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1982
The Social Consequences of Common Law Rules The Social Consequences of Common Law Rules
Richard A. Epstein
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Richard A. Epstein, "The Social Consequences of Common Law Rules," 95 Harvard Law Review 1717
(1982).
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VOLUME
95
JUNE
1982
NUMBER
8
HARVARD
LAW
REVIEW
THE
SOCIAL
CONSEQUENCES
OF
COMMON
LAW
RULES
Richard
A.
Epstein*
In
the
past
decade,
commentators
applying
both
economic
and
historical
methods
to
the
study
of
the
classical
common
law
have
explicitly
or
implicitly
made
sweeping claims
for
the system's
ability
to
allocate
or
redistribute substantial
shares
of
wealth.
In
this
Article,
Professor
Epstein
challenges
the
assumption
that
the
fun-
damental doctrines
of
the
common
law
can
have
a
decisive
effect
on
the
flow
of
resources
in
society.
He
calls
attention
to
the
con-
straints
placed
upon
the
system
by
the
generality
of its
rules,
the
prospectively
indeterminate
alignment
of
economically
interested
parties,
the
expenses
of
adjudication,
and
the
divergent
social
be-
liefs
of
the
judiciary.
He
concludes
that,
while
certain
narrowly
focused
common
law
rules
may work
major
economic
effects,
most
interest
groups
would
generally
direct
their
attention
to
the
legis-
lative
and
administrative
arenas,
in
which
far
greater
gains
and
losses
are
to
be
expected.
I.
THE
THEME
T
he
past
generation
of
legal
scholars has
been
preoccupied
with
the
social
and
economic
consequences of
common
law
rules. One
manifestation
of
this
concern
is
found
in
the
work
of
the
law
and
economics
movement,
which
has
repeat-
edly
sought
to
demonstrate
that
certain
common
law
rules
facilitate
"efficient"
resource
use.
1
In
a
parallel development,
some
legal
historians
have
insisted
that
courts
have shaped
the
common
law
to
promote
or
subsidize
industrial
growth
and
development,
and
hence
to
advance
the interests
of
certain
classes
at
the
expense
of
others.
2
*
Professor
of
Law,
University
of
Chicago.
Columbia
University,
A.B.,
1964;
Oxford
University,
B.A.,
1966;
Yale
University,
LL.B.,
1968.
I
gratefully
acknowl-
edge
the
helpful
criticisms
that
Douglas
G.
Baird
and
Cass
R.
Sunstein
made
of
an
earlier
draft
of this
paper.
The
best
known
statement
of
the
thesis
is
in
R.
POSNER,
ECONOic
ANALYSIS
OF
LAW
(2d
ed.
1977).
For
a
more
recent formulation,
see
Landes
&
Posner,
The
Positive
Economic
Theory
of
Tort Law,
15
GA.
L.
REv.
851
(1981).
2
L.
FRIEDMAN,
A
HISTORY
OF
AMERICAN
LAW
409-27
(1973);
M.
HoRWITZ,
THE
TRANSFORMATION
OF
AMERICAN
LAW,
1780-i86o,
at
67-1o8
(1977);
Gregory,
1717
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HARVARD LAW
REVIEW
Both
of
these
arguments
assume
that
a
choice
between
competing
common
law
rules can
have
a
significant
effect
on
the
allocation
of
resources
and
the
distribution
of
wealth
in
society.
This
assumption
often
rests
on
the
unstated
premise
that
the
issues
subject
to
frequent
appellate
litigation
have
an
institutional
importance
that
equals
their
intellectual
difficulty.
But
this
premise
is
deeply
flawed.
Even
if
these
choices
do
in
theory
redistribute
wealth
between
social
classes or
encourage
efficient
behavior,
their
actual
social
impact
is
minimal.
The
central
theme
of
this
Article
is
that
the
intellectual
and
institutional
constraints
on
common
law
adjudication
require
one
to
be
very
cautious
in
attributing
major
social
and
eco-
nomic
consequences
to
common
law
rules.
Ironically,
the
doc-
trinal
developments
that
are
offered
as
proof
of
the
importance
of
common
law
adjudication
often
demonstrate,
if
anything,
quite
the
opposite.
In
my
view,
the
prolonged
debates
over
the first principles
of
tort
and
contract
law
remain the
subjects
of
common
law
adjudication
precisely because
the
stakes
are
too
small
to
provoke
efforts
to
achieve legislative
reversal
of
the
common
law
outcomes.
