Deconstructing corporate social responsibility: Insights from legal and economic theory

American Business Law Journal

Volumn 38, Issue 2, 2001, Pages 261-299

  Ostas, D T ^a  

^a NONE

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EID: 0040332074     PISSN: 00027766     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1744-1714.2001.tb00290.x     Document Type: Article

References (268)

1. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
2. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
3. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
4. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
5. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
6. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
7. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
8. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
9. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
10. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
11. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
12. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
13. Scholarly debate over CSR dates back to the 1960s. See Edward M. Epstein, Business Ethics and Corporate Social Policy: Reflections on an Intellectual Journey, 1964-1996, and Beyond, 37 BUS. & SOC'Y 7 (1998); S. Prakash Sethi & Paul Steidlmeir, The Evolution of Business' Role in Society, BUS. & SOC'Y REV., Summer 1995, at 9, 10 (noting that interest in CSR predates the 1960s, but gained momentum in that decade). Although there is no single definition of CSR, the general proposition is that (1) society is replete with social ills such as poverty, racism, and environmental degradation, (2) corporations have the power to address these ills, and (3) corporations should do so. See CHRISTOPHER D. STONE, WHERE THE LAW ENDS: THE SOCIAL CONTROL OF CORPORATE BEHAVIOR 111-18(1975). Recent legal scholarship has addressed CSR in the context of corporate constituency statutes, asking whether a manager violates legal and ethical duties to shareholders when using corporate assets for the public good. See, e.g., Timothy L. Fort, Corporate Constituency Statutes: A Dialectical Interpretation, 15 J.L. & COM. 257 (1995); Timothy L. Fort, The Corporation as Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and Corporate Constituency Statutes, 73 NOTRE DAME L. REV. 173 (1997); Al Myers, Whom May the Corporation Serve? - An Argument for the Constitutionality of Non-Stockholder Constituency Statutes, 39 N.Y.L. SCH. L. REV. 449 (1994). See generally Symposium, Corporate Social Responsibility: Paradigm or Paradox?, 84 CORNELL L. REV. 1195 (1999). Management scholars tend to focus on the mechanisms for institutionalizing social concerns within the corporate hierarchy. See, e.g., Peter F. Drucker, Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility, CAL. MGMT. REV. 54 (1984); Abagail McWilliams & Donald Seigel, Corporate Social Responsibility and Social Performance: Correlation and Misspecification, 21 STRATEGIC MGMT. J. 603 (2000); Gary R. Weaver et al., Integrated and Decoupled Corporate Social Performance, 42 ACAD. MGMT. J. 539 (1999). See generally Symposium, Dispatches from the Front Lines of Corporate Social Responsibility, BUS. & SOC'Y REV., Spring 1992, at 22; Symposium, Is the Good Corporation Dead?, BUS. & SOC'Y REV., Fall 1993, at 9. For further citation to CSR literature, see Jeffrey Nesteruk, Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility, 58 U. CIN. L. REV. 451, 451 n.2 ( 1989).
14. The terms "linguistic philosophy," "linguistic analysis," and "analytic philosophy" can be used interchangeably. See Thomas Baldwin, Analytic Philosophy, in 1 RUTLEDGE ENCYCLOPEDIA OF PHILOSOPHY 223, 225-26 (Edward Craig ed., 1998). The present analysis borrows from what is commonly called "ordinary language philosophy." See generally id. Ordinary language philosophy originates in the later works of Ludwig Wittgenstein. See Norman Malcolm, Wittgenstein, in 8 ENCYCLOPEDIA OF PHILOSOPHY 327, 335-37 (Paul Edwards ed., 1967). See generally LUDWIG WITTGENSTEIN, PHILOSOPHICAL INVESTIGATIONS (G.E.M. Anscombe trans., 1953). Wittgenstein argued that the meaning of a word is determined by its use. See Malcolm, supra at 337. The analytic philosopher explores the ways that words are used, finding that many disputes originate in alternative uses of some of the key words involved. Id. The present analysis is offered in this spirit. It analyzes the language used to describe CSR in hopes of better understanding alternative constructions of the concept.
15. The terms "linguistic philosophy," "linguistic analysis," and "analytic philosophy" can be used interchangeably. See Thomas Baldwin, Analytic Philosophy, in 1 RUTLEDGE ENCYCLOPEDIA OF PHILOSOPHY 223, 225-26 (Edward Craig ed., 1998). The present analysis borrows from what is commonly called "ordinary language philosophy." See generally id. Ordinary language philosophy originates in the later works of Ludwig Wittgenstein. See Norman Malcolm, Wittgenstein, in 8 ENCYCLOPEDIA OF PHILOSOPHY 327, 335-37 (Paul Edwards ed., 1967). See generally LUDWIG WITTGENSTEIN, PHILOSOPHICAL INVESTIGATIONS (G.E.M. Anscombe trans., 1953). Wittgenstein argued that the meaning of a word is determined by its use. See Malcolm, supra at 337. The analytic philosopher explores the ways that words are used, finding that many disputes originate in alternative uses of some of the key words involved. Id. The present analysis is offered in this spirit. It analyzes the language used to describe CSR in hopes of better understanding alternative constructions of the concept.
16. The terms "linguistic philosophy," "linguistic analysis," and "analytic philosophy" can be used interchangeably. See Thomas Baldwin, Analytic Philosophy, in 1 RUTLEDGE ENCYCLOPEDIA OF PHILOSOPHY 223, 225-26 (Edward Craig ed., 1998). The present analysis borrows from what is commonly called "ordinary language philosophy." See generally id. Ordinary language philosophy originates in the later works of Ludwig Wittgenstein. See Norman Malcolm, Wittgenstein, in 8 ENCYCLOPEDIA OF PHILOSOPHY 327, 335-37 (Paul Edwards ed., 1967). See generally LUDWIG WITTGENSTEIN, PHILOSOPHICAL INVESTIGATIONS (G.E.M. Anscombe trans., 1953). Wittgenstein argued that the meaning of a word is determined by its use. See Malcolm, supra at 337. The analytic philosopher explores the ways that words are used, finding that many disputes originate in alternative uses of some of the key words involved. Id. The present analysis is offered in this spirit. It analyzes the language used to describe CSR in hopes of better understanding alternative constructions of the concept.
17. The terms "linguistic philosophy," "linguistic analysis," and "analytic philosophy" can be used interchangeably. See Thomas Baldwin, Analytic Philosophy, in 1 RUTLEDGE ENCYCLOPEDIA OF PHILOSOPHY 223, 225-26 (Edward Craig ed., 1998). The present analysis borrows from what is commonly called "ordinary language philosophy." See generally id. Ordinary language philosophy originates in the later works of Ludwig Wittgenstein. See Norman Malcolm, Wittgenstein, in 8 ENCYCLOPEDIA OF PHILOSOPHY 327, 335-37 (Paul Edwards ed., 1967). See generally LUDWIG WITTGENSTEIN, PHILOSOPHICAL INVESTIGATIONS (G.E.M. Anscombe trans., 1953). Wittgenstein argued that the meaning of a word is determined by its use. See Malcolm, supra at 337. The analytic philosopher explores the ways that words are used, finding that many disputes originate in alternative uses of some of the key words involved. Id. The present analysis is offered in this spirit. It analyzes the language used to describe CSR in hopes of better understanding alternative constructions of the concept.
18. See generally DICTIONARY OF PHILOSOPHY 164 (Dagobert D. Runes ed., 1960) (distinguishing various branches of linguistic philosophy and linking each to a central proposition that language shapes thought); Henry M. Hoenigswald, Linguistics, in 3 DICTIONARY OF THE HISTORY OF IDEAS 61-73 (Philip P. Wiener ed., 1973) (tracing the history of linguistic analysis).
19. See generally DICTIONARY OF PHILOSOPHY 164 (Dagobert D. Runes ed., 1960) (distinguishing various branches of linguistic philosophy and linking each to a central proposition that language shapes thought); Henry M. Hoenigswald, Linguistics, in 3 DICTIONARY OF THE HISTORY OF IDEAS 61-73 (Philip P. Wiener ed., 1973) (tracing the history of linguistic analysis).
20. For an excellent discussion of the power of language to channel and restrain thought see GEORGE MYERSON, RHETORIC, REASON, AND SOCIETY: RATIONALITY AS DIALOGUE (1994).
21. See generally M. Neil Browne & Nancy K. Kubasek, A Communitarian Green Space between Market and Political Rhetoric about Environmental Law, 37 AM. BUS. L.J. 127 (1999) (deconstructing the language employed in environmental debates, both by environmentalists and by free market advocates, and seeking a common ground in a unifying language of "communitarianism").
22. Milton Friedman, The Social Responsibility of Business Is to Increase Its Profits, N.Y. TIMES MAG., Sept. 13, 1970, at 32. Many contemporary business ethics textbooks continue to reprint Friedman's article. See, e.g., DAVID M. ADAMS & EDWARD W. MAINE, BUSINESS ETHICS FOR THE 21ST CENTURY 41-45 (1998); TOM L. BEAUCHAMP & NORMAN E. BOWIE, ETHICAL THEORY AND BUSINESS 51-55 (6th ed. 2001).
23. Milton Friedman, The Social Responsibility of Business Is to Increase Its Profits, N.Y. TIMES MAG., Sept. 13, 1970, at 32. Many contemporary business ethics textbooks continue to reprint Friedman's article. See, e.g., DAVID M. ADAMS & EDWARD W. MAINE, BUSINESS ETHICS FOR THE 21ST CENTURY 41-45 (1998); TOM L. BEAUCHAMP & NORMAN E. BOWIE, ETHICAL THEORY AND BUSINESS 51-55 (6th ed. 2001).
24. Milton Friedman, The Social Responsibility of Business Is to Increase Its Profits, N.Y. TIMES MAG., Sept. 13, 1970, at 32. Many contemporary business ethics textbooks continue to reprint Friedman's article. See, e.g., DAVID M. ADAMS & EDWARD W. MAINE, BUSINESS ETHICS FOR THE 21ST CENTURY 41-45 (1998); TOM L. BEAUCHAMP & NORMAN E. BOWIE, ETHICAL THEORY AND BUSINESS 51-55 (6th ed. 2001).
25. Friedman, supra note 6, at 33.
26. Discussions of CSR typically reference Friedman's seminal work, finding it provocative, yet incomplete. See, e.g., ROBERT C. SOLOMON, A BETTER WAY TO THINK ABOUT BUSINESS: HOW PERSONAL INTEGRITYLEADSTOCORPORATE SUCCESS 30-31,34 (1999); STONE, supra note 1, at 74-77.
27. Discussions of CSR typically reference Friedman's seminal work, finding it provocative, yet incomplete. See, e.g., ROBERT C. SOLOMON, A BETTER WAY TO THINK ABOUT BUSINESS: HOW PERSONAL INTEGRITYLEADSTOCORPORATE SUCCESS 30-31,34 (1999); STONE, supra note 1, at 74-77.
28. Friedman has discussed CSR elsewhere, see MILTON FRIEDMAN, CAPITALISM AND FREEDOM 133 (1962); Milton Friedman, Playboy Interview, PLAYBOY, Feb. 1973, at 59, but has not amplified or explained his notion of "ethical customs."
29. Friedman has discussed CSR elsewhere, see MILTON FRIEDMAN, CAPITALISM AND FREEDOM 133 (1962); Milton Friedman, Playboy Interview, PLAYBOY, Feb. 1973, at 59, but has not amplified or explained his notion of "ethical customs."
30. Discussions of CSR typically focus on top level management, assuming, either implicitly or explicitly, that the role of a middle level manager is simply to do what he or she is told to do by superiors. Freidman uses the word "executive," rather than "manager." See Friedman, supra note 6. The present discussion of CSR applies to all managerial levels, though the constraints faced and powers enjoyed vary widely with one's status within the corporate hierarchy.
