Legal Institutionalism: Capitalism and the Constitutive Role of Law

40 Pages Posted: 2 May 2015 Last revised: 17 Mar 2017

Simon Deakin

University of Cambridge - Centre for Business Research (CBR); European Corporate Governance Institute (ECGI); University of Cambridge - Faculty of Law

David Gindis

University of Hertfordshire - Business School

Geoffrey M. Hodgson

University of Hertfordshire

Huang Kainan

Shandong University

Katharina Pistor

Columbia University School of Law

Date Written: April 30, 2015

Abstract

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

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

Simon F. Deakin (Contact Author)

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+ 44 1223 335243 (Phone)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

David Gindis

University of Hertfordshire - Business School ( email )

Hatfield, Herts AL10 9AB
United Kingdom

Geoffrey M. Hodgson

University of Hertfordshire ( email )

Business School
Hatfield Herts, AL10 9AB
United Kingdom

HOME PAGE: http://www.geoffrey-hodgson.info

Huang Kainan

Shandong University ( email )

27 Shanda Nanlu
South Rd.
Jinan, Shandong 250100
China

Katharina Pistor

Columbia University School of Law ( email )

435 West 116th Street
New York, NY 10025
United States
212-854-0068 (Phone)
212-854-7946 (Fax)

Paper statistics

Downloads
664
Rank
30,742
Abstract Views
1,959