Pierre Schlag

In law as well as economics, the most well-known aspect of Coase’s “The Problem of Social Cost,” is the Coase Theorem. Over the decades, that particular notion has morphed into a crucial component of Chicago law and economics — namely, transaction cost analysis. In this Article, I deliberately bracket the Coase Theorem to show that “The Problem of Social Cost” contains far more interesting and unsettling lessons — both for law as well as for economics. Indeed, while Coase’s arguments clearly target the Pigouvian attempts to “improve on the market” through government correctives, there is, lurking in those arguments, a much more profound critique of neoclassical economics generally. This broader critique has been all but eclipsed by the focus on the Coase Theorem and its main offshoot — namely, Chicago transaction cost analysis. Here, based on a close reading of “The Problem of Social Cost,” I retrieve Coase’s broader critique from its current obscurity to show its relevance and bite for contemporary law and economics. In particular, I deploy Coase’s thought to show that Chicago transaction cost analysis is, on its own terms, compromised. Chicago transaction cost analysis has no theory capable of distinguishing transaction costs from production factor costs. It is accordingly incapable of delineating the circumstances when it is (or is not) efficiency-enhancing to “economize on transaction costs.” The surprising upshot is that despite its stated commitment to enhance efficiency, Chicago transaction cost analysis is instead engaged in a selective subsidization (or penalization) of various markets based on criteria that are at best opaque and quite possibly, incoherent.

It would be a wonder if deconstruction had ever had anything of value to say about positive law'beyond cease and desist. The projects of deconstruction and positive law seemed so starkly different, so obviously askew to each other, as to preempt any significant encounter'beyond an immediate reciprocal repulsion. And yet, in the American legal academy, some attempts at negotiation did occur. While one may doubt the value of the results achieved (and I do) nonetheless some important things were learned in these negotiations about the character of positive law and the disciplining practices of the American legal academy.

Before the ethical dreams and political ambitions of law can even be articulated, let alone realized, the aesthetics of law have already shaped the medium within which those projects will have to do their work. In this article, I describe those recurrent forms that shape the creation, apprehension, and identity of law. What is at stake is an attempt to reveal the aesthetics within which American law is cast. Here, I describe four such aesthetics: In the grid aesthetic, law is pictured as a two-dimensional area divided into contiguous, well-bounded legal spaces. These spaces are divided into doctrines, rules, and the like. Those doctrines, rules, and the like are further divided into elements, and so on and so forth... The resulting structure'the grid'feels solid, sound, determinate. Law is etched in stone. The grid aesthetic is the aesthetic of bright-line rules, absolutist approaches, and categorical definitions. In the energy aesthetic, law is cast in the image of energy. Conflicting forces of principle, policy, values, and politics collide and combine in sundry ways. Precedents expand or contract in accordance with the push and pull of policy and principle. Legal rules, principles, policies, and values have magnitudes that must be quantified, measured, and compared. Movement and flux are the orders of the day. In the perspectivist aesthetic, the identities of law and laws mutate in relation to point of view. As the frame, context, perspective, or position of the actor or observer shifts, both fact and law come to have different identities. Accordingly, the social or political identity of the legal actor or observer becomes the crucial situs of law and legal inquiry. In the dissociative aesthetic, identities collapse into each other. Nothing is what it is, but is always already something else. Any attempt to refer to X is frustrated, as even the most minimal inquiry reveals that X is an unstable glomming-on of many other things that cannot be subsumed or stabilized within any one thing. The crucial contributions of the prior aesthetics'the grid (and its fixed identities), energy (and its quantifiable magnitudes), and perspective (and its identifiable relations)'have all collapsed. No determinable identities, relations, or perspectives survive.

Sometime in the late part of the twentieth century, there came a crisis of interpretation in constitutional law. This crisis of interpretation was prompted by the confluence of several forces. The first was the impending loss of the object of interpretation. Without a steady object of interpretation, constitutional interpretation was fast becoming a confused and confusing activity. The second was an explicit politicization of constitutional law'a conscious recognition of the politicized character of constitutional disputes. A third force was the felt necessity to retain commitments to the rule of law. This essay explores the resulting conflicts as well the conventional theoretical efforts at mediation.

