The Economics of Products Liability: A Reaction to McKean

Abstract

It seems appropriate to begin a discussion of the law and economics of products liability by reminding ourselves that law and economics are such very different disciplines that lawyers and economists are bound to have difficulty in understanding each other's approach to this or any other topic. The trouble is not merely that we have not studied each other's subject; the trouble is that from the outset we approach problems in very different ways and with different purposes in view. I cannot think except with great diffidence about the lawyer's point of view, but I believe it to be pre-eminently practical. Whether the lawyer sits on the bench or stands before it, his business is to make social decisions. In making those decisions he has many things to take into account, and, in particular, he has to apply the standards of ethics and justice and mutual obligation that are inscribed in the law. The economist, on the other hand, is not concerned with reaching decisions at all. His business is part that of a scientist and part that of a social critic. His task is to describe the way the world operates and if possible to describe it so well and so profoundly that he can infer how the world would operate if conditions were somewhat altered, that is, so he can predict the consequences of following different policies. These predictions are sometimes useful for reaching decisions, but they are not decisions. If a decision is to be reached, one has to add to predictions of different consequences some social scale of values that enables one to tell which set of consequences is to be preferred. As Professor McKean has emphasized, economics itself is not equipped with such a scale of values. So the economist must stop at the point where he can foretell with either weak or great assurance what consequences will flow from alternative measures or policies. The politician, the moralist, the journalist or the lawyer is equipped with the requisite set of values, so that he can make or recommend a decision. The economist, in short, is preoccupied with descriptions and predictions, the lawyer with legal and equitable decisions. It is no won-