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'Capacitas': Contract Law and the Institutional Preconditions of a Market Economy

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  • Simon Deakin

Abstract

Capacity may be defined as a status conferred by law for the purpose of empowering persons to participate in the operations of a market economy. This paper argues that because of the confining influence of the classical private law of the nineteenth century, we currently lack a convincing theory of the role of law in enhancing and protecting the substantive contractual capacity of market agents, a notion which resembles the economic concept of 'capability' as developed by Amartya Sen. Re-examining the legal notion of capacity from the perspective of Sen's 'capability approach' is part of a process of understanding the preconditions for a sustainable market order under modern conditions.

Suggested Citation

  • Simon Deakin, 2006. "'Capacitas': Contract Law and the Institutional Preconditions of a Market Economy," Working Papers wp325, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp325
    Note: PRO-2
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    File URL: https://www.jbs.cam.ac.uk/cbrwp325/
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    References listed on IDEAS

    as
    1. Edward L. Glaeser & Andrei Shleifer, 2002. "Legal Origins," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1193-1229.
    2. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    3. Mathias M Siems, 2006. "Legal origins: reconciling law and finance and comparative law," Working Papers wp321, Centre for Business Research, University of Cambridge.
    4. William M. Dugger, 1996. "The Mechanisms of Governance," Journal of Economic Issues, Taylor & Francis Journals, vol. 30(4), pages 1212-1216, December.
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    Cited by:

    1. Simon DEAKIN & Priya LELE & Mathias SIEMS, 2007. "The evolution of labour law: Calibrating and comparing regulatory regimes," International Labour Review, International Labour Organization, vol. 146(3-4), pages 133-162, September.
    2. Magali Fia & Lorenzo Sacconi, 2019. "Justice and Corporate Governance: New Insights from Rawlsian Social Contract and Sen’s Capabilities Approach," Journal of Business Ethics, Springer, vol. 160(4), pages 937-960, December.
    3. Gindis, David & Hodgson, Geoffrey M. & Huang, Kainan & Pistor, Katharina, 2017. "Legal institutionalism: Capitalism and the constitutive role of lawAuthor-Name: Deakin, Simon," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 188-200.
    4. Simon Deakin & David Gindis & Geoffrey M. Hodgson & Kainan Huang & Katharina Pistor, 2015. "Legal Institutionalism: Capitalism & the Constitutive Role of Law," Working Papers wp468, Centre for Business Research, University of Cambridge.
    5. David Gindis & Abraham A. Singer, 2023. "The Corporate Baby in the Bathwater: Why Proposals to Abolish Corporate Personhood Are Misguided," Journal of Business Ethics, Springer, vol. 183(4), pages 983-997, April.
    6. Simon Deakin, 2008. "Legal Origin, Juridical Form and Industrialisation in Historical Perspective: The Case of the Employment Contract and the Joint-Stock Company," WEF Working Papers 0042, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.

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    More about this item

    Keywords

    contract law; capacity; capability approach;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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