Contemporary mainstream legal reasoning has been the subject of extensive commentary and criticism by several schools of legal thought that have emerged since the 1960s. This chapter provides a very brief introduction to several of these schools.

The reader is cautioned that schools of legal thought typically comprise a diverse collection of scholars who disagree among themselves in many respects and who may share little more than a particular political orientation or a methodological technique. Thus, the brief summaries here cannot begin to describe adequately the variety of approaches within each school, and the generalizations about each school may not apply to many of those regarded as members of the school.

The purpose of this chapter is not to survey the full range of legal scholarship on the subject of legal reasoning at the beginning of the twenty-first century. Rather, this chapter seeks only to introduce the reader to some of the most prominent contemporary perspectives on mainstream legal reasoning, particularly those that have been a force in legal education for at least a couple of decades and thus seem most likely to have a long-term impact.

Without a doubt, much scholarly work that is not discussed in this chapter will make a significant contribution. For example, many legal scholars utilize interdisciplinary approaches to the law, focusing on how the law is shaped by the context in which it operates. One of these interdisciplinary approaches, known as law and economics, is a major school and is discussed separately below. Legal scholars, however, also draw on history, sociology, psychology, anthropology, literary criticism, and other disciplines to better understand the law and legal reasoning. Much of this work is performed by scholars who identify themselves as members of the law and society movement, a very broad-based group formed in the 1960s that studies law in its social context and is in many respects an extension of the legal realist movement. Some law schools now seek to appoint to their faculties candidates who have a Ph.D., often in one of the social sciences, in addition to their law degree. As might be expected, given the popularity of interdisciplinary approaches to law, legal scholars are increasingly engaging in empirical research. These increased emphases on interdisciplinary and empirical work will not only strengthen existing schools, such as law and society and law and economics, but likely give rise to new schools of legal thought as well.


The beginning of the contemporary law and economics school is often traced to an article written in 1960 by Professor Ronald Coase of the University of Chicago.1 Coase began with the observation, already noted in chapter 8, that injuries are jointly caused. Consider the example of farmers whose crops are located near railroad tracks and are burned by sparks from passing trains. Many intuitively would regard the train as the cause of the loss. If the railroad tracks were in place before the farmer decided to plant crops in that location, some might regard the farmer’s decision to plant near the tracks as the cause of the harm. In fact, however, the cause of the injury is both the emission of sparks by the train and the decision of the farmer to plant crops in that location.

Although the harm is jointly caused, the law must determine which party shall bear the loss. The law can either impose liability on the railroad or leave the farmer to suffer the loss. Coase proposed what became known as the “Coase theorem.” He argued that, if there were no transaction costs involved in bargaining, then the parties through bargaining would impose the cost on the party that could most cheaply avoid the harm.

Assume that the cheapest way to avoid the harm is for the farmer simply not to plant crops near the railroad tracks. If the railroad is made liable for the loss, the railroad will pay the farmer not to plant crops because that will be cheaper for the railroad than preventing the emission of sparks. If the railroad is not made liable, the farmer will cease planting crops near the tracks. Thus, if the cheapest way to avoid the harm is for the farmer not to plant, regardless of whether the railroad is made liable, the end result will be that the harm will be avoided by the farmer not planting crops.

Assume that the cheapest way to avoid the harm is for the railroad to prevent the emission of sparks. If the railroad is made liable for the loss, the railroad will take the necessary steps to prevent spark emission in order to avoid liability. If the railroad is not made liable, then the farmer will pay the railroad to prevent emission of sparks, because that will cost the farmer less than suffering the loss. Thus, if the cheapest way to avoid the harm is for the railroad to prevent spark emissions, regardless of whether the railroad is held liable, the end result will be that the harm will be avoided by the railroad’s preventing the emission of sparks.

In short, the Coase theorem holds that, where no transaction costs exist, the content of the legal rule does not matter for purposes of reaching the most efficient result. Regardless of the rule, the parties will bargain to ensure that the harm is prevented by the cheapest cost avoider. That is, in the absence of transaction costs, the parties will bargain to yield the most efficient result.

Coase recognized that transaction costs are often significant, in which case the parties may choose not to bargain. He suggested that, where private bargaining will not occur, the law should require the result that the parties would have reached through private bargaining in the absence of transaction costs. He emphasized, however, that government regulation itself imposes costs and that sometimes the most efficient course of action is to do nothing about the problem at all. One inference widely drawn from Coase’s argument was that government regulatory activity should be curtailed.

