The Constitutional Role of Economic Coordination Rights

This post is part of our series on the political economy of labor & the constitution. You can find all of our posts on this topic here.

Sanjukta Paul –

Arizona Teachers Go On Strike And March To State Capitol

(via Jacobin)

There’s a common notion that pervades legal and policy debate—including among fairly liberal Democrats—that collective bargaining mechanisms, and even public coordination of markets through minimum wages and working conditions, distort market outcomes and are therefore inefficient (though they may be justified by countervailing considerations). This position immediately sets up a kind of presumption against labor coordination or public coordination of markets to benefit workers, a presumption analytically and normatively supported by Law and Economics.

Too often, progressive and even left responses have been limited to asserting that considerations other than efficiency should be balanced with efficiency concerns—we should balance fairness, or humanitarian concerns, with efficiency for example; or worker voice, living wages, and so forth are indeed efficient because they correct market failures. Some critiques rely heavily on the idea that labor is different from other commodities, which can imply that we can understand everything else as a potential commodity.

While these approaches often have merit, the Law & Political Economy orientation should attend to deeper critiques of L&E emanating from fields such as economic sociology and heterodox microeconomics. These critiques call into question the coherence of basic theoretical assumptions that are indispensable to L&E’s prescriptions about what is efficient in the first place. For example, many economists now challenge the idea that prices are determined according to orthodox microeconomic assumptions, and that these “market prices” in turn maximize welfare by allocating resources in an optimal manner; a number of sociologists, meanwhile, emphasize the indispensable role of social coordination in markets.

Also, Law & Political Economy itself can pose a powerful internal challenge to L&E, by reviving and updating the old legal realist insight that all markets are legally constructed, and by applying that insight in the weeds of particular areas of law that today have been all but given up to L&E. Relatedly, the Legal Realist move of displaying, in detail, the historical contingency of certain rules of law takes on especial importance in the context of an analytic framework like L&E, which assumes certain market rules that are given by law, but also often ignores legal contingencies and treats law as derivative of independent economic principles.

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