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Unformatted text preview: on the wealth of society, certainly retains validity within the argument as far as it is able to be extracted in principle. Rubin points out that although Posner is persuasive in
his arguments that the common law is best understood economically, he is less
persuasive in argumentation to explain why this is so.90 Rubin analysed the common law and surmised that efficient rules survive and inefficient
rules largely do not because inefficient rules are more prone to constant litigious
challenge than efficient rules, and impose a higher social cost. His model also
incorporates the relative interest of the litigating parties with respect to the precedent the case will generate if litigated, and attempts to show that this will create a bias which
the common law will exploit to promote efficient rules. Rubin attempts to explain the
model with arithmetic examples showing the relative costs to each party and that the
party with the higher cost will have a higher interest in litigating, mitigated by the
probability of precedent bias for or against that party. The explanation, however,
concentrates on principle but does not incorporate any consideration for individual facts
of each case, a prominent weakness. Priest91 amplifies Rubin's model, and incorporates
judicial bias toward or against efficient rule-making and attempts to extract some
generalisations with respect to the judicial treatment of efficient rules. Rubin 1977. 298 Criticism c an be levelled at both Rubin and Priest in that the over generalisation of 'efficient' rules ignores the fact that litigation takes place case by case, and only rar are cases heard together.92 Priest goes so far as to say that individual cases should b
ignored. "[T]o understand the effects on litigation of the inefficiency or efficiency of rules, it is important to ignore the individual case and to consider the effects on the se all disputes."93 Priest justifies his stance by appealing to aggregate economic principles
and by characterising legal rules as economic goods. He focuses, therefore, on
systematic changes in the aggregate set of legal rules in force.
Like consumers, judges are restrained by a budget, derived from the aggregate budget of litigants,
which determines the cases that proceed to judgment. . . [W]here the opportunity set of
commodity choices changes, legal rules in the aggregate, like consumer decisions in the
aggregate, can be expected to be shifted toward the relatively cheaper commodities (cheaper
rules).94 Goodman criticises this approach, both on the lack of ability to verify these and other assertions, but also on the recognition that these approaches ignore the historic approach
to the w a y precedents have been formed in the c o m m o n law, the approach which still
operates today. There is another criticism of the economic view of c o m m o n law which can be raised.
Judges, n o matter what their background, h ave some unique perspective with respect to 91 Priest. 1977.
This statement ignores class action suits which present different issues generally and warrant a different
approach to the underlying public policy.
Priest, 1977, p. 7 3; Priest cites Becker, G. S. 1976, "Irrational Behaviour and Economic Theory" in The
Economic Approach to Human Behavior, p. 153.
Priest, 1977, p.75.
G oodman, J. C. " A n Economic Theory of the Evolution of C o m m o n Law",  7 Journal of Legal
Studies, pp. 393-406 at 393-4.
92 299 w here justice will lie in each case which is brought before them.96 E ven if, for
argument's sake, the issue of stare decisis is ignored, to assume that rules which are efficient are litigated less, and therefore are less prone to change than inefficient rule
(which is the underlying basis of the Rubin-Priest model) is to assume that judges' perspectives on justice align, even if only loosely, with efficiency. This promotes the i
that the law and economics condone a theory of value where life is treasured only in
relation to production, i.e. everything of value is measured with a currency metric. As a
result, the idea that life has some worth which cannot be measured in money terms is
severely deprecated; an idea which impoverishes the law and economics by valuing all
virtue, honour, and justice in currency terms. Posner attempts to justify his position in
highly detailed fashion from examples in a wide ranging set of legal studies, but despite
the legitimacy of certain areas of law being economic in motivation, it appears that
Posner cannot overcome the criticism that he commits the fallacy of hasty generalisation.
Sifting through much of the discussion in Posner, he asserts the generalisation that "the
common law establishes property rights, regulates their exchange, and protects them against unreasonable interference - all to the end of facilitating the operation of the f
Q7 « market, a nd w here the free market is u nworkable o f simulating its results." His substantive explanations, however, appeal only to a very simple sample of cases and,
therefore, use specific examples to substantiate generally, a position which, it is
submitted, should be cautiously app...
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