31. See Ernest J. Weinrib, Legal Formalism: On the Immanent Rationality of Law, 97 YALE L.J. 949, 951-57 (1988) (defining formalism).
32. Richard Posner observes that formalists seek answers to legal questions from "a handful of permanent, unchanging, indispensable principles of law imperfectly embodied in the many thousands of published opinions." RICHARD A. POSNER, THE PROBLEMS OF JURISPRUDENCE 14-15 (1990). He continues: "Once these principles [are] brought to light the correct outcome of a case could be deduced." Id. at 15.
33. Positive legal formalism took shape in the United States during the late-nineteenth century, most notably in the hands of Christopher Langdell. See Daniel T. Ostas, Postmodern Economic Analysis of Law, 36 AM. BUS. L.J. 193, 198-99 (1998). Langdell's version of legal formalism has three defining characteristics: (1) law is autonomous, that is, not dependent on moral or social inquiries; (2) reasoning is conceptual, rather than empirical; and (3) objectively correct legal answers exist. See id. It is this strand of positive legal formalism that is critiqued in this section.
34. Natural law reasoning also employs the conceptual reasoning techniques of legal formalism. See generally POSNER, supra note 12, at 10-11 (1990) (using the term legal formalism to refer to reasoning techniques which may or may not exclude morality). But natural law locates the central tenets of law in morality, rather than legal texts. See infra notes 51-53 and accompanying text. The Langdellian version of legal formalism employed herein is distinctively positivistic. See generally Michael Corrado, The Place of Formalism in Legal Theory, 70 N.C. L. REV. 1545, 1545 (1992) (equating formalism with the notion that legal inquiry is immune from moral inquiry or other external referent).
35. Natural law reasoning also employs the conceptual reasoning techniques of legal formalism. See generally POSNER, supra note 12, at 10-11 (1990) (using the term legal formalism to refer to reasoning techniques which may or may not exclude morality). But natural law locates the central tenets of law in morality, rather than legal texts. See infra notes 51-53 and accompanying text. The Langdellian version of legal formalism employed herein is distinctively positivistic. See generally Michael Corrado, The Place of Formalism in Legal Theory, 70 N.C. L. REV. 1545, 1545 (1992) (equating formalism with the notion that legal inquiry is immune from moral inquiry or other external referent).
36. Natural law reasoning also employs the conceptual reasoning techniques of legal formalism. See generally POSNER, supra note 12, at 10-11 (1990) (using the term legal formalism to refer to reasoning techniques which may or may not exclude morality). But natural law locates the central tenets of law in morality, rather than legal texts. See infra notes 51-53 and accompanying text. The Langdellian version of legal formalism employed herein is distinctively positivistic. See generally Michael Corrado, The Place of Formalism in Legal Theory, 70 N.C. L. REV. 1545, 1545 (1992) (equating formalism with the notion that legal inquiry is immune from moral inquiry or other external referent).
37. The outcome of many legal disputes is predictable. This is particularly true when the law is stable and the facts of the case are not in dispute. See POSNER, supra note 12, at 30-31 (resisting the notion that law is radically indeterminate). The assertion here, however, is that most interesting cases involving CSR issues reside in less stable arenas. See id. (admitting that a form of probabilistic prediction is the best that can be hoped for in many cases).
38. 417 A.2d 505 (NJ. 1980).
39. See id. at 506-07.
40. See Deborah A. Ballam, Employment-At-Will: The Impending Death of a Doctrine, 37 AM.BUS. L.J. 653, 661-65 (2000) (discussing the evolving public policy exception to employment-atwill circa 1980).
41. See id.
42. See Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 508 (N.J. 1980).
43. See id. at 514.
44. See id. (Pashman, J., dissenting) (rejecting a holding that would force a decision between employment, on the one hand, and statutory policies and national and international codes of professional conduct, on the other).
45. See generally Ballam, supra note 18, at 682-87 (assessing the current dynamics associated with employment-at-will).
46. See generally GRANT GILMORE, THE DEATH OF CONTRACT 61 (1974) ("[T]hese two contradictory propositions cannot live comfortably together: in the end one must swallow up the other.").
47. 914 F. Supp. 97 (D. Pa. 1996).
48. See id at 98.
49. See id.
50. See GILMORE, supra note 24, at 18-22.
51. See id. at 70-73.
52. Smyth, 914 F. Supp. at 101 (summarizing the reasons for granting Pillsbury's motion to dismiss).
53. 42 U.S.C.A. § 1211(9) (West Supp. 1995). See generally Alan D. Schuchman, Note, The Holy and the Handicapped: An Examination of the Different Applications of the Reasonable-Accommodation Clauses in Title VII and the ADA, 73 IND. L.J. 745 (1998) (exploring alternative interpretations of "reasonable accommodation").
54. 17 U.S.C.A. § 107 (West Supp. 1996). See generally Michael G. Frey, Note, Is It Fair to Confuse? An Examination of Trademark Protection, the Fair Use Defense, and the First Amendment, 65 U. CIN. L. REV. 1255 (1997) (assessing alternative views of "fair use").
55. 48 U.S.C.A. § 2000e (WestSupp. 1994); 29 C.F.R. § 1604.11 (1999). See generally James C. Chow, Sticks, Stones, and Simple Testing: The Jurisprudence of Non-Cognizable Harassing Conduct in the Context of Title VII Hostile Work Environment Claims, 33 LOY. L.A. L. REV. 133 (1999) (examining ambiguities in interpreting the term "hostile work environment").
56. The literature addressing the thoughts of Holmes is immense. For useful discussions of Holmes' views on positivism see FREDERICK ROGERS KELLOGG, THE FORMATIVE ESSAYS OF JUSTICE HOLMES: THE MAKING OF AN AMERICAN LEGAL PHILOSOPHY, 58-62, 72-74 (1993); G. EDWARD WHITE, JUSTICE OLIVER WENDELL HOLMES: THE LAW AND THE INNER SELF 221 (1993).
57. The literature addressing the thoughts of Holmes is immense. For useful discussions of Holmes' views on positivism see FREDERICK ROGERS KELLOGG, THE FORMATIVE ESSAYS OF JUSTICE HOLMES: THE MAKING OF AN AMERICAN LEGAL PHILOSOPHY, 58-62, 72-74 (1993); G. EDWARD WHITE, JUSTICE OLIVER WENDELL HOLMES: THE LAW AND THE INNER SELF 221 (1993).
58. See Oliver Wendell Holmes, Jr., The Path of the Law, 10 HARV. L. REV. 457, 461 (1897) ("The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law.").
59. See generally NEIL DUXBURY, PATTERNS OF AMERICAN JURISPRUDENCE 9-64 (1995) (discussing Holmes' role in dismantling formalism and championing realism).
60. See Oliver Wendell Holmes, Jr., The Gas-Stokers' Strike, in THE ESSENTIAL HOLMES: SELECTIONS FROM LETTERS, SPEECHES, JUDICIAL OPINIONS, AND OTHER WRITINGS OF OLIVER WENDELL HOLMES, JR. 120-23 (Richard A. Posner ed., 1992). "The more powerful interests must be more or less reflected in the legislation, which, like every other device of man or beast, must tend in the long run to aid the survival of the fittest." Id. at 122.
61. The tobacco industry provides an apt illustration. For decades managers at tobacco companies shredded documents, concealed damaging medical reports, and engaged in elaborate public relations programs to successfully reduce the potential for legal liability. See Jon D. Hanson & Douglas A. Kaysar, Taking Behavioralism Seriously: Some Evidence of Market Manipulation, 112 HARV. L. REV. 1420 (1999) (chronicling decades of deception). Yet, under a "prediction" notion of law, one cannot condemn such activities as poor CSR. Given the successful tactics of tobacco managers, the law has been very slow to hold tobacco companies liable for addiction and premature deaths, and tobacco shareholders have reaped decades of profits. If law is a mere "prediction" of judicial actions, and CSR an admonition to make money subject to that prediction, then deceiving, addicting, and killing people becomes good CSR. One cannot condemn the tobacco industry for poor CSR, if one's notion of CSR rests solely on a prediction of legal liability.
62. See generally Tom Gerety, Why Good Lawyers Make Bad Mad Marxists, in MARXISM 196, 196-224 (J. Roland Pennock & John W. Chapman eds., 1983); Colin Summer, The Ideological Nature of Law, in MARXISM AND LAW 225, 225-61 (Piers Beirne & Richard Quinney eds., 1982).
63. See generally Tom Gerety, Why Good Lawyers Make Bad Mad Marxists, in MARXISM 196, 196-224 (J. Roland Pennock & John W. Chapman eds., 1983); Colin Summer, The Ideological Nature of Law, in MARXISM AND LAW 225, 225-61 (Piers Beirne & Richard Quinney eds., 1982).
64. See generally STEPHEN BREYER, REGULATION AND ITS REFORM 9-10 (1982) (contrasting the "capture theory" with the "public interest theory" of regulation); Richard A. Posner, Theories of Economic Regulation, 5 BELL J. ECON. & MGMT. SCI. 355 (discussing the genesis of the capture theory).
65. See generally STEPHEN BREYER, REGULATION AND ITS REFORM 9-10 (1982) (contrasting the "capture theory" with the "public interest theory" of regulation); Richard A. Posner, Theories of Economic Regulation, 5 BELL J. ECON. & MGMT. SCI. 355 (discussing the genesis of the capture theory).
66. Supra notes 16-17, 20-23 and accompanying text.
67. See Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 513-14 (1980) (holding that any potential danger to the public was "not imminent" because the FDA provided an independent check on drug safety).
68. Id. at 519 (Pashman, J., dissenting).
69. See id.
70. See id.
71. 413 N.E.2d 1054 (1980).
72. Id. at 1056.
73. See generally SHARON OSTER, MODERN COMPETITIVE ANALYSIS 320-23 (2d ed. 1994); Brian Shaffer & Amy Hillman, The Development of Business-Government Strategies by Diversified Firms, 21 STRATEGIC MGMT. J. 175, 175 (2000).
74. See generally SHARON OSTER, MODERN COMPETITIVE ANALYSIS 320-23 (2d ed. 1994); Brian Shaffer & Amy Hillman, The Development of Business-Government Strategies by Diversified Firms, 21 STRATEGIC MGMT. J. 175, 175 (2000).
75. See 15 U.S.C.A. §§ 52-55 (West Supp. 1997).
76. See TERRY HALBERT & ELAINE INGULLI, LAW & ETHICS IN THE BUSINESS ENVIRONMENT 334-35 (3d ed. 2000).
77. For a useful introduction to natural law reasoning see JEFFRIE G. MURPHY & JULES C. COLEMAN, THE PHILOSOPHY OF LAW: AN INTRODUCTION TO JURISPRUDENCE 13-22 (1984).
78. See generally LLOYD L. WEINREB, NATURAL LAW AND JUSTICE 56-60(1987) (discussing St. Thomas Aquinas' four types of law); Lloyd L. Weinreb, The Natural Law Tradition: Comments on Finnis, 36 J. LEGAL ED. 501 (1986) (discussing the work of John Finnis, a leading contemporary proponent of natural law reasoning).
79. See generally LLOYD L. WEINREB, NATURAL LAW AND JUSTICE 56-60(1987) (discussing St. Thomas Aquinas' four types of law); Lloyd L. Weinreb, The Natural Law Tradition: Comments on Finnis, 36 J. LEGAL ED. 501 (1986) (discussing the work of John Finnis, a leading contemporary proponent of natural law reasoning).
