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1. Economics—Sociological aspects. I. Title:
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10 9 8 7 6 5 4 3 2 1
23 A Sociological Approach to
Law and the Economy
Lauren B. Edelman and Robin Stryker

Ironically, law is “all over,” yet marginal in eco- “economic sociology of law” (Swedberg 2002)
nomic sociology. Despite law’s centrality to classical than it is a sociology of law and the economy. Where-
sociological understandings of the economy (see as the former term would suggest that we were
Smelser and Swedberg, this volume), law is not using existing economic sociology perspectives to ex-
often a sustained object of inquiry in its own right plain the role of law in society, the latter term im-
for “new” economic sociologists. In addition, there plies theorizing and empirically investigating the
has been scant attention to systematizing and criti- multiple social mechanisms or processes through
cally examining the way economic sociologists have which legal and economic action and institutions
treated law or law’s role in sociological explanations become part of an interconnected causal dynamic.
for economic behavior and institutions. We agree Our sociological model stands in stark contrast
with Swedberg (2002, 2) that there is need to de- to the current dominant paradigm for understand-
velop a “general sociological analysis of the role ing the relation of law to the economy: post-
that law plays in economic life.” Coasean “law and economics” (Mercuro 1989;
We work toward this goal by combining ideas in Cooter and Ulen 2000; Posner 1987, 1998). An
economic sociology with sociological perspectives offshoot of neoclassical economics, post-Coasean
more directly addressing connections among law, law and economics assumes that individuals are ra-
politics, and culture. We develop a conceptual frame- tional actors who seek to maximize their prefer-
work for examining interrelationships between law ences. Law and economics scholarship generally
and the economy, so that an “economic sociology treats preferences as fixed and as exogenous; the
of law” becomes an integral part of a more gener- social (and indeed, legal) origins of preferences are
al economic sociology. This in turn will enable outside the economic model.1
economic sociologists to capture more fully the so- In virtually all economic accounts, moreover,
cial character and situatedness of economic action, the individual is the fundamental unit of econom-
and thus to offer a compelling alternative to econ- ic behavior. Aggregate constructs such as “society”
omists’ accounts. are dismissed in favor of understandings of aggre-
Our key premise is that both law and the econo- gation as no more than the sum of the individual
my are deeply embedded in social action and or- parts. The interaction of rational individuals, each
ganization and linked through political and insti- maximizing his or her own self-interest, tends to-
tutional mechanisms. Both sets of mechanisms ward an “equilibrium” or steady state that will not
underscore the centrality of power. In addition, be- change in the absence of outside forces. Markets
cause legal and economic concepts, rules and rou- tend toward the steady state of “efficiency,” an
tines, and institutions are mutually or reciprocally equilibrium state that maximizes the preferences of
constructed and reconstructed over time through the participating actors.2 A “market” is the aggre-
political and institutional mechanisms, it does not gate result of individuals maximizing their prefer-
make sense to treat law as only an “independent” ences; there is nothing “social” or “cultural” or
variable or only a “dependent” variable with respect “political” about markets.
to the economy. Rather, an economic sociology of From a law and economics perspective, govern-
law should theorize and research how law, politics, ment regulation is unnecessary and counterpro-
and culture—and their interplay—shape the nature ductive in perfectly competitive markets, but it is
of, and causal relationships among, “economic vari- justified by various market failures. These include
ables” and “legal variables” themselves. monopoly, information asymmetries together with
The theoretical framework we suggest is less an strategic behavior, “free-rider problems” (where a
528 Edelman and Stryker
good is available to the public without cost so that culture or politics shapes individuals’ economic ex-
there is little incentive for private support), and pectations or visions of justice, preferences must be
“externalities” (or costs incurred by parties not di- understood as endogenous—determined within the
rectly involved). In these cases, the market “fails” analytic model of law and the economy rather than
to provide efficient outcomes, and regulation may outside of it. Sociological studies of inequality sug-
be used as a remedy for market inefficiencies. gest, for example, that extant wage patterns lead
Law and economics scholarship offers a theoreti- women to expect lower wages than do men for the
cally informed set of principles for identifying how same work, that workplace stratification and work-
law can promote efficiency in policy arenas ranging family concerns condition women to “prefer”
from the economic realm (e.g., property and an- lower-status and lower-paid jobs, and that the
titrust law) to areas generally thought to be outside prevalence of racial discrimination and poverty can
economics (e.g., criminal law). The seminal princi- make it difficult for minorities to imagine (and
ple underlying the field is the Coase theorem, which therefore to “prefer”) the same housing or credit
states that “when parties are free to bargain cost- or contract terms that whites might prefer (see,
lessly they will succeed in reaching efficient out- e.g., Schultz 1990). In short, preferences are a
comes regardless of the initial allocations of legal product of social background, cultural expecta-
rights” (Donahue 1988, 906). But law and eco- tions, and experience. Political actions, public pol-
nomics scholars recognize (as did Coase) that bar- icy, legal rights, and social norms affect experience
gaining almost always involves “transaction costs”; and thus preferences, as politics, culture, and law
parties to a dispute, for example, incur costs when both produce and limit realms of active, economic
they hire lawyers or consultants, when they travel to choice.
