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'Capacitas': Contract Law and the Institutional Preconditions of a Market Economy

Author

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  • Simon Deakin

Abstract

Capacity may be defined as a status conferred by law for the purpose of empowering persons to participate in the operations of a market economy. This paper argues that because of the confining influence of the classical private law of the nineteenth century, we currently lack a convincing theory of the role of law in enhancing and protecting the substantive contractual capacity of market agents, a notion which resembles the economic concept of 'capability' as developed by Amartya Sen. Re-examining the legal notion of capacity from the perspective of Sen's 'capability approach' is part of a process of understanding the preconditions for a sustainable market order under modern conditions.

Suggested Citation

  • Simon Deakin, 2006. "'Capacitas': Contract Law and the Institutional Preconditions of a Market Economy," Working Papers wp325, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp325
    Note: PRO-2
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp325.pdf
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    References listed on IDEAS

    as
    1. Edward L. Glaeser & Andrei Shleifer, 2002. "Legal Origins," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1193-1229.
    2. Mathias M Siems, 2006. "Legal origins: reconciling law and finance and comparative law," Working Papers wp321, Centre for Business Research, University of Cambridge.
    3. repec:mes:jeciss:v:30:y:1996:i:4:p:1212-1216 is not listed on IDEAS
    4. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Gindis, David & Hodgson, Geoffrey M. & Huang, Kainan & Pistor, Katharina, 2017. "Legal institutionalism: Capitalism and the constitutive role of lawAuthor-Name: Deakin, Simon," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 188-200.
    2. Simon Deakin & David Gindis & Geoffrey M. Hodgson & Kainan Huang & Katharina Pistor, 2015. "Legal Institutionalism: Capitalism & the Constitutive Role of Law," Working Papers wp468, Centre for Business Research, University of Cambridge.

    More about this item

    Keywords

    contract law; capacity; capability approach;

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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