The Coase theorem has been criticized on several grounds, apart from the fact that transaction costs always exist. One criticism is that the decision of where to impose liability potentially has major consequences for the participants in the transaction. Consider, for example, the situation where the cheapest way to avoid the harm is for the farmer not to grow crops. If the railroad is held liable, it will pay the farmer not to grow crops. If the railroad is not held liable, the farmer will not plant crops, but will receive no payment from the railroad. Under either rule, the farmer will not grow the crops. Under one rule, however, he is compensated, while under the other rule he is not. Thus, the parties to the transaction may care deeply about which rule is adopted.

This criticism becomes especially salient when the injury involves not property rights but personal rights. Application of the Coase theorem to violent conduct suggests that, in the absence of transaction costs, it does not matter whether the law prohibits murder or rape. If avoiding the crime is worth more to the potential victim than committing the crime is worth to the potential perpetrator, the former will simply pay the latter not to commit the crime, and society will benefit from this socially optimal use of resources. Yet no one really imagines that, in a world of low or no transaction costs, the state should repeal laws prohibiting murder or rape and allow the parties to negotiate. Thus, the Coase theorem does not take into account deeply held moral beliefs.

Another criticism is that, even apart from high transaction costs, the bargaining envisioned by Coase may not occur because those denied a right initially may be too poor to purchase it. Alternatively, those who have the right may simply refuse to sell it (even though it would be efficient for them to do so) because they have no need for the money. These problems are known as “wealth effects,” because the behavior of the participants in the transaction is influenced by their initial wealth. Of course, at the time the rule is fashioned, a court or legislature does not know whether the person who should purchase the right will be able to afford it or the person who should sell the right will do so. The court or legislature cannot assume that people will act as the model predicts.

A third criticism is that the Coase theorem fails to take into account the “endowment effect.” A number of psychological studies have demonstrated that an individual who has some entitlement will demand more to surrender that right than she would have paid to buy it.2 Thus, purchasers may be unwilling to pay the price sought by sellers.

In any event, the Coase theorem inspired others to begin to analyze the economic consequences of various common law and statutory rules. By the 1970s, the law and economics school was an important force in legal education. Today, a vast and sophisticated literature on the economic analysis of law exists, and some of the insights produced by this literature have been employed by the courts. In 1991, Coase won the Nobel Prize in Economics for his 1960 article and an article he had written in 1937 on the nature of the firm.

One of the most influential proponents of law and economics theory has been Richard Posner, formerly a professor at the University of Chicago and now a judge on the United States Court of Appeals for the Seventh Circuit. Judge Posner’s judicial opinions are an important means by which law and economics theory has begun to influence the development of legal doctrine.

The early practitioners of law and economics theory believed that they had an approach that eliminated the indeterminacy of policy judgments. Their premise was that the legal system, rather than referring on an ad hoc basis to various individual policy preferences, should adopt the rule in every case that would lead to the most efficient use of economic resources.

For example, a proponent of law and economics theory might oppose publicly funded lawyers for poor plaintiffs.3 If the case has any merit, goes the argument, a lawyer will be found who will take it, even if only on a contingent fee basis. If the case does not have merit, then it should not be brought in the first place and most certainly should not be brought at taxpayers’ expense. In other words, the operation of a free market will guide lawyers to the meritorious cases. By appointing lawyers, the state wastes resources on meritless cases, contrary to the policy of wealth maximization.

Adherents to law and economics theory sometimes claim that the policy of efficiency provides the principled basis for adjudication that, as it had turned out, formalism could not. At the same time, law and economics theory generally reflects the same promarket bias as late-nineteenth-century formalism and classic liberal economics.

In addition to making the normative claim that the law should promote efficiency, law and economics theoreticians have also made a number of descriptive claims. One of these is the claim that the common law in fact embraces the value of efficiency, and thus legal rules, if their effects were analyzed, would be found to promote efficient results. For example, under Judge Learned Hand’s well-known formula, the law of negligence imposes liability on those who fail to take precautions to prevent accidents when the cost of prevention is less than the potential liability, discounted by the probability that the loss will occur, while exonerating those who do not take precautions when the cost of prevention is greater than the probable loss.4 In this way, the law of negligence imposes liability on an actor only when that actor behaves inefficiently. Another descriptive claim is that people actually behave as rational maximizers of their individual economic well-being. Again, the link between law and economics and classic liberal theory is clear.

