Theory
‘This is what the law-maker must often ask himself: What is my purpose? Do I indeed achieve this or rather miss my goal?’ (744a), says Plato in Book V, in the context of a section dealing with wealth and worldly goods as a final goal.
The two questions might serve well as a motto for law and economics generally. One of the key features of law and economics, the concern with the effect as opposed to the purpose of a law, is thus indeed first formulated by Plato in the Nomoi. This feature is found throughout the book as a principle on which the entire legal order of the new state, or much of it, seems to be built. It even includes procedure, which means that legal provisions depend on how justice will realistically be applied. This concern was to remain neglected for more than two millennia after Plato first expressed it here.However, the economic system of the Nomoi, from today’s perspective, seems grossly anti-business, anti-trade and anti-finance.2 It is not for nothing that Pohlmann speaks of its ‘anti-capitalist trade and business policy’ (1925: 189). But that is just the ideology. Economics are prominent in the Nomoi - even the provisions of penal law can be argued to have at least also an economic impetus, in the sense that they aim at maintaining the economic system of the Nomoi (Bisinger, 1925: 102-5). More importantly, regardless of the economic system of the Nomoi, which is indeed ‘anti-capitalist’ - the way Plato gets there, and ensures its maintenance, is very much based on law and economics principles, and that is what matters. After all, as George Stigler says in a key law and economics essay, efficiency, often mentioned in this context as the basis of the free market approach, ‘is to be judged only with respect to the goals one seeks’ (1992: 459; see also Coase, 1960: 44, last paragraph; Campbell, 1985: 196. In any case, economic efficiency can also be seen as a collectivist principle).