negotiation sites or miss work, or when they must By treating individual preferences as exogenous
expend resources to discover information. and their collective maximization as resource-
Employing the notion of transaction costs, law efficient, law and economics tends to treat efficien-
and economics scholars analyze how, and under cy as a neutral (and hence, fair) criterion. As law
what circumstances, legal rules can be used to re- and economics scholarship increasingly permeates
store allocative efficiency where transaction costs the judiciary and the legal academy, ideas about
produce inefficient outcomes. Normative law and justice are progressively infused with this logic of
economics offers advice to policymakers on what efficiency. But by bracketing out the question of
types of legal rules are efficient under various cir- the social construction of preferences, law and eco-
cumstances, whereas positive law and economics nomics’ concepts of efficiency tend to favor the
seeks to explain common-law trends in terms of ef- status quo. A sociology of law and the economy
ficiency principles. The “new institutional eco- offers an important corrective to law and econom-
nomics” uses similar principles to show how trans- ics, by identifying conditions under which maxi-
action costs can explain the relative efficiency of mizing individual preferences perpetuates the very
markets and bureaucratic governance (Williamson injustices that legal rights seek to restructure.
1975, 1979). By introducing the legal and cultural construc-
Law and economics scholarship is important for tion of preferences and the social embeddedness of
our purposes primarily because it attends to the re- economic action, a sociology of law and the econ-
lationship between legal and economic orders. In omy will necessarily be less elegant than post-
contrast, sociological thinking about law tends to Coasean law and economics. Many questions about
theorize the relation of law to social structure, the law’s value and impact that have clear answers
norms, and culture, de-emphasizing connections through economic analyses will have murky an-
between law and the economy. From a sociological swers or no definitive answer when addressed
perspective, a major problem with post-Coasean through a sociological lens. But what is lost in par-
law and economics is that its search for parsimo- simony will be gained in accuracy because life—
nious models renders irrelevant the social, politi- even economic life—is complex.
cal, and legal construction of efficiency. The ques- While our model of a sociology of law and the
tions of how law and culture shape individual economy differs markedly from post-Coasean law
preferences and constrain individual “choice” are and economics, it draws inspiration and important
“outside the box” for most law and economists.3 orienting principles from classical sociological the-
Yet these questions must be central for a sociology ory, especially Weber, and from early-twentieth-
of law and the economy, which seeks to elucidate century institutional economics (sometimes called
causes and consequences of the unequal resource Progressive Era law and economics—see, e.g.,
distributions across social strata. To the extent that Hovencamp 1990).4 In addition, our model draws
 Law and Economy 529

on extant work in economic sociology, and re- stein 1990, 2001; Fligstein and Stone Sweet 2002;
search in political economy, political sociology, so- Dobbin 1994; Dobbin and Dowd 2000; Evans
ciology of law, and legal history. Putting concepts 1995; Evans and Rauch 1999; Carruthers, Babb,
and insights of these approaches together, we can and Halliday 2001; Spicer 2002; Schneiberg 2002).
highlight and correct underdeveloped aspects of Law is relevant to the economy primarily be-
new economic sociology. We also sketch a research cause it facilitates and promotes particular kinds of
agenda for examining the social mechanisms link- economic interactions and organization, and be-
ing legal and economic behavior and institutions. cause it provides an incentive structure in which
To present our sociological model of law and the firms’ rational strategizing occurs. By altering per-
economy, we first discuss the nature of law. In con- ceived costs and benefits of taking one route over
trast to the notion of law as formally enacted edicts another, law can help favor development of some
that characterize both economic sociology and economic strategies while eliminating others (Flig-
scholarship in law and economics, we argue that stein 1990, 2001). For example, law specifies
law should be understood as a broad set of norms, property rights; facilitates commerce (guiding eco-
customs, schema, and symbols. These include, but nomic exchange through contract doctrine as well
are not restricted to, formal rules. We further as banking, finance, and credit laws); stipulates
argue that, given this broader conception of law, standards for trade and competition (through var-
the appropriate unit of analysis is the “legal field,” ious regulatory regimes and antitrust law); and
or the social realm surrounding legal institutions. protects consumers, employees, and others (through
Second, we suggest that law and the economy be employment, product, environment, and health
understood as overlapping social fields that are and safety laws). In addition, a political economy
mutually constituted through two processes: insti- organized according to the “rule of law” provides
tutional meaning-making processes and political the stability and predictability needed for a full-
power-mobilization processes (Edelman 1964; blown capitalist economy.
