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The Elgar Companion to Law and Economics, Second Edition

Edited by Jürgen G. Backhaus

This thoroughly updated and revised edition of a popular and authoritative reference work introduces the reader to the major concepts and leading contributors in the field of law and economics. The Companion features accessible, informative and provocative entries on all the significant issues, and breaks new ground by bringing together widely dispersed yet theoretically congruent ideas.
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Chapter 37: Walter Eucken (1891–1950)

Leland B. Yeager


Leland B. Yeager Was Walter Eucken a pioneer in law and economics? Perhaps not, not if the field is conceived narrowly as ‘the use of economics to explain common – that is, judge-made – law’ and ‘to understand and explain the emergence of legal doctrines in areas of law that do not seem, on the surface, to be susceptible to economic reasoning’ (Boudreaux 1994, p. 264). On a broader conception, however, according to which the field overlaps the work of publicchoice scholars (Boudreaux 1994, p. 264), Eucken and his Freiburg colleagues are indeed notable contributors.1 With reference to the yearbook Ordo that Eucken and Franz Böhm launched in 1948 as the ‘discussion platform’ of the Freiburg school, its adherents are often called Ordoliberals (Grossekettler 1989, p. 42).2 ‘Order’, a central concept in their thinking, means something like ‘system’, ‘basic structure’, ‘institutional framework’, or ‘organizing principles’. Ordoliberals emphasize that just as various economic magnitudes are interdependent, so are economics and politics and all other areas of life. Policymakers must take this interdependence among subsystems of society into account when shaping and adapting the corresponding institutions. Eucken and Böhm conceived of an economic constitution corresponding to the political constitution; both require checks and balances to prevent arbitrary use of power (Jöhr 1950, pp. 274–5; Streit 1994, p. 512). Eucken called for ‘Unity of Constitutive Principles’. Political decisions on the economic constitution must apply, for example, not only to basic laws but also to special laws like those of bankruptcy....

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