Richard Posner [1973] brought economic analysis of law to the attention of the general legal academy; by the late 1970s, his work had provoked a vigorous controversy within the legal academy. That controversy has usually defined the debate around the philosophical foundations of economic analysis of law. Posner made two claims: (I) Common law legal rules are, in fact, efficient; and (II) Legal rules ought to be efficient. In both claims, "efficient" means maximization of the social willingness-to-pay. In the course of the controversy, two other claims were articulated in Kornhauser [1984, 1985]: (III) Legal processes select for efficient rules; and (IV) individuals respond to legal rules economically. (In this third claim, "efficient" means "Pareto efficient.") Kornhauser identified this last, behavioral claim as central to the enterprise. A fifth claim is also implicit in the literature: (V) on the best interpretation of law, common law doctrines promote efficiency.[1] Notice that (V) differs from (I) in important respects. According to (V), an economic interpretation fits a doctrine not because, as asserted in (I), the legal rules in fact induce efficient behavior but because the rule would induce efficient behavior within the view of the world that seems to underlie the judicial decisions. (I) is an empirical claim that requires the analyst to determine whether the actual behavior induced by legal rules is efficient; it requires knowledge of how individuals do, in fact, behave and of which behavior in the real world would, in fact, be efficient (V) requires only knowledge of the content of judicial opinions; the analyst interprets these opinions to extract an economic model that underlies the decision. (V) might be true even though legal rules induced inefficient behavior in the real world because the announced legal rule might be efficient within the implicit model used by judges.
These five claims do not correspond directly to traditional questions in the philosophy of law. The evaluative claim (II) that legal rules ought to be efficient would, if directed to judges, qualify as a theory of adjudication, one of the central concerns of anglo-american philosophy of law. Central philosophic questions concerning the concept of law, of its normativity, and the obligation to obey the law, however, are not directly addressed. The behavioral claim as well as the evolutionary claim (III) and the positive claim (II), by contrast, concern empirical issues that philosophers of law generally neglect. Nevertheless, the controversy within the legal academy has generally regarded economic analysis of law as providing a comprehensive theory of law that challenges traditional approaches to law. Indeed, an explanation of the vehemence of the controversy should identify differences in fundamental views concerning law.
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