Stryker 1980; Edelman 1992; Stryker 1994). Third, The vision of law in extant economic sociology
we draw on Edelman and Suchman’s (1997) ty- captures and elaborates some of the key themes em-
pology of legal environments both to provide a phasized by classical sociologists such as Durkheim
systematic review of extant research on the inter- and especially Weber, when they theorized the rela-
section of law and the economy and to further elu- tionship between legal change and economic
cidate how institutional and political processes link modernity (see Stryker 2003 for details). But be-
law and the economy. We conclude by providing a cause extant economic sociology associates law with
summary of our theoretical model and discussing state-promulgated formal rules and because law is
its implications for future research both in eco- generally treated as an exogenous, determinative,
nomic sociology and in law and economics. Be- and coercive force, economic sociologists miss the
cause of space limitations, we confine our discus- full power of law to “make a world” (White 1985).
sion to the role of law in the development and We suggest that a sociology of law and the econ-
dynamics of capitalist political economies. We en- omy must adopt a more sociological conception of
courage readers intrigued by our conceptual frame- law—one that goes beyond law as public edict to
work to treat Stryker (2003) as a companion piece, recognize the cultural and political elements of
especially in its extended concrete examples of cul- law. Just as economic sociologists theorize markets
tural and political processes through which labor and as embedded within a broader social and political
employment statutes, executive orders, regulations, realm (Smelser and Swedberg, this volume), we
and court decisions have shaped the U.S. economy. suggest that law should be understood as intricate-
ly interwoven with social forces. We draw on the
sociology of law to propose some basic, empirical-
THE NATURE OF LAW ly grounded assumptions about the nature of law.

Economic sociologists tend to equate law with

Law as Legality
formal rules (particularly statutes) promulgated by
state actors, including legislatures and courts. They The sociology of law rejects the legal formalism
generally portray legal rules as among determi- (or the focus solely on formal codes and judicial
nants of economic growth and development, and decisions) that tends to be found in traditional ju-
also of the reach, organization, institutional logic risprudence and much contemporary legal scholar-
(including models of competition and conceptions ship. Instead, sociologists of law emphasize a much
of control), and even the existence of markets (Flig- broader idea of law, including not just codified
530 Edelman and Stryker
rules but also social behaviors that mobilize and that greatly influence how and when law matters
enact law and ritual and the symbolic (or meaning- (Friedman 1975, 1984; Frohmann 1997; Resnik
making) elements of law. In addition, sociologists 1982; Adamany and Grossman 1983; Gibson 1981;
of law emphasize the ambiguous boundaries be- Heinz and Laumann 1977; Sarat and Felstiner
tween formal rules and social norms, the role of 1995; Nelson 1988; Suchman and Cahill 1996;
social context in fixing law’s form and impact, and Harcourt 2001).
the interplay between legal language and broader Research on legal consciousness focuses on the
cultural language and ways of thinking. Thus symbolic elements of law, and on the meaning of
reconceptualized, law includes both state-promul- law to individuals (Sarat 1990; Silbey 2001; Ewick
gated formal rules and law-related ideas, ideals, and Silbey 1998; Kostiner 2003; Nielsen 2000;
principles, and rituals that permeate society. Sarat 1990; Engel 1998; Merry 1986; Levine and
Law is not just formalized doctrine; it is legality Mellema 2001). This work emphasizes the multiple
(cf. Ewick and Silbey 1998; Selznick 1969). The (and sometimes contradictory) meanings of law.
idea of legality suggests that formal legal “rules on The formal legal ideal of an autonomous and just
the books,” for example, statutes, directives, exec- (in Weber’s terms “formal rational”) legal order co-
utive orders, and judicial opinions, are important, exists in legal consciousness with alternative visions
but cannot be understood fully apart from their of law. People can simultaneously see the law (as
social context. Two key elements of that social well as lawyers and legal institutions) as just and as
context are the law in action, which refers to the oppressive, as a tool to be used and as a formidable
behavior of law, legal actors, and legal institutions; enemy (Sarat 1990; Ewick and Silbey 1998). How
and legal consciousness, which refers to how law is people envision the law in turn affects whether and
experienced and understood by individuals in and how people mobilize legal tools at their disposal
through their legal experiences. (Fuller, Edelman, and Matusik 2000).
