Law, Economics and Society: The Foundations of Capitalism (LAWS0299)

The course will provide students an advanced critical introduction to the impact on the legal system of the transformation of modern capitalism from technological and economic change, drawing on research in economics, complexity science, political economy and economic sociology.

The course will examine the evolving legal and economic foundations of capitalism, as these are transformed by the ongoing fourth industrial revolution, in order to introduce participants to the intricacies of the legal-economic nexus in modern capitalist societies. This is not a traditional “economic analysis of law” course. We question the assumptions and methods employed by economic analysis of law, as we consider that it focuses too much on economic efficiency (narrowly defined), and methodological individualism, ignoring the role of complex social systems and organisations in the constellation of path dependencies and interests. It is also static (as it does not engage with the possibility of drastic innovations) and relies on a simplistic understanding of human behaviour. Hence, we consider that, although analytically appealing, traditional “economic analysis of law” is both from a theoretical and a practical perspective flawed, and that its influence on policy makers and the legal profession will wane soon. Our starting point is that of a “complex economy” in constant evolution because of the development of new technologies, which requires the role of the legal system in this process of transformation, a profound understanding, not just of economics, but also of economic sociology, political economy, science and technology studies and complexity science. Hence, the specific module relates to the broader Law and Political Economy movement. 

The first part of the course will focus on the different perspectives brought by these ongoing technological transformations in the conceptualization of property rights (including intellectual property), liability rules, regulatory alternatives and the role of the legal system in general. We will also explore the legal innovations that were put in place in order to facilitate the constitution of global markets and to support market transactions and will reflect on the way technology and drastic (or disruptive) innovation alters the economic and legal foundations of the capitalist system.  

The second part of the course will delve into the conceptual and institutional foundations of a market economy. We will focus on the social construction of markets and their properties, as well as the market-making role of economists who devise innovative technical instruments (“market devices”) that intervene in the shaping and reshaping of markets and ensure their performance. We will explore how the legal system has assisted this market-creating effort so far, as well as the intense collaboration between different professions in order to ensure the performativity of markets. The recent turn of both economics and the law to promoting innovation will constitute the intellectual backbone of the course. In this effort we will explore the legal-economic nexus in various industries, such as computing, finance, the food sector, biotechnology and pharma, among others. In addition to the classic legal texts, readings will include foundation texts in law and economics, science and technology studies, political economy, economic sociology, innovation economics and general sociology. The third part of the course will briefly introduce the students to the basics of complexity science and will provide an introduction to some quantitative techniques, including agent-based modelling and linear regression.

• Introduction to the course – Understanding markets and the embedded economy: market devices  
• Law and Neoliberalism  
• Wealth maximization and theories of value – Debt and Finance  
• Financialisation, profit maximization (shareholder value maximization) and corporate governance  
• The political economy of regulation 
• The political economy of the digital economy I: Data as an Asset and a Right   
• The political economy of the digital economy II: Between owning and sharing  
• The political economy of sustainability 
• Property Rights, Liability Rules, Regulation 
• The Institutional Foundations of Digital Capitalism – Understanding and Controlling Power in the 21st century 
• Introduction to Complex Systems and Complexity Economics/Population Ecology

Recommended Materials

Module reading lists and other materials will be provided via online module pages, once students have selected the course on enrolment.

Lianos, Value extraction and institutions in digital capitalism: Towards a law and political economy synthesis for competition law, available at Value extraction and institutions in digital capitalism: Towards a law and political economy synthesis for competition law | European Law Open | Cambridge Core 

Samuel Bowles, Frank Roosevelt, Richard Edwards & Mehrene Larudee, Understanding Capitalism: Competition, Command and Change (OUP, 2018) 

Brian Arthur, Complexity and the Economy (OUP, 2014) 

Key Information