Skip to content

Law, Political Economy, and the Legal Realist Tradition Revisited


K. Sabeel Rahman (@ksabeelrahman) is Associate Professor of Law at Brooklyn Law School. 

As David, Amy, and Jed note in their opening post, the economic, social, political, and ecological crises of the current moment are helping fuel an exciting wave of legal scholarship. This emerging trend, the “law and political economy” (LPE) approach, interrogates the relationships between law, politics, and economics, exploring issues of power, inequality, democracy, and social change. As we explore what this approach might mean and what its implications might be, it is important to situate these inquiries in a larger history of legal scholarship and reform politics. This is not the first time that a similar moment of crisis has helped spur creative new thinking about the relationships between law, capitalism, and democracy—and it won’t be the last. In this post, I want to sketch a particular aspect of this trajectory: the long legacy of legal realism and its relationship to our current debates around law and political economy.

This legacy is important for two reasons. First, now, as then, we face a similar period of socioeconomic upheaval and political conflict, prompting us to rethink our legal structures. As a result, the substantive insights of legal realism remain valuable for an LPE approach today. Second, recalling the trajectory of legal realism and its successor intellectual movements is helpful in highlighting the kinds of tensions and questions that an LPE approach will have to continue to address.

The legal realist movement first came to the fore over a century ago in the Progressive Era (loosely 1880-1920). The United States was facing a period of upheaval and crisis not unlike the one we face today. Industrialization was creating a whole new economic and social order, producing new forms of social, economic, and ecological disruption, dislocation, precarity, and crisis. The rise of new technologies promised tremendous progress. Yet it also made possible terrifying new forms of corporate and private power, as railroad, finance, and other corporate titans achieved outsized influence on the well-being of workers, communities, and whole regions. The disruptions of industrial capitalism helped fuel what Barbara Fried and Herbert Hovenkamp have called the “first great law and economics movement”: legal thinkers like Robert Hale, John Commons, Richard Ely, Walton Hamilton, Louis Brandeis, and the like cut their teeth wrestling with these new conditions of modern capitalism.

The classic legal realist critiques of legal doctrine, judicial behavior, and the role of law should be read in this larger context. Critiques of doctrines of tort, property, and contract, the judiciary’s favoring of business interests over labor, and the growing fascination with social science all shared common underlying traits. First, there was an attempt to explain empirically the ways in which law and policy was constructing social, economic, and political inequities. Second, there was a desire to leverage these critiques to build more publicly-oriented policies as well as new systems of governing. Third, both of these projects involved a moral concern with the problems of concentrated power, and the need to recover a focus on the public interest writ large. These three features should continue to be central parts of modern-day LPE  : empirically-based, institutionally-oriented, and morally-rooted.  Substantively, this first legal realist wave also developed a rich critique of economic power and a thick vision of democracy and equality, which provides a rich reservoir of insight and material for the LPE approach.

The legal realism of the early twentieth century has, of course, a complicated legacy in the decades since the Progressive Era. But it has helped drive several major currents in legal scholarship. This trajectory highlights further tensions and questions that a modern-day LPE approach will have to incorporate and build on.

One outgrowth of legal realism is the rise of the empirical study of law and public policy, including Chicago-school law and economics in the 1970s. The law and economics revolution of the late twentieth century, with its focus efficiency, welfare, and neoclassical economic models has been rightly criticized as a revived formalism. But this social scientific strand of legal realism can also be seen animating more recent interdisciplinary linkages between law and other social science disciplines, from psychology to political science.

A second strand draws from legal realism’s anti-formalist deconstruction of legal concepts and the critiques of purportedly neutral judicial decision-making. The Critical Legal Studies (CLS) movement continued this tradition, unmasking the many ways in which law reproduces hierarchies of power and unfreedom.  This unmasking of power, subordination, and hierarchy, from the common law to legal pedagogy to the structure of modern capitalism represents an important continuation and deepening of the legal realist tradition. The legacy of CLS has been a matter of debate, and has at times been criticized for not translating its insights into institutional and political alternatives, but has also opened the door for radical thinking about democratic participation, equality and alternatives to capitalism and market fundamentalism, and the relationships between law, lawyers, and power, to name a few.

A third variation, connected to but distinct from CLS, is the rise of critical race theory and feminist critiques of law. These literatures are too vast to summarize, but in many ways draw on the critical orientation of CLS to reveal and challenge the ways in which law interacts with and helps create social systems of subordination, hierarchy, and discrimination—and how such social structures interplay with economic and political structures as well. Historiographically, critical race and gender analysis were an important challenge to and extension of CLS arguments.