80. On the notion of civil disobedience see SAINT THOMAS AQUINAS, SUMMA THEOLOGICA Qu. 90, Art. 4.3 ("[L]aws may be unjust through being opposed to the Divine good: such are the laws of tyrants inducing idolatry, or to anything else contrary to Divine law: and laws of this kind must nowise be observed."); Martin Luther King, Jr., Letter from a Birmingham Jail (1968), in LAW AND MORALITY: READINGS IN LEGAL PHILOSOPHY 453, 459 (David Dyzenhaus & Arthur Ripstein eds., 1996) ("I submit that an individual who breaks a law that conscience tells him is unjust and willingly accepts the penalty . . . is in reality expressing the very highest respect for the law."); R.A. Wassertrom, The Obligation to Obey Law, in ESSAYS IN LEGAL PHILOSOPHY 279 (R. Summers ed., 1968).
81. On the notion of civil disobedience see SAINT THOMAS AQUINAS, SUMMA THEOLOGICA Qu. 90, Art. 4.3 ("[L]aws may be unjust through being opposed to the Divine good: such are the laws of tyrants inducing idolatry, or to anything else contrary to Divine law: and laws of this kind must nowise be observed."); Martin Luther King, Jr., Letter from a Birmingham Jail (1968), in LAW AND MORALITY: READINGS IN LEGAL PHILOSOPHY 453, 459 (David Dyzenhaus & Arthur Ripstein eds., 1996) ("I submit that an individual who breaks a law that conscience tells him is unjust and willingly accepts the penalty . . . is in reality expressing the very highest respect for the law."); R.A. Wassertrom, The Obligation to Obey Law, in ESSAYS IN LEGAL PHILOSOPHY 279 (R. Summers ed., 1968).
82. On the notion of civil disobedience see SAINT THOMAS AQUINAS, SUMMA THEOLOGICA Qu. 90, Art. 4.3 ("[L]aws may be unjust through being opposed to the Divine good: such are the laws of tyrants inducing idolatry, or to anything else contrary to Divine law: and laws of this kind must nowise be observed."); Martin Luther King, Jr., Letter from a Birmingham Jail (1968), in LAW AND MORALITY: READINGS IN LEGAL PHILOSOPHY 453, 459 (David Dyzenhaus & Arthur Ripstein eds., 1996) ("I submit that an individual who breaks a law that conscience tells him is unjust and willingly accepts the penalty . . . is in reality expressing the very highest respect for the law."); R.A. Wassertrom, The Obligation to Obey Law, in ESSAYS IN LEGAL PHILOSOPHY 279 (R. Summers ed., 1968).
83. See Manual Valasquez & F. Neil Brady, Natural Law and Business Ethics, 7 BUS. ETHICS Q. 83 (1997) (detailing four natural law traditions: traditionalist, proportionist, right reason, and historicist). See generally Timothy L. Fort, Corporate Makahiki: The Governing Telos of Peace, 38 AM. BUS. L.J. 301 (2001) (distinguishing various approaches to natural law).
84. See Manual Valasquez & F. Neil Brady, Natural Law and Business Ethics, 7 BUS. ETHICS Q. 83 (1997) (detailing four natural law traditions: traditionalist, proportionist, right reason, and historicist). See generally Timothy L. Fort, Corporate Makahiki: The Governing Telos of Peace, 38 AM. BUS. L.J. 301 (2001) (distinguishing various approaches to natural law).
85. See generally Michel Rosenfeld, Pragmatism, Pluralism and Legal Interpretation: Posner's and Rorty's Justice Without Metaphysics Meets Hate Speech, 18 CARDOZO L. REV. 97 (1996) (discussing competing moral norms associated with regulating speech).
86. See Int'l Union v. Johnson Controls, Inc., 499 U.S. 187 (1991).
87. See id. at 190.
88. See id.
89. See id.
90. See id.
91. See id.
92. See id. Justice Brennan, delivering the opinion, was joined by Justices Marshall, Stevens, O'Connor, and Souter. Justice White concurred in part and concurred in the judgment, joined by Justices Rehnquist and Kennedy. Justice Scalia concurred in the judgment, filing a separate opinion.
93. See Steven R. Salbu, Law and Conformity, Ethics and Conflict: The Trouble with Law-Based Conceptions of Ethics, 68 IND. L.J. 101, 110 (1992) (noting an "inability of natural law to convince either that there is one truth or that we can know what that truth is").
94. See id. at 108 (observing that natural law offers coercive punishments for those who deviate from its prescriptions).
95. See generally Symposium, The Revival of Pragmatism, 18 CARDOZO L REV. 1 (1996) (providing several complementary but distinct views of pragmatism); Symposium, The Renaissance of Pragmatism in American Legal Thought, 63 S. CAL. L. REV. 1569 (1990) (same).
96. See generally Symposium, The Revival of Pragmatism, 18 CARDOZO L REV. 1 (1996) (providing several complementary but distinct views of pragmatism); Symposium, The Renaissance of Pragmatism in American Legal Thought, 63 S. CAL. L. REV. 1569 (1990) (same).
97. Richard Posner describes pragmatism as a public "conversation" in search of both end-values and instrumental means for achieving those values. RICHARD A. POSNER, OVERCOMING LAW 4-15 (1995).
98. See Steven D. Smith, The Pursuit of Pragmatism, 100 YALE L.J. 409, 444-49 (1990) (summarizing legal pragmatism as an "exhortation to skepticism" as to both the ends sought in law and means employed to achieve those ends).
99. See generally Michael L. Seigel, Pragmatism Applied: Imagining a Solution
100. The fact that legal pragmatism echoes legal realism is not a coincidence. Realism was born as a revolt against formalism that characterized early-twentieth century jurisprudential debates. See MORTON WHITE, SOCIAL THOUGHT IN AMERICA: THE REVOLT AGAINST FORMALISM 11-18 (1949). Realists split into two camps, with the more radical members emphasizing the indeterminate nature of law (Holmes' prediction theory), and the less radical seeking to ground law to empirically based social policy (legal pragmatism). See GARY MINDA, POSTMODERN LEGAL MOVEMENTS: LAW ANDJURISPRUDENCE AT CENTURY'S END 28-33 (1995) (distinguishing two forms of realism: radical and progressive); Gary Peller, The Metaphysics of American Law, 73 CAL. L. REV. 1151, 1219-26 (1985) (same). See generally Ostas, supra note 13, at 198-210 (discussing the historical antecedents of legal pragmatism).
101. The fact that legal pragmatism echoes legal realism is not a coincidence. Realism was born as a revolt against formalism that characterized early-twentieth century jurisprudential debates. See MORTON WHITE, SOCIAL THOUGHT IN AMERICA: THE REVOLT AGAINST FORMALISM 11-18 (1949). Realists split into two camps, with the more radical members emphasizing the indeterminate nature of law (Holmes' prediction theory), and the less radical seeking to ground law to empirically based social policy (legal pragmatism). See GARY MINDA, POSTMODERN LEGAL MOVEMENTS: LAW ANDJURISPRUDENCE AT CENTURY'S END 28-33 (1995) (distinguishing two forms of realism: radical and progressive); Gary Peller, The Metaphysics of American Law, 73 CAL. L. REV. 1151, 1219-26 (1985) (same). See generally Ostas, supra note 13, at 198-210 (discussing the historical antecedents of legal pragmatism).
102. The fact that legal pragmatism echoes legal realism is not a coincidence. Realism was born as a revolt against formalism that characterized early-twentieth century jurisprudential debates. See MORTON WHITE, SOCIAL THOUGHT IN AMERICA: THE REVOLT AGAINST FORMALISM 11-18 (1949). Realists split into two camps, with the more radical members emphasizing the indeterminate nature of law (Holmes' prediction theory), and the less radical seeking to ground law to empirically based social policy (legal pragmatism). See GARY MINDA, POSTMODERN LEGAL MOVEMENTS: LAW ANDJURISPRUDENCE AT CENTURY'S END 28-33 (1995) (distinguishing two forms of realism: radical and progressive); Gary Peller, The Metaphysics of American Law, 73 CAL. L. REV. 1151, 1219-26 (1985) (same). See generally Ostas, supra note 13, at 198-210 (discussing the historical antecedents of legal pragmatism).
103. The fact that legal pragmatism echoes legal realism is not a coincidence. Realism was born as a revolt against formalism that characterized early-twentieth century jurisprudential debates. See MORTON WHITE, SOCIAL THOUGHT IN AMERICA: THE REVOLT AGAINST FORMALISM 11-18 (1949). Realists split into two camps, with the more radical members emphasizing the indeterminate nature of law (Holmes' prediction theory), and the less radical seeking to ground law to empirically based social policy (legal pragmatism). See GARY MINDA, POSTMODERN LEGAL MOVEMENTS: LAW ANDJURISPRUDENCE AT CENTURY'S END 28-33 (1995) (distinguishing two forms of realism: radical and progressive); Gary Peller, The Metaphysics of American Law, 73 CAL. L. REV. 1151, 1219-26 (1985) (same). See generally Ostas, supra note 13, at 198-210 (discussing the historical antecedents of legal pragmatism).
104. See POSNER, supra note 12, at 130 (asserting that a "fact-bound, policy-soaked, instrumental concept of reasonableness" can provide a sufficient "lodestar" to legitimize law).
105. Posner describes a pragmatic search for legal values as "a grab bag that includes anecdote, introspection, imagination, common sense, custom, memory, experience, intuition, and induction." Id. at 73.
106. Id. at 7.
107. See generally ROBERT KUTTNER, EVERYTHING FOR SALE: THE VIRTUES AND LIMITS OF MARKETS (1997) (discussing the rhetorical strength of an appeal to the market and its effect on public discourse); ROBERT E. LANE, THE MARKET EXPERIENCE (1991) (same).
108. See generally ROBERT KUTTNER, EVERYTHING FOR SALE: THE VIRTUES AND LIMITS OF MARKETS (1997) (discussing the rhetorical strength of an appeal to the market and its effect on public discourse); ROBERT E. LANE, THE MARKET EXPERIENCE (1991) (same).
109. See, e.g., FRIEDMAN, supra note 9, at 1-6 (recognizing the need for a minimal set of laws to enable market freedoms, but characterizing most laws as a restriction on freedom).
110. Friedman, supra note 6, at 126.
111. The notion of individual autonomy that underscores the classical vision of freedom is far from self-evident. Many cognitive scientists and business ethicists insist that human autonomy has no meaning outside of its cultural context. See generally RICHARD L. LIPPKE, RADICAL BUSINESS ETHICS 27-77 (1995) (linking the language of autonomy to a "radical theory" of human agency); JEFFREY REIMAN, JUSTICE AND MODERN MORAL PHILOSOPHY (1990) (same).
112. The notion of individual autonomy that underscores the classical vision of freedom is far from self-evident. Many cognitive scientists and business ethicists insist that human autonomy has no meaning outside of its cultural context. See generally RICHARD L. LIPPKE, RADICAL BUSINESS ETHICS 27-77 (1995) (linking the language of autonomy to a "radical theory" of human agency); JEFFREY REIMAN, JUSTICE AND MODERN MORAL PHILOSOPHY (1990) (same).
113. See generally Richard A. Epstein, Unconscionability: A Critical Reappraisal, 18 J.L. & ECON. 293, 293-95 (1975) (articulating and distinguishing libertarian and utilitarian defenses of laissez faire).
114. The most articulate defense of decentralized markets can be found in the works of the Austrian economists, Mises and Hayek. See generally Ludwig von Mises, Economic Calculations in Socialism (1922), reprinted in MORRIS BORNSTEIN, COMPARATIVE ECONOMIC SYSTEMS (1969) (complexities of modern economies doom central planning to failure); Friedrich von Hayek, Socialist Calculation: The Competitive Solution, 7 ECONOMICA 125 (1940) (identifying information problems as the source of planning failures); Friedrich von Hayek, The Use of Knowledge in Society, 35 AM. ECON. REV. 519 (1945) (explaining how free markets facilitate coordination).
