Judge Guido Calabresi : The Future of Law and Economics [30:42-35:52]

And sometimes what was done in the world, that Mill's, that Bentham's theory did not explain, was wrong, passed over things, but often instead it was experience what the world wanted that the theory wasn't good enough to do. The vague analysis of law is like Bentham. It takes a theory, it can be Chicago, it can be Marx, it can be whatever you want, but it is a theory of economics, looks at the world, the world doesn't fit, and it says irrational, change it, get rid of it. Because the theory says it should be this, and instead it's different, so it must be irrational. Law and economics, which is what I have tried to do, and I think Post clearly also did, starts the same way, takes a theory, looks at the world, and the world doesn't fit. It then says, am I looking at the world correctly? You know, sometimes we're looking only at appellate cases, and not at administrative cases, and so we think the world doesn't fit the theory, but it actually does, and then it causes the theory, causes you to look more broadly. But at other times when you do that, the world still doesn't fit, and then you ask yourself, is it the world that's crazy, or is the theory not good enough? And very often it's that the theory is not sufficiently complex, sufficiently nuanced to explain the world, and then the lawyer economist makes the theory different, makes it better. Which helps solve that problem, teaches you what to do in that area better, but also many others. And that, of course, is exactly what Post did in the nature of the firm, and it's what I have tried to do consistently. Many, many people do just the first, because it's easier, you know? You take the theory, you look at the world, the world doesn't fit, get rid of the world. It's easier, and it gets a lot of people tenure, which is after all the main thing that scholars are about. But the problem is that if you then use that, as a way of saying, this is the reform that we want, what we should change, that can be wrong. Because the world is actually saying, we are doing some things, and it's your theory that isn't good enough. And if you bother to change the theory, you often find it not only explains this area, but helps you vent a deal with that area better, because now you know what it is trying to do, and you can do it in different things. And then helps many other areas as well. And that's what I try to do in this book. I also want to continue to focus on some basic concepts here, just so we can understand them better. It may be fair to say, and you can just tell me if you disagree with this, that at least there's been a perception that law and economics as a movement has moved in a generally conservative direction. Would you agree that it has moved in that kind of direction? And if it has, do you think there was inevitable or inherent within the law and economics? Well, it certainly has moved, at least economic analysis of law has moved in that direction. And it has moved in that direction almost inevitably, because if you're going to do that, economic analysis of law, as I say, is much easier. You just take the theory, and you do it. And the place we did it most happened to be Chicago, which happened to then use as a theory a traditional, very conservative view of economics. You could, as I say, have done the same thing with Marxism, but there ain't much Marxism around in the United States as a theoretical matter. So you didn't get very much of that. I think that in doing that, it has lost much of the power that economics instead has of asking us to ask real questions. And it's that that I try to bring back, not necessarily to move it to the left, but to ask some of the questions that the really wiser people at the beginning,