A Study Of The Difference Between Coase And Posner's Methodological Presuppositions In Law And Economics

There are some great controversies between Chinese legal theorists about the subject positioning and many theoretical issues of law and economics.The root of these disputes can almost be found in the differences of the methodological presuppositions of the two founders of law and economics,Coase and Posner.Through the basic analytical framework of modern economics,the author examines and compares Coase's discussion of the lighthouse in economics with Posner's discussion of liability rules in tort law.In this way,the differences in methodological presuppositions of Coase and Posner are presented.These differences between Coase and Posner's law and economic methodological presuppositions are completely reflected in their different methods of law and economics.By comparing the comparative institutional analysis,which Coase use to reinterpret the lighthouse problem in economics,and the optimum-equilibrium analysis,which Posner use to discuss the liability rules in tort law,we can find when Coase and Posner analyze a specific law and economics problem,they showed many differences in respect of the institutional environment,behavior patterns of the actors and standards selected to evaluate and compare the equilibrium results.Specifically,in the definition of the institutional environment,Coase and Posner make some different assumptions on the characteristics of the actors,the existence of transaction costs,the role of the law,the status of the law,the status of the government(or judge),and the state of the institutional environment.In the setting of the behavior model,Coase sets the behavior model of the actor as an empirical person,while Posner sets it as a rational person.In evaluating and comparing the equilibrium results in terms of the standard,Coase's efficiency standard is to dynamically reduce transaction costs,while Posner is to maximize wealth statically.The reason for these differences is that Coase and Posner have different and even opposite methodological presuppositions of law and economics.Coase presupposes the object of law and economics as the institutional structure of production,while Posner presupposes the behavior of human choice under the shadow of the law.Coase presupposes the theoretical boundary of law and economics as the object of analysis,and Posner presupposes the economic analysis method.Coase presupposes the theoretical purpose of law and economics is to explain reality,and Posner presupposes is to predict the future.Behind these three presuppositions is the great difference between Coase's substantive law and economics and Posner's formalistic law and economics.In law and economics,the classical tradition of economics represented by Coase is deeply influenced by biology,it focuses on exploring the substantive nature of the research object,so it focuses on the object itself,the explanation of reality,and the authenticity of theoretical assumptions.The neoclassical tradition of economics(marginalism)represented by Posner is deeply influenced by classical physics,and is more concerned with the pursuit of causality,and therefore focuses on the application of mathematical methods,logical predictions of the future,and an attitude that requires rigorous but not realistic theoretical assumptions.Furthermore,the empiricist tradition of British economics that Coase followed by emphasizing understanding,induction,and empirical research makes his law and economics is substantive.While the rationalistic factors in pragmatism advocated by Posner make him chose formalistic law and economics.The differences and controversies between Coase and Posner's methodological presuppositions of law and economics have profoundly affected Chinese law and economics research.The debates between Chinese law and economic theorists about the nature of tort law and whether the numerusclausus principle is efficient can be regarded as a continuation of the dispute between Coase and Posner.The fellows of Posner regard tort law as a tool to internalize the negative externalities of torts,so there is due care.Accordingly,tort law just a kind of public law to regulation.Coase's supporters critique this way of economic analysis of tort law still,however,committed Pigou's error in handling externalities again.They regard the nature of tort law as a kind of mutually beneficial autonomous private law.Similarly,Posner-style mainstream law and economics advocate that there are optimal types of property rights,because free creation of property rights will produce negative externalities,so numerusclausus principle is required to internalize these negative externalities.Coase's supporters critique this theory of the optimal amount of property rights as a variation of Pigouvian approach and made the mistake of assumptions and cases that are untrue,property right is internalization rather than externality.After examining the differences between Coase and Posner in the methodological presuppositions of law and economics,and the influence of these differences on their followers in China,we can conclude that the explanative and predictive aspect of law and economics theory are not contradictory but mutually permeating;both formalistic and substantive law and economics has its advantages and disadvantages;a promising type of law and economics are more likely to grow out of borrowing and learning from biology rather than physics.