Abstract
This edited collection celebrates the academic career of Geoffrey Hodgson. Though Hodgson is an ‘economist’, this edited collection is potentially of interest to readers of this journal because, in contrast to the limited role law tends to play in much of economics today, law is centre stage in Hodgson’s economics, especially in recent times (Hodgson, 2002, 2009, 2015a). Hodgson brands his current research agenda, ‘legal institutionalism’ (p. 341). Legal institutionalism is a response to the lack of attention social scientists have given to the role of law in constituting the economic institutions of capitalism (Deakin et al., 2017). This insight is not new for socio-legal academics (see, for example, Ashiagbor et al., 2013). Hodgson’s particular perspective is, however, important for socio-legal studies.
As the editors portray it, this collection is a labour of love put together by two of Hodgson’s long-time colleagues, Francesca Gagliardi and David Gindis (Hertfordshire). The collection consists of 21 short, accessible chapters written by Hodgson’s collaborators and friends, including, mainly, intellectual historians, such as Philip Mirowski (Notre Dame) and Charles Camic (Northwestern), and economists like Stan Metcalf (Manchester).
Hodgson is an economist, but he is not part of the mainstream. For 40 years, as it has come in and out of vogue, Hodgson has been at the forefront of an economics informed by understandings of evolution and institutions, in the tradition of Thorstein Veblen. Before reviewing the contents of the edited collection then, it is worth sketching some background, to position Hodgson in the field of economics.
The economics taught in most university’s economics departments depends almost entirely on mathematical models as a means of understanding human and firm behaviour. This branch of economics tends to go by the label of, what Veblen termed, neoclassical – signifying the manner by which, around the turn of the 20th century, classical political economy gave way to mathematical marginal analysis.
Today, neoclassical economics dominates the mainstream. There are still disagreements and debates, but the mainstream is strongly criticised, by the likes of Geoffrey Hodgson, for being closed-off to alternative perspectives that might wish to call into question its core axioms (such as methodological individualism (p. 328)), for instance in terms of the viewpoints published in leading journals or the academic expertise within university economics departments. Yanis Varoufakis, elsewhere, wryly points out that: …today, Adam Smith, David Ricardo, John Stuart Mill, Karl Marx, Friedrich Hayek, even John Maynard Keynes, would never get a job at Harvard University’s Economics Department. Never. Under no circumstances. (2013)
Like many, Hodgson is heavily critical of the mainstream in economics (which, for him, includes modern variants like new institutional economics and behavioural economics), particularly its narrowness and attachment to the assumption that individuals are utility maximisers (p. 328). However, he is also critical of heterodox critics of neoclassical economics (pp. 344–347). According to Hodgson’s own definition of heterodox economics, heterodox perspectives often suffer due to their overt left-wing politics. This means they fail to appreciate the worthwhile contributions that neoclassical economics has made, and leads them to disregard schools of economics that do not share their politics, i.e. Austrian economics. Hodgson distinguishes his work, which seeks to engage with the humanities and the social and natural sciences, as truly plural. He is the editor-in-chief of the Journal of Institutional Economics, which “welcomes contributions by all disciplines and schools of thought that can contribute to our understanding of the features, development and functions of real world economic institutions and organisations” (www-cambridge-org.web.bisu.edu.cn/core/journals/journal-of-institutional-economics).
Hodgson’s economics stems from old institutional and evolutionary economics, which holds an important place in the history of socio-legal studies, especially from a US perspective. It is for this reason in particular that this edited collection may well be of interest to readers of this journal. In the early part of the 20th century, though mathematical marginalism was prominent in England, in the US, the institutional economists – influenced by Veblen’s social Darwinism – represented the mainstream, the likes of John Commons and Robert Hale. For some, institutional economics, with legal realism as a counterpart in law, was a law and economics movement pre-dating the Chicago School, “The First Great Law and Economics Movement” (Hovenkamp, 1990).
