Franz Neumann on the rule of law and capitalism: The East Asian case

The purpose of this paper is to explore, in the context of the emergence of East Asian capitalism, theoretical issues concerning the relationship between the rule of law and capitalism as expressed in the classic work of Max Weber and elaborated by Franz Neumann. More specifically, it will be argued that the optimistic Weberian vision of the growth of liberal capitalism and market rationality is clouded mainly because it is based on a distinctive model of liberal capitalism, especially one requiring an assertive bourgeoisie demanding legal restraint on the exercise of state power. State‐driven capitalism in East Asia, which has produced its own brand of legalism, is better explained in terms of Franz Neumann's analysis of the differing legal forms under various forms of capitalism, and may provide a more useful framework than the Weberian model in understanding the nature of the relationship between law and capitalism. While Weber's analysis of the emergence of rational law arises out of an historical methodology it is not able to go beyond a conception of modern law as the summit of a rational process of modernization. In contrast, Neumann provides a useful framework for the development of historical sociology of legal institutions that is able to relate forms of capitalism, political structures and legal institutions.