Research on law in action suggests that a narrow Legal consciousness is important not just as a set
focus on formal law misses a great deal. The vast of rules but as a cultural resource. Not withstand-
majority of legal action takes place far from the ing the definition of law and rights by legislatures,
courtroom and with only the most tangential (if or their interpretation by courts, the language of
any) reference to formal law. Much economic ex- law and legal rights operates as a general cultural
change occurs in the absence of formal contracts, resource and does significant cognitive work. Law
and few disputes that arise within contractual rela- helps to define moral boundaries and is, in turn,
tionships are resolved by courts, or even with the often the terrain on which moral boundaries are
involvement of lawyers (Macaulay 1963; Lempert contested (Gusfield 1966). The symbolism of law,
and Sanders 1986). Local norms matter more than moreover, helps to constitute social discourse. To
does formal law in guiding grievants toward solu- characterize a demand as a “right” rather than as a
tions (Ellickson 1986, Engel 1998; Merry 1979). “need” tends to confer legitimacy on the demand
In fact, only a miniscule proportion of persons and to define the claimant as a rights-bearer. To ar-
who believe that they have been wronged take any ticulate a grievance as a violation of law frames not
legal action. Most resort instead to informal non- only the claim but the debate that takes place
legal methods of dispute resolution such as self- around that claim (Silbey and Sarat 1989; Milner
help, gossip, violence, or other forms of retribu- 1989; Minow 1987; McCann 1998).
tion, third-party conciliation by ministers or other Following work in the sociology of law, then, we
nonlegal personnel, consultation with government suggest that a sociology of law and the economy
agencies, or (as is most often the case) doing noth- understand law as legality. The notion of law as le-
ing (Mnookin and Kornhauser 1979; Erlanger, gality provides a richer toolkit for conceptualizing
Chambliss, and Melli 1997; Bumiller 1987, 1988; both how legal schemas shape economic schemas
Miller and Sarat 1980; Saks 1992). In many cases, (including ideas of rationality and efficiency), val-
persons who have legal rights do not even recog- ues and interests, behavior and institutions, and
nize that they have suffered a legal injury (Felstin- conversely, how law is responsive to all these as-
er, Abel, and Sarat 1980). pects of the economy.
Conversely, judges, lawyers, magistrates, clerks,
cops, mediators, and other legal system actors play
The Legal Field as Unit of Analysis
a role in bringing society into the law. They act as
gatekeepers and filters, using their discretion and Drawing on our understanding of law as legali-
invoking their biases and misconceptions in ways ty, we suggest that the appropriate unit of analysis
 Law and Economy 531

for the study of law is the legal field. Centered on standing law and the economy. We suggest that
legal institutions and actors, legal fields also in- two distinct but interrelated social processes are at
clude the much broader set of legal ideals and work in linking law and the economy: institution-
norms, rituals and symbols, social behaviors that al processes that involve the production and wide-
mobilize and enact the law, and patterns of social spread acceptance of particular constructions of
thought related to legal ideals (Bourdieu 1987; law and compliance, and political processes that
Edelman, Fuller, and Mara-Drita 2001; Edelman help to shape which constructions of law are pro-
2002). Professional understandings of law, mana- duced and become institutionalized and who ben-
gerial rhetoric about law, symbolic representations efits from those constructions. We discuss these
of law, and negotiations in the shadow of law are processes (and review the literature that supports
important elements of legal fields. them) in this section.5
The idea of the legal field is analogous—and com- We will show that institutional and political
plementary to—new institutionalist ideas about processes operate to embed markets deeply within
economic (or organizational) fields. As elaborated legal frameworks and to infuse law with economic
in neoinstitutional organization theory, economic logic so that the development of legal and eco-
fields include producers of particular products or ser- nomic fields are linked. Through institutional and
vices, in interaction with their key suppliers, con- political processes, law shapes all things economic,
sumers, and state regulators (DiMaggio and Powell including understandings of rationality, efficiency,
1983; Powell and DiMaggio 1991; Fligstein 2001). and even what constitutes an economic actor.
Economic fields are centered on economic actors Conversely, law and legal institutions are constitut-
and organizations, but they also include prevailing ed and reconstituted by economic institutions and
ideas about efficiency and rationality, ideas about the actors.
value of work and workers, prevalent technologies, Our perspective suggests that both market ra-
and scientific knowledge (Stryker 2003). tionality and law are “socially constructed” or
By focusing on legal and economic fields as the given meaning through social interaction. In con-
primary units of analysis, our sociology of law and trast to post-Coasean law and economics, which
the economy can portray the social embeddedness treats preferences as exogenous, we suggest that
of both law and markets. Further, this conceptual- preferences are shaped not just by formal legal pol-
ization allows us to focus our analysis on the in- icy but by the law in action and legal consciousness
tersection of legal and economic fields as the key that defines that policy. And in contrast to eco-
site for reciprocal construction and reconstruction nomic sociology, which treats law as exogenous,
of legal and economic actors, institutions, and our perspective will show how the meaning and
consciousness. enactment of law take form within economic fields.