Despite its early prominence, for many years, there would soon be little space for the study of institutions in economic life: neoclassical economics and sociology would move to dominate the social sciences, charting distinct paths guided under “Parsons’ Pact” by prominent figures, Lionel Robbins and Talcott Parsons (Hodgson, 2015b). However, the neglect of economic institutions did not last, and for a number of years now, economic institutions have been back on the agenda, whether it be in new institutional approaches, economic sociology or Hodgson’s institutional and evolutionary economics. Until recently, however, in accounts of economic institutions, law has been very much absent. With ‘legal institutionalism’ Hodgson, along with notable figures from the legal academy, such as Simon Deakin (Cambridge) in the UK, and Katharina Pistor (Columbia), is pursuing a “cross-disciplinary” research agenda that aims “to uncover the role of legal institutions in shaping market economies” as well as “to understand the economic forces shaping legal systems and their evolution over time (p. 129). Deakin notes that legal institutionalism is not simply old institutional economics: it is a “mutually inclusive, post-neoclassical law and economics” (p. 127). Deakin explains that “[t]his body of work takes seriously the historical legacy of the first or ‘old’ institutionalists but is not averse to thinking about how their insights might be reworked in terms which neoclassical economics has been able to incorporate…, such as ‘transaction costs’ and ‘conventions’, at the same time as drawing on concepts that are novel” (p. 127). The broad acclaim that Pistor’s work (2019), which is in a similar vein to Commons’ 1924 The Legal Foundations of Capitalism (1959), is attracting is a sign of the potential such a research agenda has (Tooze, 2020). Pistor is the current president of the World Interdisciplinary Network for Institutional Research, which Hodgson helped to set up in 2013 (he is its secretary).
The collection primarily targets those already familiar with Hodgson’s work, as well as with the book’s contributors. The book has five parts, which pick-up various strands of Hodgson’s work. Part one is Gagliardi and Gindis’s introduction. Part two – ‘Foundations’ – consists of five chapters relating to Hodgson’s philosophical and methodological positions. In Part three – Institutional Economics – there are seven chapters on Hodgson’s contribution to the study of economic institutions. Following this, in part four – Evolutionary Economics – there are seven chapters on Hodgson’s contribution to evolutionary economics. The collection concludes with a transcription of a conversation between Hodgson and the editors. This final chapter is especially interesting, covering a lot of ground and providing Hodgson’s assessment of the state of economics and the social sciences today, amongst other things.
Hodgson is a prolific writer, and the collection provides a useful way-in to Hodgson’s “back catalogue”. According to Gagliardi and Gindis’s introduction, in Hodgson’s 40-year career, he has published 21 monographs, 11 edited volumes and 350 articles in books and journals (p. 11). His contribution to the field has also received significant recognition. For instance, in 2012, he was awarded the Association of Evolutionary Economics’ Veblen-Commons Prize; his monograph, Conceptualising Capitalism: Institutions, Evolution, Future (2015c), was awarded the International Joseph A. Schumpeter Society’s Schumpeter Prize in 2014; and his monograph, How Economics Forgot History: The Problem of Historical Specificity in Social Science (2001), was listed in the top 50 economics books of the last 100 years by the Word Economics Association (p. 2).
Unsurprisingly, the chapters most directly relevant to lawyers are in part three, Institutional Economics. In chapter 10 (“The corporation is not a nexus of contracts: it’s an iPhone”), Richard N. Langlois (Connecticut) argues against simplistic Coasean understandings of the corporation as “a nexus of contracts”, and in chapter 11 (“Property, possession and knowledge”), Ugo Pagano (Siena) discusses the relationship between possession and property rights. A standout chapter is chapter nine (“Juridical ontology and the theory of the firm”) by Simon Deakin (Cambridge). Deakin is the only legal academic to contribute to the collection. In this short, illuminating chapter, Deakin – with reference to the corporation – contrasts the way in which economic institutions are seen in economics with the language law uses to explain such institutions. This legal language is important for social scientists, according to Deakin, due to the way law and the market coevolve: “the conditions for the production of abstract or dogmatic legal knowledge of the kind we associate with modern legal systems were, historically, bound up with those which led to the emergence of market economics” (p. 139).
For anyone with an interest in Hodgson’s work, this book is a useful supplement to Hodgson’s key publications. For academic lawyers contemplating reading the book, consideration should be given to Deakin’s concluding sentiment: “Hodgson’s work has shown that lawyers and economists can engage in a mutually beneficial conversation about the institutional bases of market economies, and this should be supported if a genuinely useful ‘law and economics’ movement is to emerge” (p. 139).
