
According to this theory, a given subject has permanent (invariable), ordered, and non-transferrable preferences in regards to all possible states of things or actions (Becker 1976). Such a subject may be termed homo oeconomicus. This notion is not connected to behaviour of particular individuals but rather is used as a convenient tool for predicting future actions. Therefore, the concept of homo oeconomicus is predicative rather than descriptive. The only criteria of rationality used within this notion are connected to the existence of a limited coherence of preferences. Nevertheless, the process of their formation is basically outside the scope of research of law and economics. According to R. Posner, the concept of homo oeconomicus should not serve as a basis for explaining the mechanism of decision-making process, hence it is not a psychological theory but rather a model for predicting decisions which are to be made in the future. The primary aim of this notion is to introduce some order in existing relations rather than to describe or to explain them.
The second assumption of the Chicago school is connected to the choice of a proper criterion for evaluation of actions aimed at creation and application of law. This criterion for the proper critique of norms should be economic efficiency. According to Posner (1990), the only useful criterion of allocative efficiency is the so-called âKaldor-Hicks efficiencyâ (Posner 1990: 374â387).
Third, in economics of law it is assumed that individuals react in the same way in market and extra market environments. Hence, sanctions that accompany legal norms are treated as a kind of cost that must be suffered in case of disobeying an obligation stemming from those norms. One may conclude that sanctions are treated in an analogous way to prices. The information contained in a legal norm is thus transformed by individuals in order to enable them to calculate rationally the possible costs and benefits connected to their prospective intentions or engagement in particular actions. The resulting preferences are stemming from the process of observation of the choices made by individuals.4
The three above-presented assumptions are mutually connected. Therefore, acceptance of the theory of rational choice â commonly used within neoclassical economics â implies the acceptance of a particular theory of instrumental rationality and specific conditions for this type of rationality to occur. Those conditions may be divided into two broad categories: external and internal.
External conditions are connected with the necessary information for various alternative actions. Assuming that subjects of law tend to maximize their satisfaction (maximization of the utility function), one may state that for a rational choice to be made, it is necessary to evaluate various options and put them into order from the most to least preferred. Within the context of law, such information, which enables one to make rational instrumental choices, is the category of sanction measured in regard to utility function or measured in monetary units as a cost in economic terms.
The internal condition may be described as an ability of acting subjects for the exact measurement of costs and losses, as well as ability for initializing actions which are effective from Kaldor-Hicks criterion, i.e., which benefits are more significant than costs. One may ask about the method for making rational decisions that maximize satisfaction, without the full access to information on the possible costs and benefits? According to Posner, rational action may be performed, and in reality most often is performed, within a state of uncertainty and ignorance, as the cost of access to full and excessive information is too high and, hence, ineffective.
The above assumption seems to be a paradox. The rational action should not be subordinated to the principle of knowledge, which is used as a basis for evaluating the consequences of actions, but rather should be performed according to the effectiveness criterion, within the cost-benefit analysis. This paradox is not real when one assumes that the principle of effectiveness (wealth maximization) is a normative principle. Hence, according to R. Posner, it is possible to accept the epistemic limits of a subject without abandoning the theory of economic rationality. The latter is only subject to certain modifications. Posner observes accordingly:
(âŚ) People are not omniscient, but incompletely informed decisions are rational when the cost of acquiring more information exceed the likely benefits in being able to make a better decision. A fully informed decision in such circumstances â the sort of thing a person makes who cannot prioritize his tasks â would be irrational. (Posner 1992: 19)
The theory of rational choice does not aim at a precise description of the method of decision-making. R. Posner uses similar methodological assumptions as M. Friedman, according to whom the theory of rational choice serves as a convenient tool for predicting various actions or processes (Friedman 1994: 14). Thus, the theory is to serve prescriptive purposes rather than descriptive ones.
Whereas the programme of the Chicago school has been the fundament for further development of various detailed theories on law and economic efficiency, as well as the analysis of legal norms with the use of economic criteria like Kaldor-Hicks and wealth maximization, the legitimacy of law and economics scholarship is no longer based on its utilitarian origins. Moreover the majority of ideological and moral propositions could possibly be at the same time attacked and defended on the level of law and economics as it in fact happens. The most characteristic feature of this kind of discourse is heavily dependent on the linguistics constraints commonly accepted among law and economics scholars. My main thesis thus pertains to the distinctive features of the law and economics models as compared to typical jurisprudential narratives. The key distinction in this respect is the difference between the narrative and the model. The narrative is supposed to be overwhelming and thus satisfies the need for the ultimate answer to the given set of questions such as those about the nature of law, the essence of rights, and the character of justice, whereas from the perspective of the law and economics discourse, those questions are largely senseless; i.e., they cannot be addressed and answered according to the adopted verification procedure. Conversely, the model is supposed to contain the direct representation of the given aspect of the object. This representation of the modelled object must be univocal.
Additionally, the model-based discourse of law and economics will also be analyzed within the light of the distinction between three different types of discourses as proposed by Deleuze (1994). The French philosopher distinguished between three essentially different types of discourses, namely the philosophical discourse, the scientific discourse and the discourse of arts. The analysis of the legal discourse specifically pertains to the difference between philosophical and scientific discourses. The first one concentrates on concepts. Deleuze envisaged that the essence of philosophical discourse is always intimately related with the possibility of producing new concepts. Philosophical thinking is thus concept-oriented. This way of constructing discursive structures within the realm of philosophy (including legal philosophy) is substantially different from the scientific discourse. Science is function-oriented. Philosophy produces concepts and analyzes the relations between those concepts. Science does not concentrate on concepts. Different concepts could be applied, advanced and then immediately renounced depending on their utility, robustness, or explanatory power. Scientific discourse is thus not only function-oriented but also pragmatic.
The distinction between philosophy and science as established and explained by Deleuze can quite successfully be applied to the explanation between the traditional narration-based legal theory and the model-based law and economics. The former is built upon philosophical concepts as created by some philosophical systems and later on transformed into narrations. The later seems to be rather functional and purpose oriented. The question remains however about the relationship between the two. It is obvious that the philosophical concept-oriented discourse instructs different approaches and models within the law and economics mainstream. Thus some indirect interdependence between traditional jurisprudence and economic jurisprudence is undeniable. Moreover it seems that economic models borrow from traditional legal vocabulary. It is however not clear to what extent the content or substance of those philosophical-narration involved concepts, such as âdistributional justiceâ, âequityâ, ârightsâ, âlibertiesâ, âentitlementsâ, âfairnessâ, etc., influence the outcome of the modeling procedure, accepted in law and economics. The prima facie observation is that those concepts at least to some extent shape the formulation of the basic assumptions accepted within a given model. Economic modeling is always âassumption sensitiveâ. One may ask whether the basic assumptions of the economic analysis of law, like the economic rationality or efficiency, should be subject to critical examination stemming from postmodernist thought. It may be stated that the overall perception of the economic analysis of law places this theory within the typical modernist, rational, and utilitarian conceptions of law (Schlag 1989).
At the moment economic analysis of law might be regarded as one among equal trends of the contemporary jurisprudence.5 The movement found strong opposition from many authors (Fried 1977: 180; Coleman 1980: 531; Weinrib 1995: 46â50). One of the strongest critics is Ronald Dworkin, who opposes the recognition of wea...