115. The most articulate defense of decentralized markets can be found in the works of the Austrian economists, Mises and Hayek. See generally Ludwig von Mises, Economic Calculations in Socialism (1922), reprinted in MORRIS BORNSTEIN, COMPARATIVE ECONOMIC SYSTEMS (1969) (complexities of modern economies doom central planning to failure); Friedrich von Hayek, Socialist Calculation: The Competitive Solution, 7 ECONOMICA 125 (1940) (identifying information problems as the source of planning failures); Friedrich von Hayek, The Use of Knowledge in Society, 35 AM. ECON. REV. 519 (1945) (explaining how free markets facilitate coordination).
116. The most articulate defense of decentralized markets can be found in the works of the Austrian economists, Mises and Hayek. See generally Ludwig von Mises, Economic Calculations in Socialism (1922), reprinted in MORRIS BORNSTEIN, COMPARATIVE ECONOMIC SYSTEMS (1969) (complexities of modern economies doom central planning to failure); Friedrich von Hayek, Socialist Calculation: The Competitive Solution, 7 ECONOMICA 125 (1940) (identifying information problems as the source of planning failures); Friedrich von Hayek, The Use of Knowledge in Society, 35 AM. ECON. REV. 519 (1945) (explaining how free markets facilitate coordination).
117. See Jacob Viner, The Intellectul History of Laissez Faire, 3 J.L. & ECON. 45 (1960) (analyzing the rhetorical appeal of laissez faire reasoning). But see Warren J. Samuels, Interrelations Between Legal and Economic Processes, 14 J.L. & ECON. 435 (1971) (arguing that laissez faire reasoning is essentially vacuous).
118. See Jacob Viner, The Intellectul History of Laissez Faire, 3 J.L. & ECON. 45 (1960) (analyzing the rhetorical appeal of laissez faire reasoning). But see Warren J. Samuels, Interrelations Between Legal and Economic Processes, 14 J.L. & ECON. 435 (1971) (arguing that laissez faire reasoning is essentially vacuous).
119. "Neoclassical economics may be conveniently defined as an approach which (1) assumes rational, maximizing behavior by agents with given and stable preference functions, (2) focuses on attained, or movements toward, equilibrium states, and (3) excludes chronic information problems." Geoffrey Hodgson, The Approach of Institutional Economics, 36 J. ECON. LIT. 166, 169 n.4 (1998) (parenthetical omitted). The neoclassical approach originates in the nineteenth-century works of Alfred Marshall and Leon Walras. See ROBERT B. EKELUND, JR., & ROBERT F. HEBERT, A HISTORY OF ECONOMIC THEORY AND METHOD 328 (1983) (citing Marshall and Walras as the "twin founders of neoclassical analysis"). Some scholars define economics with sole reference to neoclassical techniques. See, e.g., GARY S. BECKER, THE ECONOMIC APPROACH TO HUMAN BEHAVIOR 4-5 (1976) (defining any question that can be addressed with neoclassical techniques as an "economic question"). For a useful summary of alternative approaches to economics including Austrian, Institutional, and Marxian see
120. "Neoclassical economics may be conveniently defined as an approach which (1) assumes rational, maximizing behavior by agents with given and stable preference functions, (2) focuses on attained, or movements toward, equilibrium states, and (3) excludes chronic information problems." Geoffrey Hodgson, The Approach of Institutional Economics, 36 J. ECON. LIT. 166, 169 n.4 (1998) (parenthetical omitted). The neoclassical approach originates in the nineteenth-century works of Alfred Marshall and Leon Walras. See ROBERT B. EKELUND, JR., & ROBERT F. HEBERT, A HISTORY OF ECONOMIC THEORY AND METHOD 328 (1983) (citing Marshall and Walras as the "twin founders of neoclassical analysis"). Some scholars define economics with sole reference to neoclassical techniques. See, e.g., GARY S. BECKER, THE ECONOMIC APPROACH TO HUMAN BEHAVIOR 4-5 (1976) (defining any question that can be addressed with neoclassical techniques as an "economic question"). For a useful summary of alternative approaches to economics including Austrian, Institutional, and Marxian see
121. "Neoclassical economics may be conveniently defined as an approach which (1) assumes rational, maximizing behavior by agents with given and stable preference functions, (2) focuses on attained, or movements toward, equilibrium states, and (3) excludes chronic information problems." Geoffrey Hodgson, The Approach of Institutional Economics, 36 J. ECON. LIT. 166, 169 n.4 (1998) (parenthetical omitted). The neoclassical approach originates in the nineteenth-century works of Alfred Marshall and Leon Walras. See ROBERT B. EKELUND, JR., & ROBERT F. HEBERT, A HISTORY OF ECONOMIC THEORY AND METHOD 328 (1983) (citing Marshall and Walras as the "twin founders of neoclassical analysis"). Some scholars define economics with sole reference to neoclassical techniques. See, e.g., GARY S. BECKER, THE ECONOMIC APPROACH TO HUMAN BEHAVIOR 4-5 (1976) (defining any question that can be addressed with neoclassical techniques as an "economic question"). For a useful summary of alternative approaches to economics including Austrian, Institutional, and Marxian see
122. NICHOLAS MERCURO & STEVEN G. MEDEMA, ECONOMICS AND THE LAW: FROM POSNER TO POSTMODERNISM (1997).
123. The neoclassical theory of the firm suppresses the market between a manager and his or her employer, assuming that the interests of manager and the firm match. The implications of a divergence between managerial and firm goals were first explored in the 1930s. See generally ADOLF A. BERLE, JR., & GARDINER C. MEAN'S, THE MODERN CORPORATION AND PRIVATE PROPERTY (1932); Ronald H. Coase, The Nature of the Firm, 4 ECONOMICA 386 (1937). These seminal works spawned what today would be called "agency theory." See generally Eugene F. Fama, Agency Problems and the Theory of the Firm, 8 J. POL. ECON. 288 (1980); Michael C. Jensen & William H. Meckling, The Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 J. FIN. ECON. 305 (1976).
124. The neoclassical theory of the firm suppresses the market between a manager and his or her employer, assuming that the interests of manager and the firm match. The implications of a divergence between managerial and firm goals were first explored in the 1930s. See generally ADOLF A. BERLE, JR., & GARDINER C. MEAN'S, THE MODERN CORPORATION AND PRIVATE PROPERTY (1932); Ronald H. Coase, The Nature of the Firm, 4 ECONOMICA 386 (1937). These seminal works spawned what today would be called "agency theory." See generally Eugene F. Fama, Agency Problems and the Theory of the Firm, 8 J. POL. ECON. 288 (1980); Michael C. Jensen & William H. Meckling, The Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 J. FIN. ECON. 305 (1976).
125. The neoclassical theory of the firm suppresses the market between a manager and his or her employer, assuming that the interests of manager and the firm match. The implications of a divergence between managerial and firm goals were first explored in the 1930s. See generally ADOLF A. BERLE, JR., & GARDINER C. MEAN'S, THE MODERN CORPORATION AND PRIVATE PROPERTY (1932); Ronald H. Coase, The Nature of the Firm, 4 ECONOMICA 386 (1937). These seminal works spawned what today would be called "agency theory." See generally Eugene F. Fama, Agency Problems and the Theory of the Firm, 8 J. POL. ECON. 288 (1980); Michael C. Jensen & William H. Meckling, The Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 J. FIN. ECON. 305 (1976).
126. The neoclassical theory of the firm suppresses the market between a manager and his or her employer, assuming that the interests of manager and the firm match. The implications of a divergence between managerial and firm goals were first explored in the 1930s. See generally ADOLF A. BERLE, JR., & GARDINER C. MEAN'S, THE MODERN CORPORATION AND PRIVATE PROPERTY (1932); Ronald H. Coase, The Nature of the Firm, 4 ECONOMICA 386 (1937). These seminal works spawned what today would be called "agency theory." See generally Eugene F. Fama, Agency Problems and the Theory of the Firm, 8 J. POL. ECON. 288 (1980); Michael C. Jensen & William H. Meckling, The Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 J. FIN. ECON. 305 (1976).
127. The assumption of profit maximization is axiomatic within the neoclassical approach. See Hodgson, supra note 83, at 169 n.4. The model does not suggest that managers should maximize profit, rather it predicts how they will do so, given an assumption of maximizing behavior. See Milton Friedman, The Methodology of Positive Economics, in ESSAYS IN POSITIVE ECONOMICS 3, 15 (1953) (emphasizing the role of prediction in neoclassical analysis).
128. The assumption of profit maximization is axiomatic within the neoclassical approach. See Hodgson, supra note 83, at 169 n.4. The model does not suggest that managers should maximize profit, rather it predicts how they will do so, given an assumption of maximizing behavior. See Milton Friedman, The Methodology of Positive Economics, in ESSAYS IN POSITIVE ECONOMICS 3, 15 (1953) (emphasizing the role of prediction in neoclassical analysis).
129. The theory of the firm is presented in virtually every microeconomic textbook at either the graduate or undergraduate level. The conceptual content does not change, but the reliance on mathematics increases for the more advanced student. See, e.g., MILTON FRIEDMAN;, PRICE THEORY: A PROVISIONAL TEXT (1962) (providing a conceptual approach with little mathematics); HAL R. VARIAN, INTERMEDIATE ECONOMICS (1987) (drawing on elementary algebra and numerical examples while delegating calculus to appendices); JAMES M. HENDERSON & RICHARD E. QUANDT, MICROECONOMIC THEORY: A MATHEMATICAL APPROACH (3d ed. 1980) (employing differential and integral calculus and matrix algebra).
130. The theory of the firm is presented in virtually every microeconomic textbook at either the graduate or undergraduate level. The conceptual content does not change, but the reliance on mathematics increases for the more advanced student. See, e.g., MILTON FRIEDMAN;, PRICE THEORY: A PROVISIONAL TEXT (1962) (providing a conceptual approach with little mathematics); HAL R. VARIAN, INTERMEDIATE ECONOMICS (1987) (drawing on elementary algebra and numerical examples while delegating calculus to appendices); JAMES M. HENDERSON & RICHARD E. QUANDT, MICROECONOMIC THEORY: A MATHEMATICAL APPROACH (3d ed. 1980) (employing differential and integral calculus and matrix algebra).
131. The theory of the firm is presented in virtually every microeconomic textbook at either the graduate or undergraduate level. The conceptual content does not change, but the reliance on mathematics increases for the more advanced student. See, e.g., MILTON FRIEDMAN;, PRICE THEORY: A PROVISIONAL TEXT (1962) (providing a conceptual approach with little mathematics); HAL R. VARIAN, INTERMEDIATE ECONOMICS (1987) (drawing on elementary algebra and numerical examples while delegating calculus to appendices); JAMES M. HENDERSON & RICHARD E. QUANDT, MICROECONOMIC THEORY: A MATHEMATICAL APPROACH (3d ed. 1980) (employing differential and integral calculus and matrix algebra).
132. Neoclassical economics is deductive, assuming certain central axioms as inviolate and deducing the logical ramifications of those axioms. See Daniel M. Hausman, Economic Methodology in a Nutshell, 3 J. ECON. PERSP. 115 (1989). Although neoclassicism dominates contemporary economic thought, not all economists embrace its deductive technique. Id. at 116 (tracing an inductive method to John Stuart Mill).
133. See generally HENDERSON & QUANDT, supra note 86, at 8-18, 32-33 (discussing utility theory); VARIAN, supra note 86, at 52-62 (same).
134. See generally HENDERSON & QUANDT, supra note 86, at 8-18, 32-33 (discussing utility theory); VARIAN, supra note 86, at 52-62 (same).
135. See generally HENDERSON & QUANDT (discussing cost theory), supra note 86, at 74-84;
136. VARIAN, supra note 86, at 339-42 (same).
137. See generally HENDERSON & QUANDT, supra note 86, at 64-73 (discussing production functions);
138. VARIAN, supra note 86, at 310-11 (same).
139. See generally FRIEDMAN, supra note 86, at 85-87 (discussing supply curves);
140. VARIAN, supra note 86, at 367-82 (same).
141. See generally FRIEDMAN, supra note 86, at 3 7-39 (discussing demand curves); HENDERSON & QUANDT, supra note 86, at 18-24 (same); VARIAN, supra note 86, at 20-31, 70-75 (same).
