Ward Farnsworth’s ‘The Legal Analyst’, and a Note on the Hegemony of Economics in Academic Law

When I came back to posting here at Volokh after a summer away with family duties, I mentioned that I had found more time for reading than posting, and that I wanted to share a few books with readers.  In this post, I want to raise one I believe particularly useful for my introductory course in law and economics.  It’s Ward Farnsworth, The Legal Analyst: A Toolkit for Thinking About the Law (Chicago 2007; Amazon $22 paper, $7 Kindle).

Back when I first started teaching a section of law and economics directed at first year law students (pitched to them as a course designed for students without a lot of economics or business background), then-Professor Farnsworth of BU law school posted a comment to a Volokh post of mine and mentioned this book.  I’m embarrassed to say I didn’t follow it up.  (I’m tempted to chalk it up to the noise-to-signal ratio in blog comments, but instead I’ll shoulder the blame for not noticing).  But recently I was down in Austin at the University of Texas law school, where Professor Farnsworth is now Dean Farnsworth.  In the first hour of the conference I was attending (on the meaning of American conservatism), a bomb threat closed down the whole university.  I asked my friend Bobby Chesney who the guy was in rolled up shirtsleeves, standing in the rain directing traffic, and he told me it was Dean Farnsworth.  The dean then helped drive conference participants to a professor’s house to continue off-campus, where he stayed on for several sessions, which I thought well beyond the call of deanly duty.  While we were there, though, he mentioned his book to me again and brought me a copy.  I started reading it at the airport; quite riveted, I didn’t open my Kindle all the way home on the plane.

The Legal Analyst is exactly what the title says – a toolkit of ways in which law professors, lawyers, and judges in today’s world think and talk about the law much of the time.  It is something of a grab-bag of very short – two or three page – chapters that aim to introduce the novice to the analytic lingo by which we talk about and explain law.  It is a recognition, in a sense, that the language of law and economics, the most basic language of consequences, incentives, elementary ideas in strategic behavior, and so on, has essentially conquered the analytic side of law.  That means, of course, the world of law professors, but it also means the basic vocabulary that law professors use to communicate with students.  The more elite the school, I’d also add, the more this verbal code and, often, shorthand prevails.  This spills over into the jargon, shorthand, and analytic frames of lawyers and judges and regulators, particularly those who deal in commercial, corporate, or financial matters.

I don’t mean by this anything deep – on the contrary, much of the time it is superficial, a jargon that, yes, explains something, but not so very much.  But, from the point of view of the student entering law school, it serves as a signaling device among participants – and woe to the student who hasn’t been introduced to such concepts, even at a superficial level, as externalities, moral hazard, marginal utility, efficiency, prisoner’s dilemma, and so on.  (Especially, I’d add, looking to the class structure of law schools, students from middling institutions like mine.  Not understanding this lingo is a little like using “ain’t.”  Added: Skimming the comments, I think perhaps some of them misunderstand that I mean truly basic and ordinary terms here that nonetheless are rooted in the economic analysis of law.  I start out my 1L class asking the students to write down the definitions of a couple of basic terms – one of them is always “transaction costs.”  Around half to a third of the class can’t really do it or are obviously just guessing; they’re bright students but they haven’t studied things that would teach them this, and that’s what this class is supposed to do for them.  Whether the commenters would use a term like transaction cost in a legal discussion I have no idea; but I doubt that if someone used it in a negotiation or some legal transaction with them, they would not know what is meant.  My point is that many of these terms have become the air we breathe, so it’s hard to notice – but that was far less true for such terms a few decades ago.)   The terminology operates, at its best, as a shorthand for concepts that are actually doing work in the analysis.  At its worst, it obscures meaning because this jargon can inappropriately force things into categories of “economicsy” thinking where they don’t belong.  Not infrequently, too, the jargon is just a fifth wheel on meaning, used mostly because the speaker doesn’t know any other framing language. 

(I saw this recently in a post by some political scientist about drone strikes and targeted killing. The writer clearly knew zero about the actual facts of drone strikes, and said as much.  But that did not stop him from writing an entire post in the abstract, based around the idea of measuring the “marginal benefit” of drone strikes.  He could have written the exact same words about, I don’t know, lingerie sales at Valentines or pretty much anything else.  Of course marginal thinking is fantastically useful; the getting of analytic wisdom, however, consists in knowing when it is not.  For convenience, and our own shorthand, let’s call this “Fifth Wheel Economics-Talk,” in which something like “marginal benefit” is used in some particular situation as though a serious analytic term but which, upon examination in the particular matter at hand,  does no real analytic work.  All the work is done by the actual facts and circumstances, and strategic, legal, and moral concepts that are not, in this case, illuminated by terms such as “marginal benefit,” especially when offered to invoke some big analytic structure with graphs and charts and x-y axes. I digress.)

The question is where a student who majored in, say, the humanities (but, interestingly, I often find that students who studied chemistry, physics, or engineering have the same problem, though they overcome it faster) is going to acquire this lingo and shorthand, even at the superficial level that most of it is used.  They tend to be overawed by it, and assume it’s part of some gigantic but members-only City of Oz library to which they have no admittance – not realizing that, although there is a formidable intellectual structure underlying it, its usage most of the time is nothing that demanding.  But still, someone has to teach it to you.  How to learn it?  One reason I offer an introductory law and economics class to first year students as an elective is in order to convey at least part of this stuff.  Because what my students are looking for most of the time ( though they often don’t know it) is not the formal discipline of law and economics.

