Richard Posner’s Law and Economics in Action

Richard Posner is a major force in the law and economics movement, which attempts to apply the methods of economics to the analysis of laws and regulations. He is also a judge on the Seventh Circuit Court of Appeals, which gives him the means to impose his ideas on the real world. I’m not quite sure what the “methods” of economics are, and certainly there is little in real world outcomes to show the value of economics. Still, Posner soldiers on. This is from his 1985 article in the Columbia Law Review, An Economic Theory of the Criminal Law:
My analysis can be summarized in the following propositions:
1. The major function of criminal law in a capitalist society is to prevent people from bypassing the system of voluntary, compensated exchange-the “market,” explicit or implicit-in situations where, because transaction costs are low, the market is a more efficient method of allocating resources than forced exchange. Market bypassing in such situations is inefficient — in the sense in which economists equate efficiency with wealth maximization — no matter how much utility it may confer on the offender. … (P. 1195, footnote omitted)
Posner really is using the “methods” of economics to explain criminal law. There is a market for something, and criminal law can be understood as the coercive methods used to ensure participation in those markets, says Posner. I leave it to the reader to apply that idea to rape and arson.

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