Thursday, May 11, 2023

Guido Calabresi and the “Economic Style,” Part 3: Partial Views and “Pearls Beyond Price”

This post, by Karen Tani (University of Pennsylvania), is the fourth in a series of posts in which legal historians reflect on Outside In: The Oral History of Guido Calabresi (Oxford University Press), by Norman I. Silber.

In earlier posts in this series, I suggested the fruitfulness of placing Guido Calabresi’s career alongside the rise of what sociologist Elizabeth Popp Berman has called “the economic style of reasoning”—an approach to governance that flourished in the later decades of the twentieth century and remains prominent. [All the Berman quotes in what follows are from Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy (Princeton University Press, 2022) (“TLE”).] My first post described Calabresi’s education in economics and in law, as recounted in Outside In. My second post turned to his scholarship and began to explore its fit with “the economic style.” When I left off, I had covered Calabresi's writings on “the decision for accidents” (a.k.a. “the cost of accidents”), and I had mentioned both his excitement and his discomfort at the growing influence of Law & Economics. Looking back on this period, Calabresi said this to Silber: “Because of the way the field was taking off, I was becoming afraid that people would start to think of the economic approach to law as the only thing that is legal scholarship” (OI, v.1, 332).*

Rouen Cathedral, West Façade, Sunlight, 1894 by Claude Monet

This worry is apparent in the use of the phrase “one view of the Cathedral” in the subtitle of Calabresi’s famous 1972 article (with Douglas Melamed) on “Property Rules, Liability Rules, and Inalienability.” Calabresi explains:

[B]ecause of a generic reference Harry Wellington made, I called it “One View of the Cathedral.” I do not think Harry was talking about law and economics at the time; he was talking about art and about how you couldn’t understand the cathedral at Reims by looking at only one of Monet’s impressionist paintings. To understand . . . you had to look at all the paintings. I liked that, and I used it because I wanted to say that law and economics was one important way of looking at legal issues, but it was not the only way.
(OI, v.1, 331). [Image at right: Rouen Cathedral, West Façade, Sunlight, 1894 by Claude Monet, oil on canvas. Credit: National Gallery of Art.]
This caveat is important because the article undoubtedly did further expand economics into law--from Torts into Property and beyond. And the intervention was framed in such a way that others felt inspired to push further. As Silber’s commentary explains, “[the article] attracted attention quickly, and a small swarm of academics stepped forward to build upon the ‘Cathedral’ approach” (that is, a modeling approach, in which one plays with different possible configurations of private law rights and remedies and asks about their consequences) (OI, v.1, 337). Soon Calabresi and Melamed’s schema “was being applied to scores of legal fields of study and invoked in many cases” (OI, v.1, 339).

Screen shot of the title and abstract of Calabresi & Melamed's 1972 article on "Property Rules, Liability Rules, and Inalienability: One View of the Cathedral."

My own sense, as a law professor who teaches in the 1L curriculum, is that the article’s basic insights continue to inform legal education. Without necessarily mentioning the article by name, many of us teach our students that when the law gives a particular actor “the right to do X” or “the right to be free from Y,” and when it creates particular remedies for the violation of such rights, these are choices from a menu of options. And these choices have consequences, including the possibility that people will use their understanding of the law as a baseline for private bargaining. Learning the law, we teach our students, requires not only knowing which rules our society has chosen but also assessing their consequences against societal values and goals. Do our rules and our values appear to be in line? From there, a professor might choose to follow one stream of Calabresi and Melamed’s analysis and suggest that we ought to prefer the allocation of legal entitlements that is likely to yield the most efficient outcome. But I am not sure how many teachers take this last step. (I would welcome others' views.)
To return, then, to the question at the core of my posts, “Property Rules, Liability Rules, and Inalienability” is another piece of Calabresi’s scholarship that overlaps substantially with what Berman calls “the economic style” and that surely introduced more people to this way of thinking. Paired with other scholarship from the time, such as Richard Posner's The Economic Analysis of Law (1973), it made Law & Economics seem exciting--and, if not exciting, then unavoidable. As Steven Teles puts it in The Rise of the Conservative Legal Movement (drawing on interviews with George Priest, Michael Graetz, and others), the unfolding "Posner-Calabresi debate convinced legal scholars that, if they did not update their analytical toolkit, they might be left behind" (Teles, 99).

