Behrang Kianzad
Lund University School of Economics and Management; University of Copenhagen – Centre for Advanced Studies in Biomedical Innovation Law (CeBIL)
Recent years have seen the dominance of neoclassical, marginalist and welfarist schools of Competition Law and Economics being challenged more vigorously than ever. Although the core assumptions of the neoclassical school regarding overt reliance on rationality and efficiency ever since the inception of the school have been target of much criticism, the latest decades of both research and real life developments have reinvigorated the criticism. Nowhere is the influence of neoclassical and marginalist economic approaches, in turn underscored by Legal Realism and Legal Positivist approaches, more prevalent, than laws governing economic activities, chief among them antitrust law and policy.
The famous “Antitrust Revolution” in the late 70 ́s by likes of Robert Bork and Richard Posner still today dominate mainstream law and economics of not only US Antitrust law, but also of European7 and global competition law.8 Leaving behind decades long (and one would say, centuries long) fairness-related approaches to law and economics9 (which in this article will be dubbed Kantian although the core philosophy predates Kant by eons), we now also note insights in bounded rationality,10 which further underscore the previous theoretical and philosophical approaches.
Using the legal prohibition against “unfair pricing” as an optimal proxy, the present article juxtaposes the neoclassical and marginalist approaches to this area of political economy, by way of using Kantian ethics and Kantian legal philosophy to demonstrate the inaptness of the so-called mainstream Law and Economics approaches to the matter “fairness in law and economics”. A return to Kantian philosophy of law and a balanced approach between law and economics disciplines, more so regarding laws governing economic activity, is forwarded, making the case that whether one is Kantian or Utilitarian in the normative will invariably affect the substantive positive legal and economic analysis.
This fact is independent of the claims to “rationality”, “objectivity” or “humanity” and “divinity” made by either approaches. Following the introduction framing the “paradox” regarding the return of Kantian, fairness-based approaches to law and economics, the second section depicts the Posnerian attack on Kant construed alongside Wealth Maximisation as optimal goal of law and economics. The third section describes the supposed division between fairness and welfare, or efficiency, as optimal goal of law and economics. The fourth section in turn constructs the Kantian comeback. The fifth section concludes.
The article can be found here.