Friday, November 7, 2008

Deakin on Legal Origin, Jurdical Form and Industrialisation in Historical Perspective

Simon Deakin, University of Cambridge, has posted a new paper, Legal Origin, Juridical Form and Industrialisation in Historical Perspective: The Case of the Employment Contract and the Joint-Stock Company. Here's the abstract:
The timing and nature of industrialization in Britain and continental Europe had significant consequences for the growth and development of labour market institutions, effects which are still felt today and which are visible in the conceptual structure of labour law and company law in different countries. However, contrary to the claims of the legal origin hypothesis, a liberal model of contract was more influential in the civilian systems of the continent than in the English common law, where the consequences of early industrialization included the lingering influence of master-servant legislation and the weak institutionalization of the juridical form of the contract of employment. Claims for a strong-form legal origin effect, which is time invariant and resistant to pressures for legal convergence, are not borne out by a growing body of historical evidence and time-series data. The idea that legal cultures can influence the long-run path of economic development is worthy of closer empirical investigation but it is premature to use legal origin theory as a basis for policy initiatives.
To fill this in, here are excerpts from Deakin's conclusion:
The legal origin hypothesis has had a considerable influence on policy. It has yet, however, to offer convincing theoretical or empirical bases for the claims it is making. The ‘channels’ through which legal origin is said to work are based on over-stylized descriptions of the common law/civil law divide, while the results it has generated rest on limited data, which capture, at best, differences across legal systems at a particular point in time in the late 1990s and early 2000s, and which even then have
been subject to some searching methodological critiques....

The experience of industrialization is reflected in the approaches taken by different legal systems to the regulation of the business enterprise. Legal cultures are a potential source of enduring cross-national variation, since they perpetuate institutional solutions to issues of market regulation, often after their initial purpose has been exhausted. However, this does not mean that legal solutions are predetermined by the legacy of legal origin, let alone that such solutions divide neatly, in terms of their effectiveness, along common law and civil law lines. Diversity is the consequence of legal systems being matched (if imperfectly) over long period of time with particular economic configurations. The processes by which legal forms emerge in a way which is complementary to certain economic institutions, but are then transplanted or diffused to alternative contexts, is imperfectly understood. Given what we little we truly know of the legal origin effect, it is premature to use it to construct a model of policy intervention.

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