Why the Law of Entrepreneurship Barely Matters

Abstract

Despite valiant (if nascent) efforts to show that law, or at least courts and doctrine, matters in the broader study of entrepreneurship, I am skeptical that it really does. The reason goes to the fundamental orientation to rules and their application of law and lawyers, on one hand, and entrepreneurs, on the other. As much as law students like rules, and social scientists like theories capable of prediction and algorithms and models, there are inherent philosophical (and perhaps psychological) problems with the interaction of the lawyer and the entrepreneur. In the same way that the relationship of law to moral intuition is perennially debated and no less frequently unresolved as between empiricists and rationalists, foundationalists and anti-foundationalists, the social context of rule-following for legal ordering is at odds with the entrepreneur's orientation to rules.

In this Essay (which serves as an introduction to a longer work), I want to explore several themes. First, as the philosophers have shown, there is no rule for the application of a rule, and what we perceive as a given result is a matter of social congruence rather than a result inherent in the rule itself. The social and psychological orientation of those who create law, and those who create innovation, are at odds. Second, the predominant approaches to the science of law fail to account for the inherent paradox (or antinomy) of judgment. Third, the very nature of a legal or regulatory solution, by and large, is cognitive, and fails to address the non-cognitive aspects of entrepreneurship. Finally, there is a fundamental distinction between the definition of one's presently ascertainable rights in property, and private ordering to deal with future contingency. In the former, the law comes as close as it ever does to being constitutive; in the latter, what we say now is merely ammunition for instrumental use later.

Keywords: Entrepreneurship, contract, property, rules, risk

JEL Classification: K11, K12, K20, K22, K40