142. See generally FRIEDMAN, supra note 86, at 3 7-39 (discussing demand curves); HENDERSON & QUANDT, supra note 86, at 18-24 (same); VARIAN, supra note 86, at 20-31, 70-75 (same).
143. See generally FRIEDMAN, supra note 86, at 3 7-39 (discussing demand curves); HENDERSON & QUANDT, supra note 86, at 18-24 (same); VARIAN, supra note 86, at 20-31, 70-75 (same).
144. See generally HENDERSON & QUANDT, supra note 86, at 64, 83 (specifying optimal firm decisions given supply and demand);
145. VARIAN, supra note 86, at 325-27 (same).
146. Hal Varian defines an "exogenous variable" as "predetermined by factors not discussed in this particular model." VARIAN, supra note 86, at 2. He defines an "endogenous variable" as "determined by the forces defined in the model." Id. James Henderson and Richard Quandt provide a superb summary of which variables within the neoclassical model are assumed to be outside the control of management, describing such variables as "data." See HENDERSON & QUANDT, supra note 86, at 230-31.
147. It would seem that discretion is a prerequisite for responsibility. Hence, if a manager has no control over a given decision, the notion of CSR for that manager becomes moot.
148. See FRIEDMAN, supra note 86, at 12-13 ("Wants are to be taken in our analysis as givens, or data . . . . The economist has little to say about the formation of wants; this is the province of the psychologist. The economist's task is to trace the consequences of any given set of wants."); VARIAN, supra note 86, at 34-38 (expressing the same view).
149. See FRIEDMAN, supra note 86, at 12-13 ("Wants are to be taken in our analysis as givens, or data . . . . The economist has little to say about the formation of wants; this is the province of the psychologist. The economist's task is to trace the consequences of any given set of wants."); VARIAN, supra note 86, at 34-38 (expressing the same view).
150. Recent work in economic thought is beginning to open up the "black box" of exogenous preferences. See, e.g., GARY S. BECKER, ACCOUNTING FOR TASTES (1996) (exploring the implications of evolving preferences); see also infra notes 142-62 (same). But see Geoffrey M. Hodgson, The Approach of Institutional Economics, 36 J. ECON. LIT. 166, 117 n.8 (1998) (arguing that Becker's analysis reveals a "meta-preference" that remains temporarily primary and inviolate in Becker's analysis).
151. Recent work in economic thought is beginning to open up the "black box" of exogenous preferences. See, e.g., GARY S. BECKER, ACCOUNTING FOR TASTES (1996) (exploring the implications of evolving preferences); see also infra notes 142-62 (same). But see Geoffrey M. Hodgson, The Approach of Institutional Economics, 36 J. ECON. LIT. 166, 117 n.8 (1998) (arguing that Becker's analysis reveals a "meta-preference" that remains temporarily primary and inviolate in Becker's analysis).
152. Recent work in economic thought is beginning to open up the "black box" of exogenous preferences. See, e.g., GARY S. BECKER, ACCOUNTING FOR TASTES (1996) (exploring the implications of evolving preferences); see also infra notes 142-62 (same). But see Geoffrey M. Hodgson, The Approach of Institutional Economics, 36 J. ECON. LIT. 166, 117 n.8 (1998) (arguing that Becker's analysis reveals a "meta-preference" that remains temporarily primary and inviolate in Becker's analysis).
153. The model posits that the only way that a firm can infer preferences is through the actions of its trading partners as revealed by offers to pay or offers to accept. See Paul A. Samuelson, Consumption Theory in Terms of Revealed Preference, 15 ECONOMICA 243 (1948) (seminal work); VARIAN, supra note 86, at 114-21 (discussing the theory of revealed preferences). But see Jeffrey L. Harrison, Egoism, Altruism, and Market Illusions: The Limits of Law and Economics, 33 UCLA L. REV. 1309, 1316-19 (1986) (critiquing tautological nature of revealed preference theory); Cass R. Sunstein, Incommensurability and Valuation in Law, 92 MICH. L. REV. 779, 794 n.48 (1994) (arguing that offers to pay or to accept do not warrant conclusions about underlying values).
154. The model posits that the only way that a firm can infer preferences is through the actions of its trading partners as revealed by offers to pay or offers to accept. See Paul A. Samuelson, Consumption Theory in Terms of Revealed Preference, 15 ECONOMICA 243 (1948) (seminal work); VARIAN, supra note 86, at 114-21 (discussing the theory of revealed preferences). But see Jeffrey L. Harrison, Egoism, Altruism, and Market Illusions: The Limits of Law and Economics, 33 UCLA L. REV. 1309, 1316-19 (1986) (critiquing tautological nature of revealed preference theory); Cass R. Sunstein, Incommensurability and Valuation in Law, 92 MICH. L. REV. 779, 794 n.48 (1994) (arguing that offers to pay or to accept do not warrant conclusions about underlying values).
155. The model posits that the only way that a firm can infer preferences is through the actions of its trading partners as revealed by offers to pay or offers to accept. See Paul A. Samuelson, Consumption Theory in Terms of Revealed Preference, 15 ECONOMICA 243 (1948) (seminal work); VARIAN, supra note 86, at 114-21 (discussing the theory of revealed preferences). But see Jeffrey L. Harrison, Egoism, Altruism, and Market Illusions: The Limits of Law and Economics, 33 UCLA L. REV. 1309, 1316-19 (1986) (critiquing tautological nature of revealed preference theory); Cass R. Sunstein, Incommensurability and Valuation in Law, 92 MICH. L. REV. 779, 794 n.48 (1994) (arguing that offers to pay or to accept do not warrant conclusions about underlying values).
156. The model posits that the only way that a firm can infer preferences is through the actions of its trading partners as revealed by offers to pay or offers to accept. See Paul A. Samuelson, Consumption Theory in Terms of Revealed Preference, 15 ECONOMICA 243 (1948) (seminal work); VARIAN, supra note 86, at 114-21 (discussing the theory of revealed preferences). But see Jeffrey L. Harrison, Egoism, Altruism, and Market Illusions: The Limits of Law and Economics, 33 UCLA L. REV. 1309, 1316-19 (1986) (critiquing tautological nature of revealed preference theory); Cass R. Sunstein, Incommensurability and Valuation in Law, 92 MICH. L. REV. 779, 794 n.48 (1994) (arguing that offers to pay or to accept do not warrant conclusions about underlying values).
157. The search for a theory of value provides a core theme in the history of economic thought. See generally EKELUND & HEBERT, supra note 83 (contrasting the "labor theory of value" associated with classical economists such as Adam Smith, David Ricardo, and Karl Marx with the exchange theory developed by Alfred Marshall and Leon Walras). Neoclassical economics offers no notion of objective value, content to reveal the mysteries of relative values as revealed in market prices. See WENDELL GORDON & JOHN ADAMS, ECONOMICS AS SOCIAL SCIENCE: AN EVOLUTIONARY APPROACH 83-99 (1989) (critiquing use, labor, and exchange theories of value).
158. The search for a theory of value provides a core theme in the history of economic thought. See generally EKELUND & HEBERT, supra note 83 (contrasting the "labor theory of value" associated with classical economists such as Adam Smith, David Ricardo, and Karl Marx with the exchange theory developed by Alfred Marshall and Leon Walras). Neoclassical economics offers no notion of objective value, content to reveal the mysteries of relative values as revealed in market prices. See WENDELL GORDON & JOHN ADAMS, ECONOMICS AS SOCIAL SCIENCE: AN EVOLUTIONARY APPROACH 83-99 (1989) (critiquing use, labor, and exchange theories of value).
159. See HENDERSON & QUANDT, supra note 86, at 24-25;
160. VARIAN, supra note 86, at 170-72.
161. The neoclassical theory of the firm is a "partial equilibrium" model in which the prices and wages in all markets other than the one being examined are held constant. See EKELUND & HERBERT, supra note 83, at 369 (discussing the ceteris paribus assumptions of partial equilibrium). Relaxing this assumption and assuming instead that the actions of one market actor will influence the actions of another spawned game theory. See generally JOHN VON NEUMANN & OSKAR MORGENSTERN, THEORY OF GAMES AND ECONOMIC BEHAVIOR (1944) (seminal work on game theory);
162. The neoclassical theory of the firm is a "partial equilibrium" model in which the prices and wages in all markets other than the one being examined are held constant. See EKELUND & HERBERT, supra note 83, at 369 (discussing the ceteris paribus assumptions of partial equilibrium). Relaxing this assumption and assuming instead that the actions of one market actor will influence the actions of another spawned game theory. See generally JOHN VON NEUMANN & OSKAR MORGENSTERN, THEORY OF GAMES AND ECONOMIC BEHAVIOR (1944) (seminal work on game theory);
163. VARIAN, supra note 86, at 466-78 (discussing game theory).
164. See VARIAN, supra note 86, at 309 ("Nature imposes the constraint that there are only certain feasible ways to produce outputs from inputs."). See generally HENDERSON & QUANDT, supra note 86, at 230 (stating that production functions are exogenous).
165. See VARIAN, supra note 86, at 309 ("Nature imposes the constraint that there are only certain feasible ways to produce outputs from inputs."). See generally HENDERSON & QUANDT, supra note 86, at 230 (stating that production functions are exogenous).
166. See generally HENDERSON & QUANDT, supra note 86, at 67 (defining the "marginal product" of an input as the "rate of change in total product with respect to variations in the quantity" of that input);
167. VARIAN, supra note 86, at 314-15 (same).
168. See supra note 102. For an example of a dynamic model in which technology evolves, see GORDON & ADAMS, supra note 99.
169. See supra note 102. For an example of a dynamic model in which technology evolves, see GORDON & ADAMS, supra note 99.
170. Empirical evidence suggests that once an entitlement (such as privacy) is experienced, preferences for that entitlement change. See Daniel Kahneman et al., Experimental Tests of the Endowment Effect and the Coase Theorem, 98 J. POL. ECON. 1325 (1990) (referencing 11 studies); see also infra notes 146-48 and accompanying text.
171. Empirical evidence suggests that once an entitlement (such as privacy) is experienced, preferences for that entitlement change. See Daniel Kahneman et al., Experimental Tests of the Endowment Effect and the Coase Theorem, 98 J. POL. ECON. 1325 (1990) (referencing 11 studies); see also infra notes 146-48 and accompanying text.
172. A choice of technology is made under conditions of uncertainty. Experience with the chosen technology will suggest alternative advances, also made under conditions of uncertainty. Hence, "progress" depends on the various paths chosen, rather than on some ultimate and inevitable telos. See generally GORDON & ADAMS, supra note 99, at 41 (exploring the notion of path dependence as applied to technological change).
173. See generally Sunstein, supra note 98 (discussing second-order preferences as preferences about preferences).
174. One source of uncertainty may be information asymmetry between the firm and its employees, but it is more complex than that. Workers themselves may not know the value of privacy until they experience it. See supra note 105.
