The Strategy of Methodology: The Virtues of Being Reductionist for Comparative Law

Abstract

ion in economics—making assumptions—is not that different from abstraction in, say, philosophical argument. Economists abstract in order to build models. They build models in order to untangle complex and hard-to-decipher real world interactions and focus attention on the detailed structure of a logic of how processes and systems work. Like the philosopher, the economist is interested in the intricacies of how and whether Y follows from a premise X, and indeed whether steps A, B and C are necessary or sufficient to get from X to Y. Using math— not numbers but mostly algebra—is a stepped-up version of this basic method of honing attention to the inner logic of an argument. The virtue of building a model is that it allows a clear conversation about what is and is not being claimed. This is what allows me to respond with a fairly crisp answer, for example, to John Reitz’s concern that I am misguided in focusing on the “adaptability” channel , as opposed to the “political” channel, to explain the impact of legal origin on economic variables arguably identified by the empirical literature starting with La Porta and co-authors in 1997. 1 (“LLSV”). As Reitz describes it, the “adaptability” argument claims that legal origin has an impact on economic welfare because “judges in common law systems have greater freedom to change the law.” The political argument is that with greater judicial independence, “common law courts are able to stand up to state power more effectively” and thus promote the efficiency of markets as against government intervention. Reitz has read my model to construct a more nuanced argument for the adaptability channel in this debate, namely that it is not “common law” systems per se that gives judges greater freedom to change the law, but rather specific institutional features such as the organization of the courts and the judiciary, procedure, opinion-writing practices and so on. That is he assumes I make a different move at step one—what produces greater judicial freedom to change the law—and the same move at step two—greater judicial freedom to change the law produces better law. Understanding why this is not what my model is doing is helpful in illuminating how my project departs from the existing legal origins literature. While it is true that I am focusing on adaptation of the law through adjudication as a key mechanism by which legal institutions have an impact on the quality of law (meaning here the capacity of law to promote social welfare), I am not building on a simple logic of “legal systems produce better economic outcomes when judges have greater freedom to change the law.” I’m rejecting not only step one (common law systems give judges greater freedom) but also step two (greater judicial freedom produces better law.) Indeed, I am rejecting the framework—the set-up—of the legal origins model. The flaws in that framework, I claim, are that it does not explain why judicial freedom would produce better law 1 Rafael LaPorta, Florencio Lopez-de-Silances, Andrei Shleifer and Robert Vishny, “Legal Determinants of External Finance” 52 Journal of Finance 1131 (1997); Rafael LaPorta, Florencio Lopez-de-Silances, Andrei Shleifer and Robert Vishny “Law and Finance” 106 Journal of Political Economy 1113 (1998).