Chapter

Rethinking the Relation Between Legal and Economic Development

in Law and Capitalism

Published by University of Chicago Press

Published in print June 2008 | ISBN: 9780226525273
Published online March 2013 | e-ISBN: 9780226525297 | DOI: http://dx.doi.org/10.7208/chicago/9780226525297.003.0003
Rethinking the Relation Between Legal and Economic Development

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Law is not a fixed endowment in the sense of an unchanging foundation for market activity. It is hardly surprising, then, that the sustainable development of capitalist systems should depend in part on the continuous development of new governance structures to support capitalist enterprise. Law, like capitalism, is constantly evolving. Max Weber realized the potential tension between a “rational” legal system (one that generates stable expectations) and the need for legal adaptation within a rapidly developing economy, but he never fully resolved this tension in his work. The ongoing relation between economic development and legal change has always existed and has to some extent been recognized by close observers, but the full implications of an iterative process of legal and market development have escaped sustained analysis. This chapter examines economic and legal development in capitalist systems by viewing the relationship as a highly iterative process of action and strategic reaction. It also discusses the organization of legal systems, the multiple functions of law, substitutes for law, and the political economy and supply and demand for law.

Keywords: law; capitalism; Max Weber; economic development; legal systems; legal change; market development; political economy; supply; demand

Chapter.  7348 words.  Illustrated.

Subjects: Company and Commercial Law

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