In the last thirty years or so, we can see the contours of another variation of legal realism, combining both empiricism and critique through a more self-consciously pragmatic focus on policy and institutional design. Think of the volumes of legal scholarship that leverage psychological, empirical, and institutional analysis to suggest changes to policy-making processes to make them more efficient and just. This approach partially shares the legal realist attention to policy expertise, bringing together social science and law. But it also often evinces elements of the critical project, revealing how law constructs inequalities along racial, gendered, or class lines, to focus these analyses of policy design or assess comparative institutional competencies. Similarly, the insights of law and economics, on this approach, were reframed, turning away from the ideological undercurrents of 1970s-era Chicago School and Virginia School developments that have rightly been criticized for their hostility to democratic or egalitarian values. Instead, more recent law and economicsliteratures have developed as a way to analyze micro-scale behaviors, and the macro-scale costs and benefits of different institutional systems.

Each of these variations on legal realism offers important contributions and foundations for us today. The emerging LPE wave, I would argue, represents another heir to these different legal realist legacies, fusing them into a potentially powerful configuration. First, LPE takes an empirical approach, diagnosing how law shapes capitalism, power, institutions, and ultimately, lived experiences in the real world, like the empirical trajectory of law and social science literatures. But crucially, LPE should take a self-consciously interdisciplinary approach to its empirical investigations and foundations—at once rooted in the realities of contemporary political economy and institutional dynamics, and appropriately skeptical about reducing political economy to overly simple theories or forms.

Second, LPE is implicitly or explicitly normative, animated by a desire to move towards a more egalitarian, inclusive, and democratic political economy. This normativity can be expressed in either a positive, affirmative vision of alternatives, or through a negative critique of the current state of affairs, or both. It is this normativity that gives LPE a substantive orientation, and which gives its empirical inquires a guiding purpose.

Third, LPE is often structural and institutional, examining the ways in which law creates background economic, social, and political systems or structures that drive these dynamics of power, inequality, subordination, or democratic failure. This is not to say individual-level agency and responsibility are ignored, but the orientation situates individual entities within larger systems or structures. Fourth, and crucially, these critiques are very much shaped by a background faith in agency and social change: we undertake these inquiries with the faith that structural, systemic, transformative social change is both urgently necessary, and actually possible.

Like the legal realists of the Progressive Era, there is an overriding set of macro social structural concerns here: how does law help construct the dynamics of modern capitalism; of economic, racial, gendered, forms of subordination and domination; of democratic institutions, movements, and decision-making—and their limits?  As the contributions to this blog suggest, an LPE approach manifests in many different substantive areas of law—labor law, IP, financial regulation, environmental law, family law, criminal law, to name a few—as well as critiques of public law institutions and structures. The common thread is that, like the legal realists reacting to the First Gilded Age, we see a critique and deconstruction of contemporary political economy and problematic concentrations of power, alongside the (at times implicit, at times explicit) goal of developing ideas, policies, and reforms to push in a more democratic and egalitarian direction.

Indeed, the stakes of the current moment are high. The challenges for law, social change, public policy, and public discourse in this New Gilded Age of economic and political inequality go beyond the scope of pragmatic policy design.  We need to harness empirical research, history, and critique towards vital moral ends: counteracting domination, rebalancing economic and political power, expanding opportunity, and reviving democratic agency. The techniques of contemporary legal scholarship informed by the legal realist traditions of empiricism, critique and institutional analysis are invaluable in this project.  But they require a normative orientation and charge to drive a substantive moral vision of democratic political economy.

The reason why this renewed interest in LPE is taking place at this current moment is precisely because we are living in a time of extraordinary upheaval and rupture, facing new disparities in power, opportunity, and inclusion/exclusion. But it is also a moment of as-yet-unrealized potential for radical transformation of our political economy. The Populists, Progressives, and labor republicans of the late nineteenth century who surrounded the first legal realist movement understood themselves as participating in a battle to redefine the fundamental structures of political economy. This ferment eventually produced the ideas that became the New Deal settlement a generation later—with all of its successes and exclusions and failures. The ideas and critiques and battles of today will help shape the transformations of the next century. Today, we may be in a new Gilded Age, but we could also be in the beginnings of a “Third Reconstruction”, a period where we work to create the structures for genuine social, economic, and political inclusion and empowerment.