The intersection of legal and economic fields
provides rich terrain for cross-fertilization. It is in
Institutional Processes of Social Change
this social space that legal procedures, norms, and
concepts work together to shape economic actors Neoinstitutional organization theory highlights
and institutions, and that economic structures, an evolutionary vision of change, in which models
norms, and rituals shape the law. Just as law shapes of rationality are socially constructed, diffused, and
the economy, the everyday conflicts of the work- “institutionalized” over time within organizational
place—and organizational solutions to those fields (Meyer and Rowan 1977; DiMaggio and
conflicts—are raw materials that legislators, regula- Powell 1983; Meyer and Scott 1983; Powell and
tors, and judges use to construct the law. Formal DiMaggio 1991).6 Within these fields, organiza-
law, including statutes and judicial decisions, de- tions tend to incorporate institutionalized models
pends on what conflicts are brought into the pub- less because of strategic, cost-benefit calculations
lic arena and how those conflicts are framed. and more because certain actions, forms, or rituals
come to be understood as proper and natural.
Different versions of neoinstitutional theory em-
A POLITICAL-INSTITUTIONAL PERSPECTIVE ON phasize different mechanisms by which institution-
THE INTERSECTION OF LAW AND THE ECONOMY alized models spread throughout organizational
fields. DiMaggio and Powell (1983) identify three
Building on the broad conception of law as le- mechanisms of institutionalization: mimetic iso-
gality that we presented in the previous section, we morphism (organizations imitate the apparently ra-
now turn to our sociological framework for under- tional structures of other organizations); norma-
532 Edelman and Stryker
tive isomorphism (professionals advocate particular and strategies of compliance, such as the construc-
structures); and coercive isomorphism (rules, usu- tion of employee due process grievance procedures
ally issued by the state, mandate particular struc- within the firm, tend to receive the formal impri-
tures). Suchman and Edelman (1996) distinguish matur of law. This, in turn, reaffirms the legitima-
cognitive institutional models (in which organiza- cy of such managerial ideas and effectively changes
tions incorporate structures because they are so the meaning and requirements of formal law.
taken-for-granted as to appear natural, proper, and Two lines of work, one in sociology of law, the
rational) from normative institutional models (in other in political sociology, extend the notion of
which organizations more actively seek to respond institutional logics by suggesting that new ideas
to cultural norms) and behavioral institutional form at the intersection of fields with differing log-
models (which are agnostic as to the causal mech- ics (Edelman 2002; Edelman, Uggen, and Er-
anism but focus on the diffusion of models). langer 1999; Clemens and Cook 1999; Stryker
Institutional processes have proved quite useful 2000a, 2002). Specifically elaborating the idea of
to explain the legalization of organizational life overlap between legal and organizational fields,
over time (Edelman 1990, 1992; Sutton et al. Edelman argues that law is endogenous, or con-
1994; Dobbin and Sutton 1998; Edelman and structed within the social fields that it seeks to reg-
Petterson 1999; Edelman, Uggen, and Erlanger ulate. In this view, legal ideas and forms of compli-
1999; Heimer 1999). In her research on compli- ance are constructed and institutionalized within
ance with equal employment law, Edelman (1990, organizational fields. But because the logics of or-
1992) argues that organizations are highly respon- ganizational and legal fields overlap, courts tend to
sive to their legal environments or the law-related accept—sometimes unwittingly—institutionalized
aspects of organizational fields. Legal environments ideas of legality that developed within organiza-
include formal law and its associated sanctions; in- tional fields. Change in legal institutions, then, is
formal practices and norms regarding the use, part of an interrelated, continuous social change
nonuse, and circumvention of law; ideas about the system in which law’s content, mobilization, and
meaning of law and compliance with law, and the reach are simultaneously products and sources of
broad set of principles, ideas, rituals, and norms economic behavior.
that may evolve out of law (Edelman and Suchman Consistent with ideas of law as legality and
1997; Cahill 2001). Organizations most vulnera- symbols, legal power resides not only in the overt
ble to public scrutiny respond early to change in exercise of law but also in the form of cultural
their legal environments by elaborating formal hegemony—in subtle understandings of rights, re-
structures to mimic elements of the public legal sponsibilities, and rational action. Beliefs and prac-
order, such as formal due process mechanisms that tices that are highly institutionalized are a very po-
mimic courts, special compliance offices that mimic tent form of power, acquiring mythical status as
administrative agencies, and rules that mimic legis- rational or proper or fair, with the result that they
lation. Over time, these structures become institu- go unchallenged and become nonissues. For ex-
tionalized symbols of compliance, and other or- ample, it is widely thought to be rational and fair
ganizations become increasingly likely to adopt for employers to pay employees “market wages,”
them (Edelman 1992). or the wage that an employee could (at least in the-
Friedland and Alford (1991) provided the key ory) receive from other employers. Employees,
insight that fields are imbued with “institutional employers, and even courts commonly accept this
logics.” While logics become institutionalized in rationale without recognizing that institutional-
one field, they may flow into and influence other ized ideas about paying employees their “market
fields. This insight may be extended to show the value” may systematically disadvantage female or
interplay between legal and economic fields. As minority workers (Nelson and Bridges 1999; En-
laws and legal principles are constructed, inter- gland 1993; Edelman 2002).