175. In a metaphysical sense, utility preferences and production possibilities may indeed exist without reference to the free will or creative imagination of managers. It may be reasonable, for example, to assume that preferences and technologies pre-exist creative imagination, and that the role of the manager is to discover these preferences and technologies. So viewed, utility and production functions are exogenous, but unknown. Note, however, that it is also reasonable to assume that preferences and technology do not exist outside of their material manifestations. Compare Richard Taylor, Reality Consists of Matter, in CLASSIC PHILOSOPHICAL QUESTIONS 347 James A. Gould ed., 1971), with George Berkeley, Reality Consists of Ideas, in CLASSIC PHILOSOPHICAL QUESTIONS, supra, at 365. These manifestations, in turn, can be seen as a product of free will and human intervention. Hence, managers truly create, rather than simply discover markets. The practical manager, however, has no need for such metaphysical inquiries. In the practical world in which CSR decisions are made, it makes no difference whether the manager is discovering a technology (or preference) from a Platonic menu of pre-existing ideas or creating that technology (or preference) through an act of free will. Discovery and creation, in a practical sense, conflate. They have similar practical implications. Both direct an inquiry into the unknown. Both encourage the manager to seek out new and better ways to identify and satisfy worker and consumer demands and new means of increasing productivity. Both call for an active role for managerial discretion and imagination.
176. In a metaphysical sense, utility preferences and production possibilities may indeed exist without reference to the free will or creative imagination of managers. It may be reasonable, for example, to assume that preferences and technologies pre-exist creative imagination, and that the role of the manager is to discover these preferences and technologies. So viewed, utility and production functions are exogenous, but unknown. Note, however, that it is also reasonable to assume that preferences and technology do not exist outside of their material manifestations. Compare Richard Taylor, Reality Consists of Matter, in CLASSIC PHILOSOPHICAL QUESTIONS 347 James A. Gould ed., 1971), with George Berkeley, Reality Consists of Ideas, in CLASSIC PHILOSOPHICAL QUESTIONS, supra, at 365. These manifestations, in turn, can be seen as a product of free will and human intervention. Hence, managers truly create, rather than simply discover markets. The practical manager, however, has no need for such metaphysical inquiries. In the practical world in which CSR decisions are made, it makes no difference whether the manager is discovering a technology (or preference) from a Platonic menu of pre-existing ideas or creating that technology (or preference) through an act of free will. Discovery and creation, in a practical sense, conflate. They have similar practical implications. Both direct an inquiry into the unknown. Both encourage the manager to seek out new and better ways to identify and satisfy worker and consumer demands and new means of increasing productivity. Both call for an active role for managerial discretion and imagination.
177. There is no harm, per se, in assuming that utility and production functions are exogenous. These assumptions help organize thought and unravel the mysteries of relative prices in a rigorous way. See generally Judith A. Lachman, Knowing and Showing Economies and Law, 93 YALE L.J. 1587, 1598-1603 (1984) (arguing that the advantages of more realistic economic assumptions may be outweighed by losses to tractability); POSNER, supra note 12, at 366 n. 11 (citing the virtues of reductionism). The threat comes from the repeated use of the rhetorical device and the limits on thought generated by that use. See supra notes 2-5 and accompanying text; see also DONALD N. MCCLOSKEY, THE RHETORIC OF ECONOMICS (1985).
178. There is no harm, per se, in assuming that utility and production functions are exogenous. These assumptions help organize thought and unravel the mysteries of relative prices in a rigorous way. See generally Judith A. Lachman, Knowing and Showing Economies and Law, 93 YALE L.J. 1587, 1598-1603 (1984) (arguing that the advantages of more realistic economic assumptions may be outweighed by losses to tractability); POSNER, supra note 12, at 366 n. 11 (citing the virtues of reductionism). The threat comes from the repeated use of the rhetorical device and the limits on thought generated by that use. See supra notes 2-5 and accompanying text; see also DONALD N. MCCLOSKEY, THE RHETORIC OF ECONOMICS (1985).
179. There is no harm, per se, in assuming that utility and production functions are exogenous. These assumptions help organize thought and unravel the mysteries of relative prices in a rigorous way. See generally Judith A. Lachman, Knowing and Showing Economies and Law, 93 YALE L.J. 1587, 1598-1603 (1984) (arguing that the advantages of more realistic economic assumptions may be outweighed by losses to tractability); POSNER, supra note 12, at 366 n. 11 (citing the virtues of reductionism). The threat comes from the repeated use of the rhetorical device and the limits on thought generated by that use. See supra notes 2-5 and accompanying text; see also DONALD N. MCCLOSKEY, THE RHETORIC OF ECONOMICS (1985).
180. See supra notes 11-13 and accompanying text.
181. The rhetoric of exogenous preferences can also influence a firm's output decision. Witness, for example, the current debate concerning Hollywood's role in promoting unhealthy attitudes about sex and violence. See, e.g., Roger Kimball, A Little Censorship Would be Good for Hollywood, WALL ST.J., Oct. 2 ,2000, at A34. Censors argue that Hollywood does not simply react to consumer preferences, but shapes preferences through the films it produces. See id. Such critics call upon the industry to recognize the power it has and to look for creative ways of combining profits with less explicit sex and violence. See id. The neoclassical response, at least in part, is to deny responsibility, insisting that consumer demand drives the content of Hollywood films.
182. The model of general competitive equilibrium originates in the nineteenth century worb of Leon Walras. See generally EKELUND & HEBERT, supra note 83, at 368-93 (providing a nontechnical exposition of Walrasian general equilibrium); LEON WALRAS, ELEMENTS OF PURE ECONOMICS, OR, THE THEORY OF SOCIAL WEALTH (William Jaffe trans., Irwin Press 1954) (1874).
183. The model of general competitive equilibrium originates in the nineteenth century worb of Leon Walras. See generally EKELUND & HEBERT, supra note 83, at 368-93 (providing a nontechnical exposition of Walrasian general equilibrium); LEON WALRAS, ELEMENTS OF PURE ECONOMICS, OR, THE THEORY OF SOCIAL WEALTH (William Jaffe trans., Irwin Press 1954) (1874).
184. See generally HENDERSON & QUANDT, supra note 86, at 136-37, 230-31;
185. VARIAN, supra note 86, at 480-81, 501, 516-17.
186. Partial equilibrium models often include an assumption of asymmetric information. General competitive equilibrium, given its more ambitious task, does not. See generally HENDERSON & QUANDT, supra note 86, at 136-37 (noting that model of general equilibrium assumes perfect information).
187. See generally HENDERSON & QUANDT, supra note 86, 230-31; VARIAN, supra note 86, at 516-18.
188. See generally HENDERSON & QUANDT, supra note 86, 230-31; VARIAN, supra note 86, at 516-18.
189. An externality is a cost generated by an exchange that is not borne by the parties to the exchange. The classic example is pollution. See generally VARIAN, supra note 86, at 542-61. A public good is benefit generated by an exchange that is not exclusively enjoyed by parties themselves. The classic example is education. See generally id. at 563-73. Given the mathematical techniques of general equilibrium, one can simply assume that all property rights are fully specified - anyone who receives a benefit must pay for it and anyone who accepts a cost will be compensated. See id. at 516 (stating the model of general equilibrium assumes that there are no externalities or public goods in either production or consumption).
190. See HENDERSON & QUANDT, supra note 86, at 230-31. Using the mathematical techniques of matrix algebra and vector analysis, these preferences could be modeled as fully nuanced. See supra notes 105-07 and accompanying text (discussing nuanced preferences).
191. For a definition of "minimum efficient scale" see VARIAN, supra note 86, at 428 (defining the term as "the level of output that minimizes average cost"). See generally VARIAN, supra note 86, at 507-25 (discussing the technological assumptions of general equilibrium analysis).
192. For a definition of "minimum efficient scale" see VARIAN, supra note 86, at 428 (defining the term as "the level of output that minimizes average cost"). See generally VARIAN, supra note 86, at 507-25 (discussing the technological assumptions of general equilibrium analysis).
193. Positing a static state of the world is a defining characteristic of neoclassical economics generally, not just general competitive equilibrium. See Hodgson, supra note 83, at 169 n.4. Neoclassical economists may introduce time into their models,
194. see, e.g., HENDERSON & QUANDT, supra note 86, at 322-57, but the models are still organized around an equilibrium paradigm, rather than an evolutionary one.
195. An economist would describe this condition as productive efficiency. This result derives from technological assumptions. See supra note 119 (defining productive efficiency); see also infra note 126 (noting that the world of pure competition is fictional).
196. An economist would describe this condition as productive efficiency. This result derives from technological assumptions. See supra note 119 (defining productive efficiency); see also infra note 126 (noting that the world of pure competition is fictional).
197. Economists refer to this state of the world as "allocatively efficient," or alternatively as "Pareto efficient." See generally EKELUND & HEBERT, supra note 83, at 387-89 (discussing the nineteenth-century contributions of Vilfredo Pareto). In a simple exchange economy, people exhaust all mutually beneficial trades reaching a Pareto optimal condition where no additional trade can make one person better off without making at least one other worse off. Bringing production into the model generates an even more dramatic result Perfect competition not only exhausts mutually beneficial exchanges of existing goods and services, it also dictates precisely which basket of goods and services will satisfy the most consumption preferences given societal resources. See VARIAN, supra note 86, at 520-22 (offering an intuitive proof of this theorem); HENDERSON & QUANDT, supra note 86, at 286-91 (offering a mathematical proof).
198. Economists refer to this state of the world as "allocatively efficient," or alternatively as "Pareto efficient." See generally EKELUND & HEBERT, supra note 83, at 387-89 (discussing the nineteenth-century contributions of Vilfredo Pareto). In a simple exchange economy, people exhaust all mutually beneficial trades reaching a Pareto optimal condition where no additional trade can make one person better off without making at least one other worse off. Bringing production into the model generates an even more dramatic result Perfect competition not only exhausts mutually beneficial exchanges of existing goods and services, it also dictates precisely which basket of goods and services will satisfy the most consumption preferences given societal resources. See VARIAN, supra note 86, at 520-22 (offering an intuitive proof of this theorem); HENDERSON & QUANDT, supra note 86, at 286-91 (offering a mathematical proof).
199. Economists refer to this state of the world as "allocatively efficient," or alternatively as "Pareto efficient." See generally EKELUND & HEBERT, supra note 83, at 387-89 (discussing the nineteenth-century contributions of Vilfredo Pareto). In a simple exchange economy, people exhaust all mutually beneficial trades reaching a Pareto optimal condition where no additional trade can make one person better off without making at least one other worse off. Bringing production into the model generates an even more dramatic result Perfect competition not only exhausts mutually beneficial exchanges of existing goods and services, it also dictates precisely which basket of goods and services will satisfy the most consumption preferences given societal resources. See VARIAN, supra note 86, at 520-22 (offering an intuitive proof of this theorem); HENDERSON & QUANDT, supra note 86, at 286-91 (offering a mathematical proof).
200. See HENDERSON & QUANDT, supra note 86, at 151-52 (defining rent as "that part of a person's or a firm's income which is above the minimum amount necessary to keep that person or firm in its given occupation"); see also VARIAN, supra note 86, at 393-97 (noting that an economist's notion of zero profits includes an ordinary return).
201. See HENDERSON & QUANDT, supra note 86, at 151-52 (defining rent as "that part of a person's or a firm's income which is above the minimum amount necessary to keep that person or firm in its given occupation"); see also VARIAN, supra note 86, at 393-97 (noting that an economist's notion of zero profits includes an ordinary return).
202. See HENDERSON & QUANDT, supra note 86, at 245-46.
203. Economists distinguish between notions of allocation (what goods are produced), production (how the goods are produced), and distribution (who gets what). One notion of a fair distribution is that all members in an economy are rewarded according to their productivity, that is, their respective abilities to satisfy the desires of others. In general equilibrium this condition holds. See generally infra notes 149-53 and accompanying text (revisiting the issue of whether free markets will eliminate wage discrimination in a competitive workplace). Members unable to produce, for example the sick and disabled, would receive little or no reward. Hence, the model addresses distributional concerns, but is incomplete.
