Law and Economics: The Contributions of the Austrian School of Economics
Research Handbook on Austrian Law and Economics, Todd Zywicki and Peter Boettke (eds.), Edward Elgar, 2017
33 Pages Posted: 20 Sep 2018
Date Written: September 19, 2018
The Austrian contribution to the development of law and economics is the study of endogenous rule formation, or the spontaneous evolution of social institutions, which can be traced to the founder of the Austrian School, Carl Menger. While Menger’s emphasis on spontaneous institutional analysis was born out of the Methodenstreit, a methodological battle engaged against the German Historical School, this paper argues that the Austrian contribution to law and economics emerged directly from the socialist calculation debate against market socialism. This debate, we will argue, played an essential role in the re-discovery of the institutional framework in economics during the post-WWII era, particularly in the development of law and economics. In the aftermath of the socialist calculation debate, Menger’s earlier emphasis on institutional analysis was reemphasized by F.A. Hayek, who in turn influenced the early pioneers of law and economics, particularly Aaron Director, Ronald Coase, and Bruno Leoni.
Keywords: Austrian economics, law and economics, endogenous rule formation
JEL Classification: B41, B53, P16, P51
Suggested Citation: Suggested Citation