preted, and institutionalized by economic actors
(managers, employers, compliance officers, legal
Political Processes of Social Change
counsel), the law tends both to influence ideas of
rationality and to become infused by managerial Whereas neoinstitutional theories emphasize
and capitalist logic. Edelman and her colleagues concepts of institution and institutionalization that
(Edelman, Uggen, and Erlanger 1999; Edelman, imply cognitive and normative taken-for-granted-
Fuller, and Mara-Drita 2001; Edelman 2002), for ness as a primary mechanism of change and stabi-
example, suggest that over time, managerial logic lization in legal fields, political theories emphasize
 Law and Economy 533

overt conflict and contestation (see Stryker 2000a, “myth of rights” inherent in liberal legal ideology,
2002). Political approaches view legal change less suggesting that rights are valuable only to the
as a result of nonconflictual diffusion of ideas, extent that they are politically mobilized (cf.
norms, and ideals and more as a result of diverse McCann 1994; Rosenberg 1991). Critical legal
types of manifest conflict over and involving legal scholars point to the instability and political ma-
schema. nipulability of rights (Tushnet 1984; Aron 1989).
Following Weber, economic sociologists generally Feminist legal scholars suggest that rights embody
have a “power-oriented concept of economic ac- male norms and therefore tend to harm women
tion” (Swedberg and Granovetter 1992, 8). Like- (Olsen 1984; MacKinnon 1989). And critical race
wise, explicitly political approaches to market struc- scholars appreciate the ideological aspects of
turation are prominent in economic sociology rights, but contend that rights may be socially em-
(Fligstein 2001). In parallel fashion, albeit in some- powering for minorities even when they are hard
what different ways, both sociologists of law and po- to mobilize in court (Williams 1991; Minow 1987).
litical sociologists draw on Marx and Weber to sug- Scholars focusing on law in action analyze legal
gest that law is linked to the economy through institutions as arenas for resource mobilization and
processes involving both overt resource mobilization conflict. In a classic essay, Marc Galanter (1974)
and the exercise of covert power. suggests that the structure of adversary litigation
The general tenets of Marx’s historical material- gives substantial advantages to parties that have
ism relegate “bourgeois” law—along with the rest greater organizational and economic resources.
of the democratic state—to reflecting and reinforc- Numerous studies since then have documented a
ing the domination of capital. But Marx’s (1967) variety of advantages for “haves” over “have-nots”
analysis of the nineteenth-century Factory Acts in in civil litigation (Bumiller 1988; Yeager 1990;
Capital evidences a more nuanced appreciation for Nielsen 2000; Yngvesson 1988; Albiston 1999;
law as an object of class conflict. In that work, Edelman and Suchman 1999).
Marx argues that the Factory Acts, which limited While much sociology of law emphasizes the in-
the length of the working day in Britain, were an herent tendency of law to favor the power elite,
outgrowth of sustained working-class organization political sociologists emphasize the contests and
and struggle. power struggles themselves. Building on Weber’s
Sociologists of law tend to emphasize the role of (1978) definition of power as the capacity to real-
law as ideological superstructure (Stone 1985). ize one’s will even against resistance in overt con-
Sociologists of law point out that formal-rational flict, political sociologists suggest that both the
law differs from overt politics in that it depends for form and content of law are actively constructed
its legitimacy on the liberal legal notion that its and mobilized as power-resources. Stryker (2000a,
rule application is apolitical. Legal liberalism main- 2003), for example, portrays law as both a re-
tains that, although legal disputes are a form of source for and a result of political conflict; she in-
institutionalized conflict, legal principles applied to vokes a broad definition of politics as the mobi-
resolve them are generally and universally applica- lization and countermobilization of resources in
ble, and autonomous from partisan political inter- interest-based, value-based, and cognitively based
ests, social classes, formal politics, or other aspects conflicts, whether these are played out in the for-
of society (Sarat 1998). In contrast, neo-Marxist mal political sphere or elsewhere. Pedriana and
work in the sociology of law suggests that the lib- Stryker (1997) show, however, that law’s resource
eral legal ideal is, in fact, a hegemonic ideology value does not flow automatically from formal
masking political-economic power while simulta- statutes. Because its resource value at any given
neously legitimating that power. Neo-Marxist schol- time results from a prior politics of law interpreta-
ars suggest that both form and content of the law tion and enforcement, law is a “moving target”
consistently favor interests of the dominant class or (Pedriana and Stryker, 2004).
