The Legal Origins Theory in Crisis

48 Pages Posted: 22 Oct 2012

See all articles by Lisa M. Fairfax

Lisa M. Fairfax

University of Pennsylvania Carey Law School - Institute for Law and Economics; European Corporate Governance Institute (ECGI)

Date Written: 2009

Abstract

The Legal Origins Theory purports to predict how countries respond to economic and social problems. Specifically, the legal origins of the United States should strongly influence the manner it approaches economic problems and its approach should be distinct from the response of civil law countries. If the theory is accurate, America's legal tradition should have a profound impact on its response to the crisis. This Article seeks to test the boundaries of the theory by assessing whether it could have predicted the manner the U.S. responded to the current economic crisis. After analyzing the U.S. response to the crisis, this article reveals that such response runs fundamentally counter to its legal origins. This inconsistency suggests that political, social, and economic forces do more to explain the U.S. response to significant turmoil than its legal origins. It also suggests that the current crisis may have been so severe that it overwhelmed any explanatory or predictive value potentially derived from the legal origins theory.

Keywords: Legal Origins Theory, Legal Origins, LLSV, Financial Crisis, Recession, TARP, Economic Reinvestment, Federal Reserve, Automaker, Bailout, Over-Reliance, Judicial Review, Ideology, Common Law Tradition, Common Law Country, Common Law Countries, Civil Law Tradition, Civil Law Country

JEL Classification: D73, E44, E62, G00, G21, G28, G30, G31, G34, G38, G39, J68, K33, N10, N20, N40, P11, P50

Suggested Citation

Fairfax, Lisa M., The Legal Origins Theory in Crisis (2009). 2009 Brigham Young University Law Review, 1571-1617 (2009), GWU Legal Studies Research Paper No. 2012-94, GWU Law School Public Law Research Paper No. 2012-94, Available at SSRN: https://ssrn.com/abstract=2165392

Lisa M. Fairfax (Contact Author)

University of Pennsylvania Carey Law School - Institute for Law and Economics ( email )

3501 Sansom Street
University of Pennsylvania Carey School of Law
Philadelphia, PA 19104
United States
215-746-2243 (Phone)
215-573-2025 (Fax)

HOME PAGE: http://https://www.law.upenn.edu/faculty/fairfaxl

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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