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Legal Institutionalism: Capitalism & the Constitutive Role of Law

Author

Listed:
  • Simon Deakin
  • David Gindis
  • Geoffrey M. Hodgson
  • Kainan Huang
  • Katharina Pistor

Abstract

Social scientists have paid insufficient attention to the role of law in constituting the economic institutions of capitalism. Part of this neglect emanates from inadequate conceptions of the nature of law itself. Spontaneous conceptions of law and property rights that downplay the role of the state are criticized here, because they typically assume relatively small numbers of agents and underplay the complexity and uncertainty in developed capitalist systems. In developed capitalist economies, law is sustained through interaction between private agents, courts and the legislative apparatus. Law is also a key institution for overcoming contracting uncertainties. It is furthermore a part of the power structure of society, and a major means by which power is exercised. This argument is illustrated by considering institutions such as property and the firm. Complex systems of law have played a crucial role in capitalist development and are also vital for developing economies.

Suggested Citation

  • 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.
  • Handle: RePEc:cbr:cbrwps:wp468
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp468.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Wang, Ying & Lahr, Henry, 2017. "Takeover law to protect shareholders: Increasing efficiency or merely redistributing gains?," Journal of Corporate Finance, Elsevier, pages 288-315.
    2. Ding Chen & Simon Deakin, 2014. "On Heaven's Lathe: State, Rule of Law, & Economic Development," Working Papers wp464, Centre for Business Research, University of Cambridge.

    More about this item

    Keywords

    Institutions; law; capitalism; theory of the firm; property rights;

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • P1 - Economic Systems - - Capitalist Systems
    • P5 - Economic Systems - - Comparative Economic Systems

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