dominant elites, even while celebrating ideals such Law is mobilized not just by dominant classes
as equal protection and due process for all (Balbus and class segments, but also by subordinate classes
1977; Genovese 1976; Spitzer 1983; Collins and class segments, diverse race, gender, ethnic, or
1982; Stone 1985; Chambliss 1964; Klare 1998; religious groups, myriad non-class-based social
Freeman 1990). movements and groups, and diverse professional
Sociolegal scholarship on rights is similarly skep- and technical experts, to help enhance economic
tical about the justice- and equality-enhancing im- well-being, income and wealth, social status and
pact of rights. Scheingold (1974) identifies the prestige, self-esteem and dignity, and authority, au-
534 Edelman and Stryker
tonomy, and power (Sabatier 1975; Lempert and of ideology and of collective identity, as well as of
Sanders 1986, Yeager 1990; Stryker 1994; Saguy strategy and structure, between labor movements
2003). A standard assumption is that law is limited in the United States and Europe (Rogers 1990;
in its capacity for restraining market logic and eco- Forbath 1991b; Voss 1993).
nomic power (Stryker 1989; Yeager 1990).7 How- Historical and comparative scholarship on labor
ever, under some conditions, law can also serve as movements highlights the complexity inherent in
a force for enhancing equality and justice in capi- law’s political nature. Because overt mobilization
talist political economies (Sabatier 1975; Pedriana of law on behalf of subordinate economic actors
and Stryker 1997, 2004; Stryker 2003). occurs within a broader political-economic envi-
Political sociology, then, reiterates the theme in ronment in which formal-legal discourse and legal
critical sociology of law that legal power operates culture reinforce the ideological hegemony of cap-
covertly, by creating political “nonissues” as well as ital, law is a resource for equality and justice, but
issues (see Lukes 1974). Law as politics involves only within limits leaving private ownership, mar-
stabilizing and transforming both concrete legal ket logic, and the economic power asymmetries
rules and broader visions of legality. Like current between capital and labor intact (Stryker 2003).8
writings in the sociology of law, current research in In sum, just as political approaches in economic
political sociology emphasizes that visions of a sociology conceptualize economic action as con-
neutral, apolitical legally legitimate capitalism, con- flictual and political (Fligstein 2001), we suggest
tain conflict in institutionalized forms, and channel that likewise, law is conflictual, political, and deeply
it away from revolutionary rupture toward reform. implicated in the stabilization and transformation
Paradoxically then, when “have-nots” succeed in of power, including economic power and control
mobilizing legal discourse and procedures for con- (Stryker 2003). The financial, technical, and orga-
crete social, political, or economic gains, they help nizational resources accompanying economic power
validate the idea of law as autonomous from eco- do provide economic “haves” with systematic ad-
nomic elites. In turn, this helps elites prevent more vantages in “realizing their will” in formally egali-
radical redistributions of economic wealth and tarian legal processes. But because legal principles
power. operate as resources in complex and contradictory
The political mobilization and countermobiliza- ways, law in capitalist political economies also pro-
tion of law are also evident in historical accounts. vides openings for “have-nots.”
For example, Tomlins (1985, 1993) and Forbath
(1991a, 1991b) show that changing concepts of
An Institutional and Political Approach
property and criminal conspiracy in common law
and changes in statutory antitrust law shaped the To understand the interplay of law and the econ-
interests and strategies, cognitions, values and col- omy in today’s globalized, multilevel, and highly
lective identity of the American labor movement. institutionally differentiated political economy, we
Legal power both overt and covert is involved in combine the ideas of institutionalization and of
their accounts of why the American labor move- politics in legal fields. Following Stryker (2000a,
ment abandoned class-based radical politics and 2002, 2003), we suggest that neoinstitutional the-
legislative reform for “economic voluntarism” and ories of organization be modified to emphasize
business unionism. For example, in fighting court both institutional conditions under which taken-
injunctions against labor collective action, union for-grantedness is likely to prevail and institution-
leaders mobilized “recessive, radical strains and al conditions in which taken-for-grantedness is
possibilities” in the rhetoric of private rights that likely to be fragile, such that latent conflicts of
pervaded constitutional law (Forbath 1991a, 135). meaning, values, and interests evolve into manifest
At the same time, union leaders reinforced the conflicts.
economic and legal power of this constitutional Clearly, both institutional and political forces
rights discourse, “ratify[ing] many of industry’s help to forge the intersection of law and the econ-
asymmetries of power” (Forbath 1991a, 135). In omy. Institutional processes may lead to wide-
comparative view, legal differences, including an spread acceptance of certain forms of corporate
absence of judicial review and divergent legal pro- compliance and constructions of legal rules affect-
cedures and substantive law even in common-law ing industries and organizations. But political con-
Britain (otherwise more similar to the United testation and power are critical factors in deter-
States than were the code law nations of Conti- mining which legal principles and structures, forms
nental Europe) helped ensure enduring differences of compliance, and constructions of rules come to
 Law and Economy 535

dominate the economic world. To understand the among social groups—facilitated, promoted, legit-
interplay of law and the economy in today’s differ- imated, and reinforced economic rationalization.
