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We take a common-law approach to economics. This involves avoiding the debilitating constraints of classical and neo-classical economics without discarding their contributions. These we retain in the face of contemporary prejudice against them. This contemporary prejudice can be summarized as “the market is the problem, government intervention is the solution.” To this we cannot subscribe. But neither can we reverse the formula and say “the government is the problem, the market is the solution.” This is a pernicious either/or that revenges itself every time it is implemented.

Both market and government: or, to put a finer point on it, the market embedded in an institutional framework, the chief characteristic of which is the rule of law. Hence, common-law economics.

Why common law? Because without it, society would be either an organization or a family, or it would fall apart. Common law is the integrating principle that holds together the various associations and organization that comprise society. It is this general, universal set of legal institutions and principles that enable a pluralistic society to function. These institutions include property, contract, credit and debt, legal personality, and the citizen ideal. Together they “string the beads” of the various spheres into a coherent whole, without forcing them into the straitjacket of an overarching organizational embrace.

Traditional economics attempts to develop economic theory by divesting these institutions from the picture, in order to deal with a supposed “natural” economy. A common-law approach recognizes the primary importance of these legal institutions to the study of economics. In particular, money, banking, and finance can be accounted for, which on the presuppositions of traditional economics cannot be adequately dealt with.

This approach thus promises to bridge the much-lamented gap between economics and finance. A common-law theoretical basis allows us to integrate economics and finance into a coherent whole, from which vantage point many things hitherto obscure become clear.

The accompanying introductory course is the fruit of this approach.

A common-law order is thus the presupposition. This means a differentiated social order rather than a monolithic one, a social order in which the rule of law is the framework of activity rather than the “command and control” of a planned economy. There are various social entities, each playing a specific role, each acting on its own account. This is the opposite of a state-run economy such as is envisioned in socialism.[1]

[1] Schumpeter compares and contrasts the two kinds of economic order, socialist and capitalist, in an intelligible and enlightening way in Joseph Schumpeter, Treatise on Money (Aalten: WordBridge, 2014), chs. 4-7.