In part that is because, somewhat oddly, law and economics is a little bit a way of “doing” law, but mostly it is a way of “explaining” it, closer to jurisprudence than anything else, and explaining it from outside the law itself; I borrow this point from my WCL colleague Jonathan Baker, who, it turns out, uses Dean Farnsworth’s book.  (Jurisprudence, so to speak, after the coup d’etat in which the original ruling discipline of law, philosophy, has been de-throned, and economics-the-usurper rules in its place; I don’t want to conjure up images of hunchbacks and guys named Richard, but … still.)  The question, after all, for many law and economics inquiries, is the systemic one of how the rules should be organized so as to maximize efficiency, with how the rules actually are organized being not quite an afterthought, but nonetheless merely the raw material for an analysis of “should” according to various criteria external to the law itself.  (Another day we can talk about the irony that this emphasis in law and economics on “should be organized” means that the academic discipline in which likely the most libertarian law professors reside is the one that can be used most easily to justify … social engineering.  Hari Seldonism – we shall rearrange their incentives and so they shall behave.  Again, I digress.)  Yet for most lawyers or judges in practice, that “should” is interesting, but beside the point much of the time.  Because, efficient or not, the rules are there and must be dealt with as they are.

This is often not true, sure – judges these days, for example, in complicated business, finance, or regulatory environments expect fully to be informed of the likely consequences of the proposed outcome. You probably don’t want to be the judge who didn’t realize that yesterday’s impeccable legal ruling dimantled the capital markets today.  The same is true of regulatory lawyers inside and outside government.  Consequences matter.  Still, my students (I realized after teaching my introductory law and economics course for a year or two) walk into the first day of class assuming that this magical way of thinking they have heard so much about will reveal to them the right answers within the structure of existing law.  They tend to be somewhat annoyed, frankly, when they realize that it’s mostly telling them what they should do if they were legislators, or perhaps the Czar, or maybe God – the god-who-sets-the-rules, organizer of the Big Regulatory Bang.  Until I started explaining this before add-drop week was over, I would regularly field questions around week 4, asking (frustrated but still trying to be polite) … “and in training to be a practicing lawyer I should care about this because …?”

There are lots of reasons why students should care and do benefit from law and economics taught as a discipline that seeks to explain law from the outside, so to speak, measured against the criteria of economics.  But I’d say that as a practical matter, most students – whether they know it or not – are actually looking for a way into the analytic jargon that they sense inchoately but correctly structures much of the discourse.  It’s some basic economic ideas endlessly replayed and reapplied.  In trying to find ways to teach that – well, I wish I had followed up with Ward Farnsworth’s book much earlier.  It’s a terrific book.  I anticipate revamping my syllabus to draw this book into it – and at the same time, I am going to spend a while thinking about whether I would draw more students in or push them away if I were to re-title the course as something closer to what I intend: not systematic law and economics, but an introduction to the “toolkit,” as Dean Farnsworth offers it.

I think frankly many law schools would benefit from a course like this – including ones at the top tier that might imagine their students are well beyond any need for this – because the problem is, half of them are and half of them aren’t.  At the top end schools, students who don’t know this stuff will often avoid it to avoid being found out as not knowing everything – at last revealed as a fake, so to speak.  At the other schools, rational, credential- and GPA- maximizing students who already know this stuff will see an opportunity for an easy A, particularly in the first year when grades matter most to the outside world.  Students who don’t, but are still strategically rational, will ask themselves whether it makes sense to take a class competing with students who already know it, no matter how important to their legal educations and knowledge as lawyers.

But that raises a different question of whether this kind of course should be an elective or required; we can talk about that some other day.  Assuming one can get the students who most need this background into the class, this book is a splendid resource.  It  is written with a plain, clear style that makes me weep with envy – but is perhaps not surprising from a law professor who has written a splendid book on classic English rhetoric and two more on … chess strategy.  Even for those of you who don’t teach law students, it is a very entertaining and revealing book, one which can be read it tiny chunks; it probably is an excellent Kindle book, because you can read a chapter at a time on your iPhone. (I should add that the chapter on “slippery slopes” is coauthored with The Chief Conspirator himself.)

Final note:  Economics wasn’t always the master discipline for academic law.  Up until, say, the early 1980s, philosophy rather than economics provided the essential background concepts for law, including a whole jargon all its own.  The same problem existed for students who had never heard of the “original position” or “behind the veil of ignorance.”  But I would say the last serious stand for philosophy against the hegemony of  microeconomics was Charles Fried’s Contract as Promise (we can discuss another time why I don’t think it was Ronald Dworkin’s books).  Whether one thought Fried was right or not, as an exercise in moral philosophy and the philosophy of law, it was the last challenge to the hegemony of economics in law, in the sense that it was the last time that the new hegemon of law and economics bothered to respond.  After that, well, it no longer had a need to engage, and in any case, no longer could, because its leading theorists were – and are – so entirely locked within the iron cage of utilitarian thinking, combined with an absolute separation of passion from reason, that there was (and is) no intellectual ground on which to engage.  And the rest is silence.  With possibly some noise.

Meanwhile, the philosophers went someplace else.  I don’t know where, exactly; I just know on these issues, they’re not in wide-spread intercourse with the legal academy.  They may be informing each other on these questions, but they’re not informing us.  There is wonderful work in the philosophy of economics – Elizabeth Anderson, for example – but its impact within the legal academy seems to me regrettably small.  More’s the pity, because the deep questions run not only to the philosophy of value, treated as a substantive question – but, more importantly for these purposes, the philosophy of valuation.  By that I mean the philosophical status of the methods by which economics answers substantive questions of value.  Neither seems to get discussed much in the legal academy, at least not in ways that actually engage scholars of law and economics as to their methods in some larger and deeper intellectual framework.  There are many exceptions, of course, and I exaggerate here for effect.