The Fable of the Codes: The Efficiency of the Common Law, Legal Origins & Codification Movements

Abstract

The superior efficiency of the common law has long been a staple of the law and economics literature. Generalizing from this claim, the legal origins literature uses cross-country empirical research to attempt to demonstrate this superiority by examining economic growth rates and the presence of common law legal systems. We argue that this literature fails to adequately characterize the relevant legal variables and that its reliance on broad-brush labels like “common law” and “civil law” is inappropriate.

In this Article, we first examine the efficiency literature’s claims about the common law and find that it fails to accurately account for important distinctions across common law legal systems and under-specifies key terms. We next turn to the lengthy debate over replacing the common law with a civil code that raged across the nineteenth century United States, drawing from the arguments of the participants the key factors that promote efficient outcomes. We conclude that a focus on legal systems’ ability to cheaply identify efficient rules, restrain rent-seeking in the formulation and application of rules, adapt rules to changed conditions, reveal the law to those affected by it, and enable contracting around inefficient rules would be more appropriate than the current emphasis on labels. Further, more attention to transition costs would make efforts at reform more credible.