Legal origins, comparative law, and political economy

American Journal of Comparative Law

Volumn 57, Issue 4, 2009, Pages 847-862

  Reitz, John ^a  

^a UNIVERSITY OF IOWA COLLEGE OF LAW   (United States)

Author keywords

[No Author keywords available]

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EID: 72449193233     PISSN: 0002919X     EISSN: None     Source Type: Journal    
DOI: 10.5131/ajcl.2008.0026     Document Type: Review

References (66)

1. For a more complete introduction to the legal origins literature and its critical reception by non-quantitative comparatists
2. see Ralf Michaels, Comparative Law by Numbers? Legal Origins Thesis, Doing Business Reports, and the Silence of Traditional Comparative Law, 57 Am. J. Comp. Law 765 (2009).
3. Rafael La Porta et al., Law and Finance, 106 J. Pol. Econ. 1113 (1998).
4. See, e.g., Paul Mahoney, The Common Law and Economic Growth: Hayek Might Be Right, 30 J. Leg. Stud. 503 (2001). (Pubitemid 33648834)
5. Rafael La Porta, et al., The Economic Consequences of Legal Origins, 46 J. Econ. Lit. 285 (2008). I concentrate on this essay, not only because, as explained in Part 3 below, it agrees in important ways with my work, but also because it is a helpful summary of the legal origins literature prior to 2008 and it disavows the broadest and most controversial version of the legal origins thesis, the claim that the common law is generally superior to the civil law at promoting economic growth. In fact, what these authors say about the relative strength of a less regulatory role in times of political and financial calm and the relative strength of a more regulatory role in times of trouble
6. see id. at 327, seems sensible and largely supported by the course of the worldwide financial crisis of 2008-09.
7. Most contentious in this regard are judgments about which legal family to assign developing country legal systems that have drawn from both civil and common law legal traditions, and these disputes depend on traditional, non-quantitative scholarship about those legal systems.
8. See, e.g., Mathias M. Siems, Legal Origins: Reconciling Law & Finance and Comparative Law, 52 McGill L. J. 55, 62-70 (2007) (arguing that classification of legal origin in legal origins literature is so questionable as to be essentially random for many countries).
9. As Edward Tufte has written:
10. Statistical techniques do not solve any of the common-sense difficulties about making causal inferences. Such techniques may help organize or arrange the data so that the numbers speak more clearly to the question of causality-but that is all statistical techniques can do. All the logical, theoretical, and empirical difficulties attendant to establishing a causal relationship persist no matter what type of statistical analysis is applied.
11. Edward R. Tufte, Data Analysis for Politics and Policy 5 (1974).
12. John Reitz, Toward a Study of the Ecology of Judicial Activism?, 59 U. Toronto L. J. 185, 190-91 (2009).
13. LLS's 2008 review essay provides a rich catalogue of studies that have collected data from many legal systems about interesting topics, such as government ownership of banks, the burden of entry regulations, regulation of labor markets, the degree of military conscription, and the degree of government ownership of the media. La Porta et al., supra note 4, at 286 (citing to specific studies). One of the more interesting examples is a study that collected data from law firms in 109 countries concerning the procedures to evict a tenant for failing to pay rent and to collect a bounced check, including their estimates for the usual time to process such actions.
14. Simeon Djankov et al., Courts, 118 Quarterly J. Econ. 453 (2003).
15. See, e.g., id.; Rafael La Porta et al., The Quality of Government, 15 J. Law, Econ. & Organization 222 (1999).
16. See, e.g., Holger Spamann, "'Legal Origins' of Crime and Punishment, " Nov. 26, 2008 (unpublished draft in author's possession) (statistical analysis of data for some 200 countries shows that severity of crime and punishment is robustly correlated with only three factors: legal origin, economic development, and income inequality; correlation raises the question of the mechanism of causation).
17. See also La Porta et al., supra note 2 (empirical evidence for standard corporate law assumption that better legal protection for minority shareholders promotes development of financial markets through broader stock holding).
18. See Mathias M. Siems, Numerical Comparative Law: Do We Need Statistical Evidence in Law in Order to Reduce Complexity? 13 Cardozo J. Int'l & Comp. L. 521 (2005).