Criticisms of early law and economics theory centered on both its political orientation and its methodological assumptions. Progressive critics of law and economics theory disagreed that wealth maximization should be identified as the primary goal of the law. They favored a system that, at times, may seek other goals, such as compensating injured victims or protecting the vulnerable against the more powerful, as in the case of laws to protect consumer safety.

They also observed that efficiency, as an essentially utilitarian value, is destructive of individual rights. For example, a negligence rule that exculpates an actor who declined to prevent an injury because the cost of prevention was greater than the potential loss may conserve the resources of the society as a whole, but it leaves the victim with an uncompensated injury. That is, the society prospers, though at the expense of those who have the misfortune of suffering the injuries for which the negligence rule does not require compensation.

For example, in the 1970s, Ford Motor Company built an automobile called the Pinto, the gas tank of which tended to explode in the event of a rear-end collision at more than twenty-five miles per hour, severely burning or killing the passengers. Eventually, it was discovered that Ford had been aware of the problem, but calculated that the cost of preventing the explosion would be $11 per car. Given the number of Pintos Ford expected to sell, the total cost of prevention would have been more than $100 million. At the same time, Ford estimated the number of cars likely to be involved in collisions leading to an explosion and the number of burn victims. Knowing the average jury award in cases involving similar injuries or deaths, Ford concluded that the cost of compensating all the victims would be less than the cost of preventing the explosions. Accordingly, Ford decided not to modify the Pintos to prevent the explosion. Under a negligence rule that adopts the utilitarian approach of law and economics, Ford should not be held liable to the burn victims because its conduct was economically efficient.

Even assuming that efficiency is the primary goal, these critics also questioned whether the market, in fact, is the most efficient means of allocating resources. Market economics rests on a number of assumptions, such as the availability of information, the absence of transaction costs, and the absence of barriers to entry, that may not be true in practice. Economists use the term market failure to refer to situations in which the conditions assumed by market theory do not exist in practice. For example, to return to the example from above, an indigent with a meritorious legal claim may not be able to obtain a lawyer through the free market because in fact the parties do not have sufficient access to the necessary information. Lawyers may be unaware of the claim and unable to learn about it without incurring prohibitive costs. Indigents may be unacquainted with private attorneys and uncertain how to find a qualified attorney to represent them. Thus, deference to the market may not yield the results promised by market theory.

In fact, critics have charged that much law and economics scholarship is based not on empirical research but on deductions from unexamined assumptions, such as the premise that humans are rational maximizers of their self-interest. This criticism regards the law and economics school as having more in common with Langdellian formalism than with social science. Recognizing the force of this critique, some practitioners of law and economics have begun to conduct empirical experiments in the field of behavioral economics, investigating the extent to which behavior is influenced by nonrational factors. Such factors may include wealth and endowment effects, already mentioned above, as well as other cognitive biases, such as those discussed briefly in chapter 4. As the law and economics school has grown, its research has become increasingly empirical, although mathematical models of behavior remain an important part of its work. Some law and economics practitioners respond to these criticisms by arguing that no science can study a phenomenon in its totality and that scientific investigation requires simplifying assumptions.

Critics have also challenged the conservative political bias of law and economics theory. A system that values a choice according to the dollar amount that an individual is willing to pay for that choice necessarily gives preference to those who have the most money and can pay the most for the satisfaction of their whims. And, if one believes in the diminishing marginal utility of money,5 then in a society where some have more money than others, dollars do not represent a uniform or constant method of valuation. In this view, law and economics theory uncritically reinforces the existing distribution of wealth by disproportionately valuing the preferences of the wealthy.

These criticisms of law and economics theory, in combination with a growth in the numbers and thus the diversity of practitioners of that theory, have resulted in a moderation of some of the claims made by the early theorists. Increasingly, at least some proponents of law and economics theory no longer see efficiency as the only or as the central value of the law, but as merely one of many values to be promoted. The value of law and economics theory in this view is that when efficiency is the preferred value, it provides a scientific basis for selecting the best result, and when other values are preferred, it demonstrates how those values can be promoted in the most efficient way.

