The Genius of Roman Law from a Law and Economics Perspective

Abstract

Law and economics aids us in understanding why Roman law is still worthy of admiration and emulation. The admirable character of Roman law is its quality as an (almost) paradigmatic private law system. My discussion of Roman law illustrates how private law can align incentives for people to exert efforts to optimize investment and share information so as to reduce information asymmetries. Roman private law also enables people, who face resource constraints and incentive constraints, to act more consistently in their own interest and, when efficient, to act in the interest of others. This paper shows how Roman private law makes possible the decentralized market, without mediation by public law. The private sector cannot exist in a vacuum. Private law enables the private sector to be the main driver of the economy. Understanding how a system of private law works is relevant for economic liberalization. Unfortunately, Latin American countries liberalized and privatized their economies in the 1990s, forgetting that their legal systems had been socialized and constitutionalized during much of the 20th century. Arguing for a return to Roman law is the best way to introduce law and economics into the civil law tradition and to reprivatize Latin America's ailing legal system.