Contract is, of course, part of the core legal infrastructure that makes markets possible. But it is more than that. As an ideal type, it is at the core of all individualist social, moral, and political theories that seek to account for human sociality while avoiding social structure. Contract represents the ideal of being able to choose how to calibrate others’ demands with one’s own life plan. It presents the possibility of a social obligation that is not imposed upon one from the outside—by family or tradition or etiquette or the state. The rational choice theories that form the basis for neoliberal economic thought do not just understand chosen obligation as an ideal or a possibility: it is how they model all social institutions, even highly complex ones. No wonder “social contract” has been such an enduring model of the legitimate exercise of state power in the liberal tradition.
Theories based on the contractual ideal have proven especially useful for justifications of capitalist ordering. When the law has taken such theories too seriously, it has found it easy to endorse and even mandate all sorts of market-mediated exploitation as necessary to a free society. Lochner and its ilk were supposed to protect freedom of contract, after all.
The contractual ideal and the promissory morality that comes with it is part of our culture, and not just our legal culture. Even those of us who have been on the business end of exploitative contracts—for debt, for labor, for rent, for whatever else–have a hard time shaking the notion that we are obligated to do what we said we would (even if we didn’t know what we “said we would” via the fine print): that we chose, and therefore have responsibility for, the rules imposed upon us.
Thinking about—and teaching—contract from an LPE perspective requires denaturalizing with this tendency of thought and the forms of moral, political, and legal justification that have grown out of it. And doing that requires dealing with contracts not as the shadows of an ideal Form but as institutions shaped by socio-legal context. It requires dealing with the law of contract not as a self-contained and coherent body of judge-made doctrine but as an overlapping set of rules that deal with different contractual forms in different contexts. And it requires highlighting how the decontextualized contractual ideal can serve ideological functions when used as a map for this complex terrain.