3
To
focus
on
appellate
litigation
is
to
choose
an
inaccurate
measure
of
social
importance.
The
introduction
of
a
system
of recording
for
land
transfers
or
chattel
mortgages
may
have
great institutional
significance
even
though
the operation
of such
a
system
will
rarely
be
litigated
in
the courts.
Similarly,
although
a
decision
to
require
proximate causation
as
part
of
a
plaintiffs
tort
case
may
not
be
the
subject
of
repeated
appellate
review,
such
a
decision
has
far
greater
importance
than
the
choice
between
the
fore-
sight
and
directness tests
of
causation
- two
tests
that
are
the
subject
of
much
litigation
and
scholarly
dispute,
but that
yield
the
same
results
in
the
overwhelming
number
of
cases.
In
advancing
this
thesis,
I
am
not
contending
that
judges
-
who
may
well
overestimate the
importance
of
their
own
deliberations
-
do
not
seek
social
ends.
Nor
do
I
doubt
that
influential
litigants
try
to
shape
the
law
to
their
own
advan-
tage.
My
argument
is
that
structural
features
limit
what
the
manipulation
of
common
law
rules
can
achieve.
The
more
focused
and
sustained
methods
of legislation
and
regulation
Trespass
to
Negligence
to
Absolute
Liability,
37
VA.
L.
REV.
359
(I95I).
A
recent
explanation
of
the
1
9
th
century English
common
law
of
contract
concludes
more
cautiously
that,
while
the
rules
"were
no
doubt
broadly
in
the interests
of
the
new
commercial
and
industrial
classes,"
the
common
law
judges
were sincere
believers
in
their
"dogmas" of
the
neutrality
of
the
law
and
were often
moved
by considerations
of
the
equities of
an individual
case.
P.
ATIYAH,
THE
RISE
AND
FALL
OF
FREEDOM
OF
CONTRACT
389-90
(1979).
3
See,
e.g.,
infra
p.
1730.
1718
IVol. 95:1717
HeinOnline -- 95 Harv. L. Rev. 1718 1981-1982
COMMON
LAW
RULES
are
apt
to
have
more
dramatic
effects
than
does
alteration
of
common
law
rules
and
thus
will
attract
the
primary
efforts
of
those
trying
to
use
the law
to
promote
their
own
interests.
This
view
is
called
into
question
by Morton
Horwitz'
as-
sertion
that
business
interests preferred
to
arrange
subsidies
through
the
common
law
system
because
adjudication
is
less
politically
conspicuous
than
the
legislative
process.
4
However,
the
contention
that
nineteenth
century
commercial
interests
and
legislatures
shrank
from
public
debates
on
subsidy
issues
is
questionable
simply
as
a
matter
of
historical
fact.
5
Even
on
theoretical
grounds the
arguments
seem
weak.
Common
law
decisions
are
public,
not
covert.
And
even
if
it
were
thought
that
judicial
rhetoric
could
conceal
a
common
law subsidy,
commercial
interests
often
have
no
choice
but
to
do
battle
in
the
legislative
and
administrative
arenas,
whether
their
recep-
tion
is
friendly
or
hostile.
6
In
order
to
understand
better
the
dominance
of
the
legis-
lative
and
administrative
systems, consider
the
institutional
barriers
to
effective
wealth
redistribution through
the
manip-
ulation
of
common
law
rules.
Control
over
the
judicial
process
is
divided
between courts
and
litigants;
no
one
group
can
dictate
the
case
agenda.
In
addition,
most
common
law
rules
are
not
cast
in
class
form;
there
is
no
easy one-to-one
corre-
spondence between
a
given
rule
and
the
advancement
of a
particular
social class.
The
ability
to
work
substantial
trans-
fers
of
wealth
between
social
classes
is
also
severely
hampered
by
the
demand
for
public
justification
by
written
opinion
that
lies
at
the
heart
of
the
common
law
process.
The
protection
that
the
resulting
generality
affords
is
far
from
absolute,
for
the
degree of
generality
can
vary
widely
with
context:
a
rule
that
refers
to
the
rights
of
A
and
B
without
qualification
has
greater
generality
than
one
referring
to
promisor
and
promisee,
which
in
turn
is
more
general
than
one
referring
to
creditor
4
M.
HORWITZ,
supra
note
2,
at
ioo-oi.
5
The
public
financing of
infant
industries
was
often
the
subject
of
controversy.