19. See Rafael La Porta et al., Judicial Checks and Balances, 112 J. Pol. Econ. 445, 453-55 (2004). As a measure of judicial independence, the authors actually calculated a normalized average of their coding for three proxies: the tenure for the highest judges in the regular court system, the tenure of the judges on the administrative court, and whether or not court decisions are deemed to be sources of law. None of these factors is very clearly suited to serve as a measure of actual judicial independence.
20. See, e.g., La Porta et al., supra note 2, Table 1, at 1123-24 (indices for antidirector rights and creditor rights formed in this way and total country score results from addition of all scores for specific factors).
21. Cf. Siems, supra note 11, at 531.
22. This is why the constructing of indices with numerical measures for many countries of such things as anti-director rights and creditor rights is so problematic.
23. Curtis J. Milhaupt & Katharina Pistor, Law & Capitalism (2008) ;
24. see also Curtis Milhaupt, Beyond Legal Origin: Rethinking Law's Relationship to the Economy-Implications for Policy, 57 Am. J. Comp. L. 831 (2009).
25. The risk arises from the spirited way in which the authors criticize the legal origins literature and distinguish their own work.
26. See, e.g., Milhaupt & Pistor, supra note 16, at 10. The risk is aggravated by the effusively positive review by David Skeel of what he calls "Milhaupt and Pistor's counter-model."
27. David A. Skeel, Governance in the Ruins, 122 Harv. L. Rev. 696, 698 (2008) (book review). Neither work literally says that the statistical method should be rejected, but both portray the Milhaupt-Pistor case study as a counter-model that avoids the main criticisms of the legal origins methodology.
28. Ralf Michaels, The Second Wave of Comparative Law and Economics, 59 U. Toronto L. J. 197, 211 (2009).
29. If there is such a bias, I think Michaels is right in his observation, made in the course of editing this paper, that the goals which comparative lawyers pursue with the generalizations they are trying to formulate may be somewhat different from the goals of the social scientist. The comparative lawyer, Michaels suggests, is generally seeking as complete a description of the systems under comparison as possible; the social scientist is more likely to accept that his description is incomplete because his primary goal is typically an explanation that can enable him to predict future behavior. He is therefore willing to sacrifice thick description in order to concentrate on the aspects of the problem with greatest predictive value. I would add that lawyers are not uninterested in prediction, but they live in a world that is not only interested in prediction. They also have to make arguments for clients-or train lawyers to do so-even if they do not expect to win. The lawyer may therefore be more likely to focus not only on prediction, but also on the as-yet unrealized potentialities of the legal system. In any event, the focus on legal argument makes law and legal training at its root a part of rhetoric and thus of the humanities, despite the technical "feel" that much of law has and despite the obvious relevance of the natural and social sciences to policy choices relevant to the formulation and interpretation of law. I do not want to insist on sharp distinctions among fields. After all, many legal scholars and social scientists have credentials in both law and social science disciplines. In fact, my overall point is to counter what appears to be a bias in traditional comparative law studies against the use of quantitative methods. If there is a bias, it may come from the different preoccupations that typically concern comparative law scholars and social scientists.
30. La Porta et al., supra note 4, at 286.
31. John Reitz, Political Economy and Separation of Powers, 15 Transnat'l L. & Contemp. Probs 579, 584 (2006).
32. If and when it is implemented, a French constitutional amendment adopted in 2008 would mute this contrast with Germany by adding Article 61-1 authorizing constitutional court challenges in concrete cases by reference from non-constitutional courts seized with concrete cases under already enacted laws. As of July 2009, the National Assembly was still conducting hearings on a bill to implement the amendment.
33. See http://www.assemblee-nationale.fr/13/dossiers/art61-l-const-04-09. asp#E TAPE253051 (last visited July 16, 2009). Even after implementation, the German system will still protect private action more strongly by granting direct access to the constitutional courts if the regular courts refuse to refer the case.
34. John Reitz, Political Economy and Abstract Review in Germany, France, and the United States, in Constitutional Dialogues in Comparative Perspective 62-88 (Sally J. Kenney et al. eds., 1999). Tellingly, U. S. law does not make exceptions to the concreteness requirement for officials, but only for private parties asserting the rights of other private parties who might otherwise not be able to be heard.
