A Progressive Critique of the Law and Political Economy Movement

The emerging law and political economy movement (LPE) in the United States is characterized by an anti-economism that has prevented it from drawing upon a rich tradition of left-wing law and economic scholarship to achieve progressive goals. That tradition began with the first law and economics movement a century ago. It rejected the division of wealth implied by competitive markets. And it showed that neoclassical economics supports the redistribution of wealth in either of two basic ways. One is to reallocate endowments, broadly defined to include all aspects of value that are influenced by legal rules. The other is to manipulate the prices at which inframarginal buyers and sellers transact. The first law and economics movement focused on price manipulation and its alter ego, taxation. The critical legal studies movement that eventually succeeded the first law and economics movement focused on endowments. It sought to redistribute them by changing background rules of private law. In rejecting neoclassical economics as enemy propaganda, LPE has been unable to make progress along either of these two policy dimensions. The movement has treated as new the now century-old proposition that endowments influence market outcomes—in other words, that law determines the market. The movement seems unaware that conservative law and economics long ago accepted this proposition and parried by arguing that the market also determines the law. LPE has also constituted itself around the vague concept of “concentrations of economic power” and placed antitrust at the center of its policy agenda. That is a poor choice because antitrust generates the distribution of wealth that prevails in competitive markets, which is precisely the outcome that progressives have been trying for a century to avoid.