40 Pages Posted: 2 May 2015 Last revised: 17 Mar 2017
Date Written: April 30, 2015
Social scientists have paid insufficient attention to the role of law in constituting the economic institutions of capitalism. Part of this neglect emanates from inadequate conceptions of the nature of law itself. Spontaneous conceptions of law and property rights that downplay the role of the state are criticized here, because they typically assume relatively small numbers of agents and underplay the complexity and uncertainty in developed capitalist systems. In developed capitalist economies, law is sustained through interaction between private agents, courts and the legislative apparatus. Law is also a key institution for overcoming contracting uncertainties. It is furthermore a part of the power structure of society, and a major means by which power is exercised. This argument is illustrated by considering institutions such as property and the firm. Complex systems of law have played a crucial role in capitalist development and are also vital for developing economies.
Keywords: institutions, law, capitalism, theory of the firm, property rights
JEL Classification: B4, K22, K40, P1, P5
Suggested Citation: Suggested Citation
Deakin, Simon and Gindis, David and Hodgson, Geoffrey M. and Kainan, Huang and Pistor, Katharina, Legal Institutionalism: Capitalism and the Constitutive Role of Law (April 30, 2015). Journal of Comparative Economics, Vol. 45, No. 1, 2017; University of Cambridge Faculty of Law Research Paper No. 26/2015 . Available at SSRN: https://ssrn.com/abstract=2601035 or http://dx.doi.org/10.2139/ssrn.2601035