35. Reitz, supra note 21.
36. John Reitz, Doubts about Convergence: Political Economy as an Impediment to Globalization, 12 Transnat'l L. & Contemp. Probs 139, 148-51 (2002).
37. John Reitz, Political Economy and Contract Law, in New Features in Contract Law 247-76 (Reiner Schulze ed., 2007), available in SSRN as University of Iowa Legal Studies Research Paper No. 07-06, http://ssrn. com/abstract=964476.
38. For a graphic representation of the political economy spectrum
39. see Reitz, supra note 21, at 624.
40. See, e.g., Ugo Mattei, Three Patterns of Law: Taxonomy and Change in the World's Legal Systems, 45 Am. J. Comp. L. 5 (1997) ;
41. Michaels, supra note 18, at 200 (difference between common and civil law "traditionally... widely exaggerated"; citing more authorities in n. 14). Thus many critics of the legal origins literature have rejected this aspect of the work as imprecise.
42. See, e.g., Gillian Hadfield, The Levers of Institutional Determinants of the Quality of Law, 36 J. Comp. Econ. 43, 44 (2008) (arguing that other factors have a greater effect on the quality of law than legal origins do). I agree that more precise distinctions can be drawn among countries concerning political economy in both traditions, but I think there is also value to the generalization that the civil and common law traditions differ in this regard.
43. For the bases for this claim
44. see Reitz, supra note 21, at 584-90 (based on comparisons of welfare spending, intellectual history, and the structure of interest group interaction with the state).
45. See also Reitz, supra note 23, at 74-78. We saw this dichotomy illustrated again in the spring of 2009 at the G20 Conference in London, where Germany and France were arguing for tighter regulation of financial markets and the United States and Great Britain were arguing instead for more stimulus.
46. For a succinct summary of the chief differences in historical development
47. see Otto Kahn-Freund et al., A Source-book on French Law 201-02 (2d ed. 1979) (while courts were chief instrument of pacification and unification of country in England, in France the administration played the chief role).
48. Reitz, supra note 21, at 590-92.
49. For classic studies of lawmaking by French judges
50. see John Dawson, Oracles of the Law (1968) ;
51. Mitchel de S.-O.-L'E. Lasser, Judicial Deliberations (2004). For the classic study examining whether U. S. courts make law more actively than British courts
52. see P. S. Atiyah & Robert S. Summers, Form and Substance in Anglo-American Law (1987).
53. William Fisch, Recent Developments in West German Civil Procedure, 6 Hastings Int'l & Comp. L. Rev. 221, 279 (1983) ;
54. John Langbein, The German Advantage in Civil Procedure, 52 U. Chi. L. Rev. 823, 863 (1985). In the United States, for example, some judges are beginning to play a more managerial role in litigation, and in some civil law countries, like Germany, the bar is becoming more assertive in litigation and lawyers increasingly offer their own experts to challenge the court appointed one, but the essential contrast has not been eliminated in most cases.
55. Reitz, supra note 26.
56. See Peter A. Hall, Governing the Economy 18 (1986) ("There are likely to be structural consistencies behind the persistence of distinctive national patterns of policy.") ;
57. cf. Milhaupt & Pistor, supra note 16, at 22 ("a rolling relationship between law and market"; "a highly interative process of action and strategic reaction" between law and the economy).
58. An important example has to do with the rules about contracts of employment. Great Britain has adopted the continental regulatory approach that greatly restricts employment at will, the unregulated form of employment law. Reitz, supra note 26.
59. See supra text at notes 13-15 (discussing potentially misleading rhetoric of numbers in summing measurements of various factors).
60. But see Reitz, supra note 21 (attempt at non-quantitative method to rank order degree of concentration of lawmaking power in various countries).
61. New Zealand is a striking example. Although there is no doubt that it belongs to the common law family of legal systems, New Zealand has been marked since at least the late nineteenth century by a number of important characteristics of a political economy that is more state-centered than the other common law jurisdictions I have studied, and it has recently adopted several more such features, including proportional voting and judicial review of legislation.
62. See Reitz, supra note 21, at 587, 589-90, 597-98, 613.
63. La Porta et al., supra note 4, at 326-27.
64. See infra text at note 42.
65. La Porta et al., supra note 4, at 325.
66. Id.