204. No economist actually believes that the world described by general competitive equilibrium exists or has ever existed. Virtually every discussion of general equilibrium is quickly followed with a discussion emphasizing the myriad of conditions that frustrate the model. If any one of the assumptions of the model is incorrect, then no implications regarding social welfare can be drawn from the model. In fact, if all markets are competitive save one, the analyst cannot even safely say that moving that remaining market toward a competitive solution is unambiguously a good thing. See HENDERSON & QUANDT, supra note 86, at 315-17 (offering a formal proof of this assertion known as the "theory of second best"). Yet, notwithstanding this knowledge, economists routinely state that pure competition does not exist, and then immediately use the model as a source of advice directing public policy prescriptions. See, e.g., VARIAN, supra note 86, at 500-04 (providing only one of many examples of the phenomenon). This bears evidence to the rhetorical appeal of the model of pure competition. Once the economist has seen the aesthetic appeal of the model, particularly in its mathematical form, it may be difficult not to want the model to be accurate.
205. No economist actually believes that the world described by general competitive equilibrium exists or has ever existed. Virtually every discussion of general equilibrium is quickly followed with a discussion emphasizing the myriad of conditions that frustrate the model. If any one of the assumptions of the model is incorrect, then no implications regarding social welfare can be drawn from the model. In fact, if all markets are competitive save one, the analyst cannot even safely say that moving that remaining market toward a competitive solution is unambiguously a good thing. See HENDERSON & QUANDT, supra note 86, at 315-17 (offering a formal proof of this assertion known as the "theory of second best"). Yet, notwithstanding this knowledge, economists routinely state that pure competition does not exist, and then immediately use the model as a source of advice directing public policy prescriptions. See, e.g., VARIAN, supra note 86, at 500-04 (providing only one of many examples of the phenomenon). This bears evidence to the rhetorical appeal of the model of pure competition. Once the economist has seen the aesthetic appeal of the model, particularly in its mathematical form, it may be difficult not to want the model to be accurate.
206. See HENDERSON & QUANDT, supra note 86, at 175, 292.
207. For an insightful discussion of economic power see JOHN R. COMMONS, THE LEGAL FOUNDATIONS OF CAPITALISM 56-59 (1924) (defining economic, or monopoly power, as the ability to withhold property from others).
208. See VARIAN, supra note 86, at 428-29 (linking monopoly power to technological imperatives).
209. See generally HENDERSON & QUANDT, supra note 86, at 199-227 (providing an extensive discussion of non-competitive equilibria in the presence of an oligopolistic market structure).
210. See generally JOAN ROBINSON, THE ECONOMICS OF IMPERFECT COMPETITION (1933) (seminal work demonstrating that "degrees" of monopoly power exist); VARIAN, supra note 86, at 436-39 (defining product differentiation and identifying it as a source of market power); HENDERSON & QUANDT, supra note 86, at 193-97 (discussing the rents that derive from monopolistic competition).
211. See generally JOAN ROBINSON, THE ECONOMICS OF IMPERFECT COMPETITION (1933) (seminal work demonstrating that "degrees" of monopoly power exist); VARIAN, supra note 86, at 436-39 (defining product differentiation and identifying it as a source of market power); HENDERSON & QUANDT, supra note 86, at 193-97 (discussing the rents that derive from monopolistic competition).
212. See generally JOAN ROBINSON, THE ECONOMICS OF IMPERFECT COMPETITION (1933) (seminal work demonstrating that "degrees" of monopoly power exist); VARIAN, supra note 86, at 436-39 (defining product differentiation and identifying it as a source of market power); HENDERSON & QUANDT, supra note 86, at 193-97 (discussing the rents that derive from monopolistic competition).
213. See infra notes 154-57 and accompanying text (discussing the issue of framing).
214. Friedman, supra note 6.
215. A sharp separation between the market and the law is a distinguishing characteristic of neoclassical economics. Both partial and general equilibrium analysis take the law as a given, leaving the underlying legal assumptions typically unexplored. Yet those assumptions are nonetheless present, and alternative assumptions will generate alternative conceptions of the market. See generally Daniel T. Ostas, Economics and the Law of Unconscionability, 27 J. ECON. ISSUES 647 (1993) (distinguishing the jurisprudential assumptions that underscore classical, neoclassical, institutional, neo-institutional, and Marxian market theories).
216. See supra note 109.
217. For an excellent assessment of the rhetorical nature of the economic paradigm see MCCLOSKEY, supra note 110, passim. The power of language is also a theme in attempts to bring feminist insights to economic analysis.
218. See generally Myra H. Strober, Rethinking Economics Through a Feminist Lens, 84 AM. ECON. REV. 143 (1994) (explaining how feminist narratives can contribute to economic thought).
219. The inability of a manager to transfer total legal authority to the government is discussed in the first part of this article.
220. Thomas Cotter observes that "whatever paradigm the analyst employs carries with it a set of value judgments that direct her choice of an appropriate topic of study, that suggest which phenomena are significant and which are not, and that delimit the boundaries within which she may interpret the results of her research." Thomas F. Cotter, Legal Pragmatism and the Low and Economics Movement, 84 GEO. L.J. 2071, 2114 (1996). This postmodern insight echoes that offered by Thomas Kuhn. See generally THOMAS KUHN, THE STRUCTURE OF SCIENTIFIC REVOLUTIONS (2d ed. 1970).
221. Thomas Cotter observes that "whatever paradigm the analyst employs carries with it a set of value judgments that direct her choice of an appropriate topic of study, that suggest which phenomena are significant and which are not, and that delimit the boundaries within which she may interpret the results of her research." Thomas F. Cotter, Legal Pragmatism and the Low and Economics Movement, 84 GEO. L.J. 2071, 2114 (1996). This postmodern insight echoes that offered by Thomas Kuhn. See generally THOMAS KUHN, THE STRUCTURE OF SCIENTIFIC REVOLUTIONS (2d ed. 1970).
222. Milton Friedman, The Methodology of Positive Economics, in ESSAYS IN POSITIVE ECONOMICS 3, 15 (1953).
223. Friedman's view of positive economics has drawn considerable criticism. Several commentators have noted that economists do not seek to falsify the underlying assumptions of neoclassical theory or offer alternative explanations for a given phenomenon. See Cotter, supra note 138, at 2117 nn. 198-201 (citing several writers who have leveled this charge). Without empirical evidence one way or the other, a researcher may be more confident if the assumptions of the model are at least descriptively accurate. See Herbert Simon, Problems of Methodology - Discussion, 53 AM. ECON. REV. 229, 229-31 (1963). If realism matters then neoclassicism is at distinct disadvantage. Friedman's view is that the realism of an underlying assumption is largely irrelevant for social science inquiry. Friedman, supra note 139.
224. Friedman's view of positive economics has drawn considerable criticism. Several commentators have noted that economists do not seek to falsify the underlying assumptions of neoclassical theory or offer alternative explanations for a given phenomenon. See Cotter, supra note 138, at 2117 nn. 198-201 (citing several writers who have leveled this charge). Without empirical evidence one way or the other, a researcher may be more confident if the assumptions of the model are at least descriptively accurate. See Herbert Simon, Problems of Methodology - Discussion, 53 AM. ECON. REV. 229, 229-31 (1963). If realism matters then neoclassicism is at distinct disadvantage. Friedman's view is that the realism of an underlying assumption is largely irrelevant for social science inquiry. Friedman, supra note 139.
225. Friedman's view of positive economics has drawn considerable criticism. Several commentators have noted that economists do not seek to falsify the underlying assumptions of neoclassical theory or offer alternative explanations for a given phenomenon. See Cotter, supra note 138, at 2117 nn. 198-201 (citing several writers who have leveled this charge). Without empirical evidence one way or the other, a researcher may be more confident if the assumptions of the model are at least descriptively accurate. See Herbert Simon, Problems of Methodology - Discussion, 53 AM. ECON. REV. 229, 229-31 (1963). If realism matters then neoclassicism is at distinct disadvantage. Friedman's view is that the realism of an underlying assumption is largely irrelevant for social science inquiry. Friedman, supra note 139.
226. See, e.g., BEHAVIORAL LAW & ECONOMICS (Cass R. Sunstein ed., 2000) (reprinting recent scholarship that challenges orthodox economic assumptions). See generally Daniel T. Ostas, The Evolution of Economic Analysis of Law: Is Pragmatic Institutionalism Displacing Orthodoxy?, 33 J. ECON. ISSUES 287, 290-91 (1999) (citing several trends in the economic literature and assessing their impact on economic analysis of law).
227. See, e.g., BEHAVIORAL LAW & ECONOMICS (Cass R. Sunstein ed., 2000) (reprinting recent scholarship that challenges orthodox economic assumptions). See generally Daniel T. Ostas, The Evolution of Economic Analysis of Law: Is Pragmatic Institutionalism Displacing Orthodoxy?, 33 J. ECON. ISSUES 287, 290-91 (1999) (citing several trends in the economic literature and assessing their impact on economic analysis of law).
228. Exploring the source of preferences and the implications of endogenous preferences was a hallmark of institutional economic thought prevalent in the early-twentieth century. See generally ALLAN G. GRUCHY, MODERN ECONOMIC THOUGHT: THE AMERICAN CONTRIBUTION (1947) (recounting the origins of institutional economics). Institutional insights are making a resurgence in the economic literature. See Hodgson, supra note 83; Ostas, supra note 141.
229. Exploring the source of preferences and the implications of endogenous preferences was a hallmark of institutional economic thought prevalent in the early-twentieth century. See generally ALLAN G. GRUCHY, MODERN ECONOMIC THOUGHT: THE AMERICAN CONTRIBUTION (1947) (recounting the origins of institutional economics). Institutional insights are making a resurgence in the economic literature. See Hodgson, supra note 83; Ostas, supra note 141.
230. Exploring the source of preferences and the implications of endogenous preferences was a hallmark of institutional economic thought prevalent in the early-twentieth century. See generally ALLAN G. GRUCHY, MODERN ECONOMIC THOUGHT: THE AMERICAN CONTRIBUTION (1947) (recounting the origins of institutional economics). Institutional insights are making a resurgence in the economic literature. See Hodgson, supra note 83; Ostas, supra note 141.
231. The notion of individual autonomy that underscores the libertarian concept of freedom has been widely challenged by cognitive psychologists. See supra note 79.
232. For a thorough review of recent economic literature on endogenous preferences, see Samuel Bowles, Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions, 36 J. ECON. LIT. 75 (1998).
233. See id.
234. See generally Kahneman et al., supra note 105; Harrison, supra note 98, at 1358-61.
235. See generally Kahneman et al., supra note 105; Harrison, supra note 98, at 1358-61.
236. See Russell Korobkin, Note, Policymaking and the Offer/Asking Price Gap: Toward a Theory of Efficient Entitlement Allocation, 46 STAN. L. REV. 663 (1994).
237. One possible explanation of this endowment effect is the development of tastes through experience. But see Kahneman et al., supra note 105, at 1342 (noting that empirical evidence suggests that endowment effects can occur instantaneously). Another explanation focuses on the elimination of social taboos associated with seeking greater workplace liberties. See Robert C. Ellickson, The Case for Coase and Against "Coaseanism", 99 YALE L.J. 611, 622-23 (1989).
238. One possible explanation of this endowment effect is the development of tastes through experience. But see Kahneman et al., supra note 105, at 1342 (noting that empirical evidence suggests that endowment effects can occur instantaneously). Another explanation focuses on the elimination of social taboos associated with seeking greater workplace liberties. See Robert C. Ellickson, The Case for Coase and Against "Coaseanism", 99 YALE L.J. 611, 622-23 (1989).
239. The debate is cited in Cotter, supra note 138, at 2120 n.213. Scholars suggesting that anti-discrimination laws were inefficient included Richard Epstein, Thomas Sowell, and Richard Posner. Id. Compare RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS (1992) (arguing that anti-discrimination laws are inefficient), THOMAS SOWELL, RACE AND CULTURE: A WORLD VIEW 87-92, 96-98 (1994) (same), and Richard A. Posner, The Efficiency and the Efficacy of Title VII, 136 U. PA. L. REV. 513 (1986) (same), with John J. Donohue III, Is Title VII Efficient?, 134 U. PA. L. REV. 1411 (1986) (arguing that anti-discrimination laws are efficient), John J. Donohue III, Further Thoughts on Employment Discrimination Legislation: A Reply to Judge Posner, 136 U. PA. L. REV. 523 (1987) (same), Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 HARV. L. REV. 1003 (1995) (same), and Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1 (1992) (same).
