Ten Legal Change

Abstract

This chapter explores several important questions related to legal change, legal transplants, and legal harmonization and convergence. It begins with the simple observation that all countries constantly change some subset of the rules that form part of their legal systems via legislative change, regulatory change, or case law. Some models of law and markets do not contemplate the possibility that legal systems change by means other than colonization or military occupation. Where the possibility of legal change is contemplated in the literature, the answer, often implicit, is that legal change is an evolutionary process. This chapter summarizes Robert Clark's argument that the history of capitalist enterprise can be divided into four stages and that the legal system responded by employing regulatory strategies appropriate to each stage. These are the entrepreneurial stage, the rise of the professional business manager, the emergence of financial intermediaries and institutional investors as professional investment managers, and the professionalization of the savings function as workers delegated the authority to invest in particular financial claims to plan sponsors and other professionals.