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CAIRO BOOKS's Description
Economic analysis of law is an interesting and challenging attempt to employ
the concepts and reasoning methods of modern economic theory so as to gain a
deeper understanding of legal problems. According to Richard A. Posner it is
the role of the law to encourage market competition and, where the market fails
because transaction costs are too high, to simulate the result of competitive
markets. This would maximize economic efficiency and social wealth. In this
work, the lawyer and economist Klaus Mathis critically appraises Posner’s
normative justification of the efficiency paradigm from the perspective of the
philosophy of law. Posner acknowledges the influences of Adam Smith and Jeremy
Bentham, whom he views as the founders of normative economics. He subscribes to
Smith’s faith in the market as an ideal allocation model, and to Bentham’s
ethical consequentialism. Finally, aligning himself with John Rawls’s contract
theory, he seeks to legitimize his concept of wealth maximization with a
consensus theory approach. In his interdisciplinary study, the author points
out the possibilities as well as the limits of economic analysis of law. It
provides a method of analysing the law which, while very helpful, is also
rather specific. The efficiency arguments therefore need to be incorporated
into a process for resolving value conflicts. In a democracy this must take
place within the political decision-making process. In this clearly written
work, Klaus Mathis succeeds in making even non-economists more aware of the
economic aspects of the law.