Legal philosophers have long debated the question, what is law? When can we say that a society is organized as a legal order as opposed to some other type of order such as order based on religious authority, moral principles, emergent social norms, or tyranny? This question is of both theoretical interest and political and economic interest, as countries seek to transition from the rule of power or privilege to the rule of law to build market democracies and generate economic growth. We present a model that seeks to explain the distinctive characteristics of law -- such as its generality, abstract reasoning, uniqueness and reliance on open and public processes -- on the basis of law's function to coordinate an equilibrium based on decentralized enforcement of rules. We thus depart from the conventional assumption in both law and economics and positive political theory, namely that law is to be defined as a system of coercive enforcement of penalties by the state. We find that the capacity of law -- meaning third-party classification of behaviors as wrongful or not -- to coordinate enforcement depends on the ability of law to provide unambiguous classification. Many of the features identified by legal philosophers as characteristic of legal orders, and some that legal theory ignores or deemphasizes, are predicted by the model.
Economics | Jurisprudence | Law and Economics | Politics | Public Law and Legal Theory
Date of this Version
Gillian K. Hadfield and Barry Weingast, "What is Law? A Coordination Model of the Characteristics of Legal Order" (December 2010). University of Southern California Law and Economics Working Paper Series. Working Paper 123.