The Role of Law in Markets: From Industrial Revolution to Economic Dissolution
University of Reading
July 1, 2011
SLS Conference 2011 Society of Legal Scholars
This paper follows the evolution of economic and legal theory on how to balance the market-state relationship from the era of the industrial revolution, till the resurgence of liberalism in the latter part of the twentieth century. The aim is to show how law and regulation have been used as buffers, in accordance perhaps with neoclassical assumptions, against the potential of the market to self-destruct. The paper traces the role of law in economic regulation from the early industrial era to the current economic crisis marking significant conceptual changes that took part in the early 20th century, the radical shift in perceptions of law brought about by the Great Depression and the resurgence of theories of laissez-faire since the 1970s. The paper also explores the consequences of various incarnations of the balance between state control and market freedom on the wider political economy. It considers how the tendency towards de-politicisation exemplified by deregulation from the early 1980s till the financial crisis of 2008 is responsible for a degrading of the role of the state and politics leading to a sub-optimal balance of market vis-a-vis social interests.
Keywords: law, economics, neoclassical economics, financial crisis, political economy, laissez-faire, Great Depression
JEL Classification: A12, P26, P48working papers series
Date posted: July 1, 2011
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