University of Hertfordshire

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Legal institutionalism: Capitalism and the constitutive role of law

Research output: Research - peer-reviewArticle



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Original languageEnglish
Number of pages13
Pages (from-to)188-200
JournalJournal of Comparative Economics
Journal publication date1 Feb 2017
Early online date11 Apr 2016
StatePublished - 1 Feb 2017


Social scientists have paid insufficient attention to the role of law in constituting the economic institutions of capitalism. Part of this neglect emanates for inadequate conceptions of the nature of law itself. Spontaneous conceptions of law and property rights that downplay the role of the state are criticized here, because they typically assume relatively small numbers of agents and underplay the complexity and uncertainty in developed capitalist systems. In developed capitalist economies, law is sustained through interaction between private agents, courts and the legislative apparatus. Law is also a key institution for overcoming contracting uncertainties. It is furthermore a part of the power structure of society, and a major means by which power is exercised. This argument is illustrated by considering institutions such as property and the firm. Complex systems of law have played a crucial role in capitalist development and are also vital for developing economies.


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