As the intellectual credentials of American law become increasingly dubious, the question arises: how has this discipline been intellectually organized to sustain belief among its academic practitioners? This essay explores the nineteenth-century pseudo-science of phrenology as a way of gaining insight into the intellectual organization of American law. Although there are, obviously, significant differences, the parallels are at once striking and edifying. Both phrenology and law emerged as disciplinary knowledges through attempts to cast them in the form of sciences. In both cases, the "sciences" were aesthetically organized around a fundamental ontology of reifications and animisms'"faculties" in the case of phrenology, "doctrines" and "principles" in the case of law. Both disciplines developed into extremely intricate productions of self-referential complexity. In both cases, the disciplinary edifice was maintained by disciplinary thinkers who sought confirming evidence of the truth (and value) of their enterprise and who went to great lengths to avoid disconfirming evidence. Finally, the surface plausibility of both disciplines was maintained through a tacit reliance on folk beliefs (folk-frames and folk-ontologies) that were recast in professionalized jargons. Both the similarities and the differences between phrenology and law lead to a fundamental question: does the discipline of law know anything, and if so, what?

If the crucial generative gesture that gives rise to the "law of the academy" lies in transforming law into an idealized image of itself' whether as "doctrine," or "theory," or the like, then we will have an academic discipline constituted as a continual attempt to escape from its own object. In other words, its very object of study will have been constituted as cheerful, idealized, purified simulation of the ostensible object of study. That judges should engage in such rhetorical exercises is perhaps unexceptionable. That the legal academy should unthinkingly follow suit seems rather blinkered. An opportunity missed.

Sometimes it seems as if there is only one story in American legal thought and only one problem. The story is the story of formalism and the problem is the problem of the subject. The story of formalism is that it never deals with the problem of the subject. The problem of the subject is that it's never been part of the story. One problem is that we are missing any convincing accounts of who or what it is that thinks or produces law. Another problem is that apparently we and our legal rhetoric have been constituted to avoid inquiry into this question of who or what produces law. In this Article, I try to reveal the various ways in which the problem of the subject arises within several important contemporary modes of legal thought including rule-of-law, critical legal studies (cls), neopragmatism, and cultural conservatism. Surprisingly, there is a recurring sameness to the ways in which the problem of the subject arises within each of these modes of contemporary legal thought. That is because, in their very rhetoric, all of these modes of contemporary legal thought establish, depend upon, and eclipse a quintessentially liberal individual subject'what I have elsewhere called the relatively autonomous self. As this subject emerges from its eclipsed condition, we will see that it emerges as a problem for each of these modes of contemporary legal thought.

Legal thinkers operate from incommensurable cognitive frameworks, which I describe as prerationalism, rationalism, modernism, and postmodernism. Although the substantive philosophical and historical content associated with these four world views is readily recognizable (and very much in discussion these days), the cognitive frameworks that form and organize these world views are not so easily discernible'and are easily confused. Not surprisingly, we tend to shift from one cognitive framework to another rather frequently and without warning. None of us operate within just one cognitive framework. The upshot of all this is that we go along (mis)understanding each other (and ourselves) in more or less systematic ways. For a number of reasons, we tend to deny both the fact of such (mis)understandings and their systematic character. This "legal dissonance" has significant intellectual and political implications for the character, the understanding, and the practice of law.

Disputes that pit a rule against a standard are extremely common in legal discourse. Indeed, the battles of legal adversaries (whether they be judges, lawyers, or legal academics) are often joined so that one side is arguing for a rule while the other is promoting a standard. The arguments we make for or against rules or standards tend to be pretty much the same regardless of the specific issue involved. The arguments are patterned and stereotyped; the substantive context in which the arguments arise hardly seems to influence their basic character. The arguments are drearily predictable, almost routine; they could easily be canned for immediate consumption in a Gilbert's of legal reasoning. The suspicion arises that much of legal discourse (including the very fanciest law-talk) might be nothing more than the unenlightening invocation of "canned" pro and con arguments about rules and standards. There are some conventional ways to escape this conclusion. The only problem is that they don't work. Ultimately, all the more promising conventional ways of understanding the rules vs. standards dispute will turn out to be located within the bounds of that dispute. The conventional forms of legal thought allow us no place outside of the rules v. standards dichotomy from where we can make sense of the dispute. In the end, no explanation (or all explanations) of the rules vs. standards dispute is left standing. The attempt to tie form to substance is just so much form.