These findings had an enormous academic and real-world impact–and generated a good deal of controversy. In The Economic Consequences of Legal Origins, written for the Journal of Economic Literature and presented at the Law and Economics seminar, LLS provide a synthesis of the academic debate that has taken place over the last ten years. Here is their abstract:

“In the last decade, economists have produced a considerable body of research suggesting that the historical origin of a country’s laws is highly correlated with a broad range of its legal rules and regulations, as well as with economic outcomes. We summarize this evidence and attempt a unified interpretation. We also examine the effects of legal origins on resource allocation and economic growth. Finally, we address a broad range of objections to the empirical claim that legal origins matter.”

The paper’s survey of the existing literature is outstanding. Yet the paper’s main contribution is its articulation of a “unified interpretation” of the empirical results. LLS “develop the Legal Origin Theory, namely that legal origins represent fundamentally different strategies of social control of economic life.” A big advantage of this theory is that it can explain why legal origins also seem to matter in areas dominated by statutes, such as military conscription or the regulation of entry of new businesses. These subjects had eluded previous attempts at explanation; earlier hypotheses had usually focused on the differences between judicial and legislative law-making.

One may wonder, however, what is specifically “legal” about the “Legal Origins Theory” as now articulated by LLS. To be sure, the theory predicts differences in legal rules as found in the data collected by LLS and others. But the theory seems to locate the root cause of these differences in the cultural and political inclinations of countries’ populations or elites rather than in institutional differences (even though LLS argue vigorously against competing cultural and political explanations in the paper). Among the many questions raised by the theory, then, is how these inclinations could have been so profoundly influenced by the identity of the colonizing power–which is ultimately what legal origins refers to (where a country chose its legal family, as in the case of Japan, legal origin is endogenous and hence does not have explanatory power). Likewise, one might ask how these inclinations could be so stable over time, especially through the many and often profound changes in local political climate.

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