Adam Smith's Market Jurisprudence

Abstract

Perhaps the most important and fundamental lesson of Adam Smith’s theory of jurisprudence for contemporary lawyers is that successful communities share a commitment to the rule of law and to the primacy of justice. As represented by the metaphor of the impartial spectator, the rule of law requires rational and impartial decision-making in accordance with due process. The rule of law is not merely an expression of economic or political power in some other form. In Smith’s theory, conflating the triadic relationship among law, economics, and politics undermines civic society and destabilizes the very pillars upon which civilization rests. Learning from Smith, we know that law and justice cannot simply be reinterpreted in terms of an economic calculus, nor can law and justice be understood as the mere exercise of power in service of identity politics. When the rule of law becomes confused with economics or politics, justice is in trouble. In the midst of such confusion, the language and mechanics of justice may survive as rhetorical and logical exercises in decision-making, but justice loses its ethical and aesthetic grounding. This loss of ethical and aesthetic grounding ultimately undermines the moral authority of law, reduces voluntary cooperation among people, and undercuts the sentiment of common interest.

Keywords: Adam Smith, invisible hand, impartial spectator, justice, economics, law and economics, rule of law

JEL Classification: k-10, A-13, B-10, B-12