In this incarnation, law and economics theory loses some of its conservative coloration. Once efficiency is deprived of its privileged status among values, law and economics theory seems predominantly a claim that judges should use social science, more specifically economics, as an aid to reaching decisions. That is, deprived of its normative claim, law and economics theory appears more than anything else to constitute a revival of the legal realist tradition, without the progressive political agenda. More specifically, law and economics theory shares with legal realism a belief that, with the death of formalism, law can be resurrected as a social science.


While law and economics theory is a principal heir to the constructive, social scientific strand of legal realism, the modern successor to its critical strand and the keeper of its progressive political flame was a movement called critical legal studies (CLS).

The origin of CLS as a movement is generally traced to a conference organized in 1977 by a small group of law professors, including Harvard law professors Duncan Kennedy, Morton Horwitz, and Roberto Unger; Wisconsin law professors David Trubek, Mark Tushnet, Tom Heller, and Stewart Macauley; UCLA law professor Richard Abel; and Rutgers law professor Rand Rosenblatt. The conference brought together a number of scholars whom the organizers believed were engaged in similar kinds of work, including in particular a number of scholars involved in the law and society movement. By the mid-1980s, the movement had become a major presence in American legal education. Even those who were not proponents of CLS often found themselves defining their position in opposition to that of prominent CLS scholars.

By the mid-1990s, however, CLS as an organized movement had collapsed, although those who belonged to the movement continued to write and teach, and thus their ideas continued to influence legal thought. One reason for the collapse of the movement was that many of the younger members of CLS were women or people of color who rebelled against a leadership that was predominantly white and male and that, in their view, was insufficiently interested in issues relating to race and sex. Those who might otherwise have formed the next generation of CLS scholars began to identify their work as part of feminist legal theory or critical race theory, both of which are discussed below. As significant parts of the CLS movement splintered into new schools, the CLS movement disintegrated.

At its core, CLS combined a skepticism about the determinacy of textual interpretation with a leftist political orientation. Defined this way, CLS appears almost indistinguishable from legal realism. Indeed, one is tempted to see it as a continuation of the realist critique of formalism by people who in many cases are farther to the left politically than were the New Deal realists. Such a view, however, overlooks the fact that the CLS movement emerged a full half century after legal realism and thus shows to a much greater degree the impact of postmodernism on legal thought.

In the postmodern view, there are no foundational principles that permit the derivation of other assertions. That is, certain knowledge cannot be obtained either by deduction from intuited first principles or by empirical observation. The individual is not an autonomous, self-generating entity, but rather a social creation. Thus, there is no knowledge, only belief—and that belief is socially constructed.

Some of the work of the CLS movement involves an analysis of the premises underlying various legal rules in an effort to demonstrate that the rules are the product of choices between various sets of inherently conflicting and irreconcilable values. This approach, generally referred to as structuralism, is often traced to the work of twentieth-century anthropologist Claude Lévi-Strauss, who believed that human understanding rests on “deep structures” of binary opposites. Each member of the pair can be understood only in reference to the other.

A structuralist analysis of the law begins with the premise that a court deciding any given case must choose between different outcomes, each of which is justified by one of the opposing values. Because the American legal system assumes the validity of both opposing values, a coherent argument can be made in favor of either result. To choose repeatedly the result that favored one of the values would completely negate the other value, a consequence to be avoided because the other value has an assumed validity. Thus, each case presents anew the question of which value is to be preferred in that instance.

The courts avoid both extremes, choosing one policy in most cases but never ruling out the possibility that the opposing policy may prevail in the next case. CLS scholars claim that a conservative, market-oriented ideology will prevail most of the time because of the political preferences of most judges in American society. The larger point, however, is that the choice of which ideology prevails is not dictated by a rule but is a matter of the ideological preferences of the judge who hears the case. Law, in other words, is not neutral, but political. Judicial decisions are the product of power rather than reason.

The CLS movement also attempted to describe how judges write their opinions in a way that obscures the political nature of adjudication and attempts to justify their decision as consistent with, or even compelled by, the language of a rule, widely shared principles of justice, or sound policy. CLS scholars view legal doctrine as constituting an elaborate facade of legitimacy and inevitability that masks the political and contingent nature of judicial decisions. Many CLS scholars are especially critical of liberalism, which they believe legitimates the status quo through its rhetorical embrace of ideas of liberty and equality, but has failed to deliver a sufficiently egalitarian society. That is, liberalism offered just enough reform to defuse calls for more radical reform, but without threatening in any significant way the existing distribution of wealth and power. This is another respect in which CLS differed from legal realism. The legal realists generally were liberals.
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