240. The debate is cited in Cotter, supra note 138, at 2120 n.213. Scholars suggesting that anti-discrimination laws were inefficient included Richard Epstein, Thomas Sowell, and Richard Posner. Id. Compare RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS (1992) (arguing that anti-discrimination laws are inefficient), THOMAS SOWELL, RACE AND CULTURE: A WORLD VIEW 87-92, 96-98 (1994) (same), and Richard A. Posner, The Efficiency and the Efficacy of Title VII, 136 U. PA. L. REV. 513 (1986) (same), with John J. Donohue III, Is Title VII Efficient?, 134 U. PA. L. REV. 1411 (1986) (arguing that anti-discrimination laws are efficient), John J. Donohue III, Further Thoughts on Employment Discrimination Legislation: A Reply to Judge Posner, 136 U. PA. L. REV. 523 (1987) (same), Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 HARV. L. REV. 1003 (1995) (same), and Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1 (1992) (same).
241. The debate is cited in Cotter, supra note 138, at 2120 n.213. Scholars suggesting that anti-discrimination laws were inefficient included Richard Epstein, Thomas Sowell, and Richard Posner. Id. Compare RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS (1992) (arguing that anti-discrimination laws are inefficient), THOMAS SOWELL, RACE AND CULTURE: A WORLD VIEW 87-92, 96-98 (1994) (same), and Richard A. Posner, The Efficiency and the Efficacy of Title VII, 136 U. PA. L. REV. 513 (1986) (same), with John J. Donohue III, Is Title VII Efficient?, 134 U. PA. L. REV. 1411 (1986) (arguing that anti-discrimination laws are efficient), John J. Donohue III, Further Thoughts on Employment Discrimination Legislation: A Reply to Judge Posner, 136 U. PA. L. REV. 523 (1987) (same), Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 HARV. L. REV. 1003 (1995) (same), and Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1 (1992) (same).
242. The debate is cited in Cotter, supra note 138, at 2120 n.213. Scholars suggesting that anti-discrimination laws were inefficient included Richard Epstein, Thomas Sowell, and Richard Posner. Id. Compare RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS (1992) (arguing that anti-discrimination laws are inefficient), THOMAS SOWELL, RACE AND CULTURE: A WORLD VIEW 87-92, 96-98 (1994) (same), and Richard A. Posner, The Efficiency and the Efficacy of Title VII, 136 U. PA. L. REV. 513 (1986) (same), with John J. Donohue III, Is Title VII Efficient?, 134 U. PA. L. REV. 1411 (1986) (arguing that anti-discrimination laws are efficient), John J. Donohue III, Further Thoughts on Employment Discrimination Legislation: A Reply to Judge Posner, 136 U. PA. L. REV. 523 (1987) (same), Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 HARV. L. REV. 1003 (1995) (same), and Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1 (1992) (same).
243. The debate is cited in Cotter, supra note 138, at 2120 n.213. Scholars suggesting that anti-discrimination laws were inefficient included Richard Epstein, Thomas Sowell, and Richard Posner. Id. Compare RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS (1992) (arguing that anti-discrimination laws are inefficient), THOMAS SOWELL, RACE AND CULTURE: A WORLD VIEW 87-92, 96-98 (1994) (same), and Richard A. Posner, The Efficiency and the Efficacy of Title VII, 136 U. PA. L. REV. 513 (1986) (same), with John J. Donohue III, Is Title VII Efficient?, 134 U. PA. L. REV. 1411 (1986) (arguing that anti-discrimination laws are efficient), John J. Donohue III, Further Thoughts on Employment Discrimination Legislation: A Reply to Judge Posner, 136 U. PA. L. REV. 523 (1987) (same), Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 HARV. L. REV. 1003 (1995) (same), and Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1 (1992) (same).
244. The debate is cited in Cotter, supra note 138, at 2120 n.213. Scholars suggesting that anti-discrimination laws were inefficient included Richard Epstein, Thomas Sowell, and Richard Posner. Id. Compare RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS (1992) (arguing that anti-discrimination laws are inefficient), THOMAS SOWELL, RACE AND CULTURE: A WORLD VIEW 87-92, 96-98 (1994) (same), and Richard A. Posner, The Efficiency and the Efficacy of Title VII, 136 U. PA. L. REV. 513 (1986) (same), with John J. Donohue III, Is Title VII Efficient?, 134 U. PA. L. REV. 1411 (1986) (arguing that anti-discrimination laws are efficient), John J. Donohue III, Further Thoughts on Employment Discrimination Legislation: A Reply to Judge Posner, 136 U. PA. L. REV. 523 (1987) (same), Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 HARV. L. REV. 1003 (1995) (same), and Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1 (1992) (same).
245. The debate is cited in Cotter, supra note 138, at 2120 n.213. Scholars suggesting that anti-discrimination laws were inefficient included Richard Epstein, Thomas Sowell, and Richard Posner. Id. Compare RICHARD A. EPSTEIN, FORBIDDEN GROUNDS: THE CASE AGAINST EMPLOYMENT DISCRIMINATION LAWS (1992) (arguing that anti-discrimination laws are inefficient), THOMAS SOWELL, RACE AND CULTURE: A WORLD VIEW 87-92, 96-98 (1994) (same), and Richard A. Posner, The Efficiency and the Efficacy of Title VII, 136 U. PA. L. REV. 513 (1986) (same), with John J. Donohue III, Is Title VII Efficient?, 134 U. PA. L. REV. 1411 (1986) (arguing that anti-discrimination laws are efficient), John J. Donohue III, Further Thoughts on Employment Discrimination Legislation: A Reply to Judge Posner, 136 U. PA. L. REV. 523 (1987) (same), Richard H. McAdams, Cooperation and Conflict: The Economics of Group Status Production and Race Discrimination, 108 HARV. L. REV. 1003 (1995) (same), and Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1 (1992) (same).
246. More precisely, the debate focussed on whether anti-discrimination legislation was efficient. Recasting the debate to emphasize managerial discretion does not alter the central point about endogenous preferences.
247. See Robert Cooter, Market Affirmative Action, 31 SAN DIEGO L. REV. 133 (1994) (arguing that the forces of perfect competition force a discriminating firm to absorb the costs of discrimination).
248. This argument illustrates the tautological nature of projected preferences. Virtually any behavior can be rationalized as rational and maximizing, limited only by the creative imagination of the analyst who posits the preferences. See Amartya K. Sen, Rational Fools, in PHILOSOPHY AND ECONOMIC THEORY (Frank Hahn & Martin Hollis eds., 1979).
249. There is empirical evidence that suggests that enactment of the Civil Rights Laws affected social values regarding discrimination. See Sunstein, supra note 98.
250. Research in cognitive psychology suggests that decisions depend on the context in which a question is posed. See generally Robert C. Ellickson, Bringing Culture and Human Frailty to Rational Actors: A Critique of Classical Law and Economics, 65 CHI.-KENT L. REV. 23, 43-54 (1989); Russell Korobkin & Chris Guthrie, Psychological Barriers to Litigation Settlement: An Experimental Approach, 93 MICH. L. REV. 107, 129-30 (1994).
251. Research in cognitive psychology suggests that decisions depend on the context in which a question is posed. See generally Robert C. Ellickson, Bringing Culture and Human Frailty to Rational Actors: A Critique of Classical Law and Economics, 65 CHI.-KENT L. REV. 23, 43-54 (1989); Russell Korobkin & Chris Guthrie, Psychological Barriers to Litigation Settlement: An Experimental Approach, 93 MICH. L. REV. 107, 129-30 (1994).
252. See VARIAN, supra note 86, at 34-36.
253. See generally RICHARD H. THALER, QUASI-RATIONAL ECONOMICS (1991) (exploring this and similar paradoxes presented by assuming economic rationality).
254. See Roger Mason, Interpersonal Effects on Consumer Demand in Economic Theory and Marketing Thought, 1890-1950, 25 J. ECON. ISSUES 871, 881 (1995) (observing that marketing analysts have always tempered economic rationality assumptions with insights from cognitive and emotive psychology).
255. See Cass R. Sunstein & Edna Ullmann-Margalit, Second-Order Decisions, in BEHAVIORAL LAW AND ECONOMICS 187 (Cass R. Sunstein ed., 2000); Cotter, supra note 138, at 222 (discussing preferences about preferences).
256. See Cass R. Sunstein & Edna Ullmann-Margalit, Second-Order Decisions, in BEHAVIORAL LAW AND ECONOMICS 187 (Cass R. Sunstein ed., 2000); Cotter, supra note 138, at 222 (discussing preferences about preferences).
257. See Amartya Sen, Internal Consistency and Choice, 61 ECONOMETRICA 495, 498-503 (1993).
258. See McAdams, Cooperation and Conflict, supra note 149, at 1007-08; McAdams, Relative Preferences, supra note 149, at 91-103.
259. See McAdams, Cooperation and Conflict, supra note 149, at 1007-08; McAdams, Relative Preferences, supra note 149, at 91-103.
260. One commentator lists a set of "blocked exchanges" including slavery and free speech as evidence of "incommensurables," that is, things that cannot, or should not, be measured in terms of dollars. See MICHAEL WALZER, SPHERES OF JUSTICE: A DEFENSE OF PLURALISM AND EQUALITY 96-103 (1983). The slavery example may be well taken, but the notion that one may not sell one's rights to free speech seems to go too far. The relinquishmem of speech rights is typical in an employment setting with a private employer. In this light, one's wage or salary includes one's civil liberties; they are a subject of negotiation. In short, most incommensurables are difficult, but not impossible, to quantify.
261. See Sunstein, supra note 98.
262. Recall that many economists define the economic discipline with reference to neoclassical techniques, including assumptions regarding rationality. See supra note 83 (citing as an example Nobel Laureate Gary Becker). An alternative and more historically accurate means of defining the discipline is with reference to subject matter. See JOHN K. GALBRAITH, ECONOMICS IN PERSPECTIVE 5-8 (1987) (defining economics as the study of economic systems and identifying the central questions asked of the discipline). The alternative definition is not tied to any particular view of human psychology or other aspect of human nature or culture.
263. Recall that many economists define the economic discipline with reference to neoclassical techniques, including assumptions regarding rationality. See supra note 83 (citing as an example Nobel Laureate Gary Becker). An alternative and more historically accurate means of defining the discipline is with reference to subject matter. See JOHN K. GALBRAITH, ECONOMICS IN PERSPECTIVE 5-8 (1987) (defining economics as the study of economic systems and identifying the central questions asked of the discipline). The alternative definition is not tied to any particular view of human psychology or other aspect of human nature or culture.
264. See Matthew Rabin, Psychology and Economics, 36 J. ECON. LIT. 11 (1998) (reviewing recent attempts to improve economics with insights from cognitive psychology); Jon Elster, Emotions and Economic Theory, 36 J. ECON. LIT. 47 (1998) (reviewing recent works seeking to borrow from the psychology of the emotions).
265. See Matthew Rabin, Psychology and Economics, 36 J. ECON. LIT. 11 (1998) (reviewing recent attempts to improve economics with insights from cognitive psychology); Jon Elster, Emotions and Economic Theory, 36 J. ECON. LIT. 47 (1998) (reviewing recent works seeking to borrow from the psychology of the emotions).
266. See Hodgson, supra note 83.
267. See id. at 170-73; GORDON & ADAMS, supra note 99, at 17-41.
268. See id. at 170-73; GORDON & ADAMS, supra note 99, at 17-41.