Course:Law3020/2014WT1/Group C/Law As Efficiency

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Law and Economics: Law as Efficiency


Proponents of Law and Economics submit that the purpose of law is to achieve economic efficiency. The idea of Law as Efficiency is concerned with viewing law as being the essential tool for wealth-maximization in society. Theorists who support the concept of Law and Economics believe that since some laws are efficient and the best explanation of why we have laws is because of their efficiency, it follows that we ought to have efficient legal rules in our society. Law as Efficiency purports that the aim of law should be to maximize social wealth. In this context, wealth is not measured solely by monetary value, but rather it refers to all tangible and intangible goods, services and satisfactions that are valued by society.

Legal Scales

Application to Moore v. British Columbia (Education)

Pareto-superiority is a standard that allows for efficiency to be measured and compared between different states of affairs on the basis of optimality. The goal of reaching a Pareto-optimal state is attainable by achieving a status where we cannot make any more individuals better off without making other individuals worse off as a result; this is said to be a state of ultimate Pareto-superiority in which efficiency is maximized. In Moore, the facts suggest that in order to improve the lives of those who suffer from disability and require special education, budgetary allocations would have to come from another source of the school funding. As the funding for the Diagnostic Centre was severed, in order to provide meaningful education to those who require special education, it appears that funds would have to be removed from some other allocation and be redistributed accordingly. Thus, as there are only limited funds available to the school, it cannot be said that a redistribution of budgetary allocations which provide funding for the Diagnostic Centre would not make others worse off. When there is a set value that is to be dispersed, by redistributing funds to the needs of special education, it will be taking away from the financial needs of another department. In light of this economic limitation, theorists who advocate Law as Efficiency would likely contend that Section 8 of the British Columbia Human Rights Code would not serve to maximize wealth because in Moore, it would not be possible to benefit special needs students without making other students worse off. Therefore, because there are no further moves that could be made to benefit some without negatively affecting others at their expense, it can be said that the situation has already achieved maximum efficiency under the scope of Pareto-optimality.

It is possible that Section 8 can be viewed in another light in terms of achieving efficiency though wealth-maximization. An aspect of Law and Economics suggests that we can ensure that wealth is maximized in our society by protecting and facilitating voluntary transactions. In Moore, Section 8 is aimed at promoting equality. When there is equality in society, people are more likely trust each other and would be more inclined to voluntarily interact with other. It can be argued that societal trust breeds the facilitation of transactions thereby adhering to wealth-maximization and economic efficiency. The School Act which was in effect in Moore states that "the purpose of the British Columbia school system is to enable all learners to develop their individual potential and to acquire the knowledge, skills and attitudes needed to contribute to a healthy, democratic and pluralistic society and a prosperous and sustainable economy. This declaration of purpose is an acknowledgement by the government that the reason all children are entitles to an education, is because a healthy democracy and economy require their educated contribution" (paragraph 5). Law as Efficiency theorists would likely see this purpose as one that conforms to the Legal Economist's goal of attaining social efficiency and promoting wealth-maximization. A healthy democracy and economy are substantial attributes which are in accordance with the types of wealth that are seen as being desirable to maximize in the view of Law and Efficiency.

Pareto Efficiency


At paragraph 39 in Moore, it is stated that "special education shares the basic purpose of all education: the optimal development of individuals as skillful, free, and purposeful persons, able to plan and manage life and to realize highest potential as individuals and as members of society". This purpose of special education surely imitates the goal of Legal Economists in the sense that those things which are valued most by society will be maximized and in effect, efficiency can be realized. Maximizing the educational potential for all individuals in society is undoubtedly in accordance with the proponents of Law and Efficiency. Wealth-maximization can be achieved by the same methods that are used to promote equal opportunity for all individuals in society, such as those intended objectives which are embodied in Section 8 of the Human Rights Code. This line of reasoning would be similar to the Natural Law theorist approach because maximizing social wealth could be seen as being congruent with the Natural Law theory of attaining the common good. In the same way that Natural Law theorists would promote that which satisfies the greatest number of people in terms of happiness, so too would Legal Economists desire that wealth be maximized in a way that achieves efficiency by ensuring that allocation of resources puts each resource into the control of those individuals who value it the most. That is, the common good can be achieved by maximizing wealth through efficient distribution of value in society.

Treatments of Selected Theoretical Perspectives

Legal Perspectives Philosophers
Natural Law Thomas Aquinas
Legal Positivism John Austin, HLA Hart, Jeremy Bentham, and Joseph Raz
Separation Theory HLA Hart
System of Rights Ronald Dworkin
Liberty and Paternalism John Stuart Mill and Gerald Dworkin
Law as Efficiency Susan Dimock
Feminist Jurisprudence Patricia Smith and Catharine Mackinnon