The John M. Olin Center

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Kristoffel Grechenig & Martin Gelter, The Transatlantic Divergence in Legal Thought: American Law and Economics vs. German Doctrinalism, 2008; also published as University of St. Gallen Law & Econonomics Working Paper No. 2007-25.

Abstract: Law and economics has become an integral part of American legal scholarship and the law school curriculum. Ever since the legal realist movement, scholars mostly view the law from an external perspective.1 It may be surprising to many Americans that European legal scholarship has been largely resistant to this development. Law is typically viewed “from the inside”, that is as an autonomous discipline independent from the other social sciences. Most legal scholarship is doctrinal, meaning that legal scholars employ interpretative methods in order to systematically expose the law and to find out what the law is, frequently even before it is tackled by a court. American-style legal scholarship is often considered very alien, and law and economics in particular often meets outright rejection. In this paper, we attempt to explain this divergence in the academic legal discourse using the reception of law and economics in legal scholarship in German-speaking countries as a case in point. However, we suspect that our approach can be generalized to other parts of Europe because of common roots and similar historical factors that can be identified in many parts of Europe.

We propose a two-pronged explanation for why law and economics plays an insignificant role in German-speaking countries while the United States have become a stronghold for it. First, in the US, legal realism (in its particular political setting) discredited what has become known as classical legal thought. As a result, legal academics in the US were receptive for new approaches which began to thrive later during the 20th century. In German-speaking countries, the free law school had a similar agenda but did not succeed in displacing doctrinal approaches. Consequently, there was no void to be filled by external criteria. Second, utilitarianism had already gained widespread acceptance in American intellectual circles since the 19th century. As it forms the foundation of modern welfare economics, its basic tenets provide a fertile soil for the incipient law and economics movement. In contrast, German philosophy promoted a strictly anti-utilitarian attitude hostile to any law and economic movement. To the extent external criteria were (or are) accepted by legal scholarship they needed to be taken from a different source. It has recently been pointed out that, both in the US and in Germany, legal theories opposed to positivism have prevailed. Other than in the US, the German critique resulted in a “value-based”, transcendental jurisprudence.2 In our view, none of these two factors alone can explain the success of law and economics in the US relative to Europe, but the combination of the two can.

We proceed as follows: Section 2 describes the rejection of the economic analysis of law in German-speaking countries and gives an overview on explanations that we found in the existing literature. Section 3 outlines our own hypothesis. Section 4 traces the development in the US, based on the existing literature. It starts with the classical legal thought of the late 19th century and subsequently surveying legal realism and the early development of law and economics since the 1960s. Section 5 describes the development of legal theory in Germanspeaking countries. As both legal realism and the free law school have pointed out, a doctrinal approach to law is equally prone to exploitation to achieve certain political ends. The current state of the discussion on legal philosophy is relevant to us insofar as it influences the ordinary legal discourse, in particular the predominant forms of legal scholarship. Section 6 summarizes.


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