The Economics of Uniform Laws and Uniform Law Making
63 Pages Posted: 3 Apr 2003 Last revised: 23 Aug 2017
Date Written: December 12, 2002
Uniform law making has a substantial history in the twentieth century. It seems to be continuing with some force into the twenty-first century. A significant American law and economics literature, however, questions its merit. By contrast, there have been limited rational choice oriented investigations of unification or centralization of law in Europe. Critics of the uniform law movement in the United States use methods of analysis influenced by public choice theory, political economics and positive political theory. The paper does not call into question the methods and assumptions of these approaches. The paper claims that economic analysis supports public policy in favor of unification of law, if certain conditions are met. Research to date on the question does not lead to the conclusion that governments should avoid unification as a general principle. A central pillar of these claims is that unification can lead to efficiency improvements in the law. Two questions must be explored to understand the effects of any law, one normative and the other positive. The normative question is whether unified rules are more efficient than diverse rules. The answer to this question is "they can be." The positive question is whether or not the rule making process leads to the production of efficient rules. The answer to this second question is "it depends." The paper explains how political economics and public choice theory support arguments for the proper design of institutions to facilitate efficient unification. It is beyond challenge that the characteristics of the lawmaking process - institutions - affect the content of the substantive rules that are produced in any such process. The paper throws into question the way questions are posed in the scholarly debate about unified versus diverse law. To make the analysis sufficiently general, we have to flip the question and ask about the effects of the process of making diverse or decentralized law on the content of the law. Decentralized institutions do not necessarily produce apolitical law because they can suffer from public choice problems too. The question is not whether the institutions of unification are or are not subject to interest group capture, rent seeking or any of the other properties of a law making process that public choice theory predicts, but whether the workings of those institutions results in efficiency improvements over what actually exists in law making settings that do not involve unification, such as those which occur in domestic legislatures or domestic courts. The paper urges a focus on design of institutions to minimize the production of inefficient law. What is required is a close institutional analysis of each institutional process to determine what sorts of rules are produced. From these sorts of close analyses, no general conclusion, such as unification is "good" or "bad" can follow. The paper examines these questions from American and European contexts.
Keywords: legal unification, comparative law, commercial law
JEL Classification: K1, K10, K12, K3, K30
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