See
Schwartz,
Tort
Law
and
the
Economy
in
Nineteenth-Century
America:
A
Rein-
terpretation,
go
YALE
L.J.
1717,
1754-55
(198I).
6
The
process
does
not
necessarily
cease
with
legislation,
for
constitutional
chal-
lenges
may
still
be
brought
in
the
courts.
These
challenges
are
beyond
the
scope
of
this
Article,
but
it
should
be briefly
noted
that
they
have proven
largely
ineffective,
especially
in
land
use cases,
precisely
because
of
judicial
deference
to
legislative
action.
See,
e.g.,
Agins
v.
City
of Tiburon,
447
U.S.
255
(198o);
Miller
v.
Schoene,
276
U.S.
272
(1928);
Village
of
Euclid
v.
Ambler
Realty
Co.,
272
U.S.
365 (1926).
This
deferential
attitude
is
not
a
judicial
brief
for
industrial
development;
environmental
protection
legislation
is
analyzed
in
exactly
the
same
way.
See,
e.g.,
Just
v. Marinette
County,
56
Wis.
2d
7,
201
N.W:2d
761
(1972).
With
the
constitutional
avenues
foreclosed,
the
legislative
and
administrative
realms
dominate.
1982]
1719
HeinOnline -- 95 Harv. L. Rev. 1719 1981-1982
HARVARD
LAW
REVIEW
and
debtor.
The
systematic
demand
for
formal
generality
and
neutrality
in
the
common
law
may
not
guarantee
that
the
proper
substantive
result
will
be
reached
in
any
individual
case,
but
it
does
provide
one
bulwark
against
the
invidious
application
of
legal
rules.
The
easiest
way
to
oppress
the
poor,
or
to confiscate
from the
rich,
is by
laws directed
at
the
rich
and
poor
as such;
the
clandestine
use
of
formally
neutral
prin-
ciples
is
a
poor
second
choice,
to
be
used
only
when
political
or
constitutional
obstacles block the
direct route.
The
issue
is
effectiveness,
not
motive.
The
foremost
tools
of
racial
and
religious
oppression
have
not
been
the
doctrines
of
tort
or
contract.
By
the
same
token,
effective
aid
to
the
poor
depends
on
welfare
payments
or
progressive
taxation,
not
the manip-
ulation
of
general
common
law
rules.
Thus
far
I
have
spoken
only of
the
barriers
that
prevent
common
law
adjudication
from being
used
in
the
first instance
as
a
means
to
secure
wealth
redistribution.
Equally
formidable
obstacles arise
as
a
result
of
subsequent
efforts
to
defeat
the
rules. One
way
in
which
disadvantaged
parties
can
undo
any
wealth
transfer
is
by
altering their
private
conduct
to
minimize
the
impact
of
the
law.
Because
judges
normally
do
not
have
at
their
disposal
an
arsenal
of
administrative
remedies,
the
possibilities
of
evasion
will
typically
be
substantial.
A
second
means
to
counter the
redistributive
effect
of common
law
rules
is
to seek
modification
of
the
legal
standard
by
legislation.
The
greater
are
the stakes, the
more
likely
it
is
that
the
dis-
tributive
gains
will be
challenged.
The
original
gain
must
be
discounted
by
the
probable
collective
response
to
the
common
law
decision.
Similar
difficulties
plague
efforts
to
attribute substantial
allocative
effects
to
particular
common
law
rules.
It
is
often
said
that
the
common
law
aims
to
minimize
(perhaps
within
a
constraint
of
justice) the
total
costs
of
accidents,
accident
avoidance,
and
administration
of
the
legal
system.
7
But it
is
far
easier
to
state
this
condition
than
it
is
to
discern
a
given
rule
that
satisfies
it.
It
is,
for
example,
rarely
easy
to
identify
the
cheapest
cost-avoider
or
to
trace
the
incentive
effects
of a
given
rule.
The
effort
to
make the
defendant
bear
the
social
costs
of his
own
activity
will
complicate
efforts to
regulate
the
plaintiffs
conduct.
And
whatever
trade-off
is
made
on
the
question
of
incentives
will
be in
systematic
tension
with
the
demand
to
economize
on
administrative
costs,
which
rise
with
the
sophistication
and
complexity
of
the
common
law
liability
7
See,
e.g.,
G.
CALABRESI,
THE
COSTS
OF
ACCIDENTS
24-33
(1970).
1720
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