Abstract
The Great Recession of 2008 and onward has drawn attention to the American economic and financial system, and has cast a critical spotlight on the theories, policies, and assumptions of the modern, neoclassical school of law and economics - often labeled the 'Chicago School' - because this school of legal economic thought has had great influence on the American economy and financial system. The Chicago School's positions on deregulation and the limitation or elimination of oversight and government restraints on stock markets, derivative markets, and other financial practices are the result of decades of neoclassical economic assumptions regarding the efficiency of unregulated markets, the near-religious-like devotion to a hyper-simplified conception of rationality and self-interest with regard to the persons and institutions participating in the financial system, and a conception of laws and government policies as incentives and costs in a manner that excludes the actual conditions and complications of reality.
This Article joins the critical conversation on the Great Recession and the role of law and economics in this crisis by examining neoclassical and contemporary law and economics from the perspective of legal rhetoric. The Great Recession already has caused several of the stars of the Chicago School to recant their hardest, most definite statements concerning market efficiency and the necessity of non-regulation and zero government oversight (or interference) in the financial system. The law and economics movement is likely to regroup or reform itself under a revised conception of market efficiency, as indicated by the chastened admissions of the leaders of the old school, or move in the direction of a revised conception of rational choice theory represented by the thriving school of behavioral law and economics. In order to better understand the law and economics movement now and in the future, this Article joins the discussion by pointing out the fundamental rhetorical canons of law and economics. These canons have made law and economics a persuasive form of discourse: Mathematical and scientific methods of analysis and demonstration; the characterization of legal phenomena as incentives and costs; the rhetorical economic concept of efficiency; and rational choice theory as corrected by modern behavioral social sciences, cognitive studies, and brain science.
Original language | American English |
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Journal | Loyola Law Review |
Volume | 58 |
Issue number | 2 |
DOIs | |
State | Published - Feb 29 2012 |