But at the same time, “Property Rules, Liability Rules, and Inalienability” insisted that economics was just one way of looking at the world; alone, it would never provide full understanding. I don't think this was false modesty. In Outside In, Calabresi recounts with apparent delight a story about an Arizona judge who found in the article's economic model a belated explanation for the ruling that had felt right to him in an unusual nuisance case. The judge "then became a devotee of law and economics, and went to a great many law and economics conferences," hoping to gain another insight of similar value. "[B]ut, of course, he never did" (OI, v.1, 330).

In assessing Calabresi's scholarship in the 1970s, one also has to account for his more philosophical work, such as Tragic Choices (1978) (co-authored with Philip Bobbitt). As Silber helpfully summarizes, the book investigates “why and how societies . . . reject market pricing mechanisms to address many agonizing ‘life-or-death’ problems” (e.g., scarcity of “life-saving kidney dialysis machines”) and it shows that societies “instead use special entities and non-market legal norms to allocate extraordinary privileges and obligations” (OI, v.1, 341).
This book might seem to fit with “the economic style” in that it presents market approaches as a sort of default; societies’ rejection of such approaches in certain circumstances is the phenomenon to be explored and explained. As Calabresi puts it in Outside In, in a portion of an interview in which he discusses Tragic Choices, “[m]ost often we [society] use the market as a convenient device. It does a pretty good job and has a comparative advantage in allocating most ordinary things, given that there are other things that have to be allocated in more egalitarian ways” (OI, v.1, 347). The book might also seem to fit “the economic style” in its use of economics language even when critiquing market mechanisms (there is a “cost to costing,” the authors famously observed).
But Tragic Choices seems fundamentally at odds with “the economic style” in its ready acceptance of societal values other than efficiency, including fairness, equality, and reverence for human life. The latter is especially important. As Calabresi explains, there are situations in which it feels very important to affirm to one another that life is precious—a “pearl beyond price” (OI, v.1, 345). The book’s core message is that societies have multiple, contradictory values, and that certain situations bring contradictions to the fore. This leads to complex, imperfect, and dynamic systems of allocation. It also leads to what Calabresi calls “subterfuges,” which, as I understand them, are legal and rhetorical devices for preventing the public from seeing the harshest version of reality: a decisionmaker has undercut one value in order to pursue another.
Commenting on Tragic Choices, Silber offers an equally complex picture. Silber quotes Calabresi’s co-author Philip Bobbitt for the view that Calabresi is a “humanist” who never saw “efficiency as the primary value” (OI, v.1, 353). But in the same section of commentary, Silber notes the strong connection that Cass Sunstein felt to Calabresi and his work. A famous proponent of cost-benefit analysis in the regulatory domain, Sunstein is emblematic of “the economic style” and its expansive tendencies.** One gets the sense that although Tragic Choices leveled strong critiques against market approaches and some applications of cost-benefit analysis, those critiques could not overcome the power of Calabresi's earlier work--or, more precisely, the power of what some readers interpreted that earlier work to mean. Consider, for example, this 2019 article in the Economist, which quotes with approval Calabresi and Bobbitt's adage about the "cost to costing," only to urge policymakers to apply cost-benefit thinking to decisions about how best to "promote African health and prosperity."
Up next: an attempt at assessment. Did Calabresi’s nuanced approach to Law & Economics help legitimize and spread the less nuanced “economic style” of Berman’s concern? Or (and?) did his work plant seeds of skepticism and resistance?
* In this post, I include some quotes from Calabresi himself. These come from Silber's interviews. One note of caution is that, as Silber explains in a helpful Author's Note, the "fluid monologue" one finds in the book is not a verbatim transcript. The language attributed to Calabresi was no doubt his own (as I think people who know him would attest), but its presentation on the page was "craft[ed] out of [interview] transcripts." (OI, v.1, xiv)
** Here’s Silber on Sunstein and Calabresi: “In a review of Guido’s book The Future of Law and Economics (2016), Sunstein claimed Guido as a progenitor in his advocacy of cost-benefit analysis—bypassing Guido’s critique of engaging in public cost-benefit analysis in Tragic Choices contexts.” (OI, v.1, 354)