entiated and globalized political economy thus re- We draw on Edelman and Suchman’s (1997) ty-
quires us to combine the ideas of institutionaliza- pology of legal environments to show how extant
tion and of politics in legal fields. We must analyze research fits into our political-institutional frame-
how legal and economic ideas and ideals, norms work and to help identify areas for future research.
and values, interests and power, behavior and in- Edelman and Suchman suggest that legal environ-
stitutions are mutually endogenous. To analyze en- ments operate as facilitative tools allowing orga-
dogeneity, we should examine the role of conflict nizations to structure their relations with competi-
and contestation—as well as their circumscription tors, customers, and suppliers; as regulatory edicts
and limitation—in particular historical contexts. actively imposing societal authority on various as-
pects of economic life; and as constitutive constructs
subtly influencing ideas about efficient organiza-
THE INTERSECTION OF LAW AND THE ECONOMY tional form and structure. In each of these forms,
legal environments operate as portals through
In this section, we review the extant theoretical which legality constructs and is constructed by the
and empirical work in light of the political-institu- economy.
tional framework on law and the economy that we Facilitative, regulatory, and constitutive legal en-
outlined in the previous section. We draw on the vironments should be understood as ideal types
extant literature to further elucidate how institu- analytically distinguishing among diverse ways in
tional meaning-attribution and political power- which law matters to actors in economic fields.
mobilization processes combine, so that legality While we organize the literature in terms of these
shapes almost every aspect of economic life, and types, it is important to note that research often
economic actors and institutions shape legality. No implicitly addresses two or all three of these types
one piece of research explicitly examines all aspects as well as the linkage between them. Far from rep-
of how law and the economy interrelate through resenting intellectual sloppiness, the insight that
the political and institutional processes we have each type of legal environment is likely to shape
specified. However, our political-institutional frame- the others through a combination of institutional
work helps us systematize contributions and clarify and political processes (so that any concrete em-
gaps in the empirical research. pirical situation involves more than one of the
Our framework presumes that legal constructs, types) is an essential feature of our theoretical
principles, and institutions shape the organization- framework.
al forms and identities of economic actors, and
they shape central elements of capitalist economic
The Facilitative Legal Environment
fields, such as valuation, exchange, and strategies
of competition and cooperation. They do so both The facilitative legal environment includes pas-
because legal constructs and institutions are incor- sive procedural vehicles and forums that organiza-
porated into the logic and assumptions of eco- tions may mobilize to resolve disputes, to structure
nomic activity, and because they serve as—or to their relations with other organizations, to govern
help construct—cultural resources that economic their employees, to influence the behavior of regu-
actors can mobilize. In turn, as legal actors reframe latory agencies, and to gather information. When
economic conflicts in legal language so that they the facilitative environment is mobilized, it be-
can adjudicate them, law necessarily incorporates comes implicated in overt political processes, as
some of the assumptions, language, and institu- economic actors draw on legal constructs, proce-
tional logic of economic fields. Just as a capitalist dures, and techniques as resources in the produc-
economy is endogenous to law, law is endogenous tion, distribution, exchange, and consumption of
to the economy. Law is shaped within economic goods and services, and to enhance their competi-
fields by the very actors whose interactions the law tive position. At the same time, institutional
seeks to constitute, facilitate, and regulate. Although processes play a role in the attribution of meaning
framed in terms of recent developments in organi- to, and diffusion of, facilitative legal environments.
zational and political sociology and the sociology The role of the facilitative legal environment can
of law, our framework is quite consistent with Max be seen in Weber’s (1978) comparative studies of
Weber’s (1978) vision of how the rationalization law and the rise of capitalism. Weber showed that
of law—itself achieved through power struggles such legal tools as agency, negotiability, and the
536 Edelman and Stryker
idea of the juristic or legal person facilitated devel- nomic changes in the late-nineteenth- and early
opment of capitalist economic action and institu- twentieth-century United States. Sklar (1988) high-
tions that had a very high degree of predictability, lights the many contradictions and inconsistencies
calculability, and systematization. For example, in legal doctrine, noting for example, that from
agency is the idea that one person (an agent) rep- 1897 to about 1911–14, changes in property law
resents another (the principal) with the other’s established both legal and intellectual grounds for
consent. Negotiable instruments include checks, the corporate reorganization of property, while
banknotes, and other representations of uncondi- antitrust law still worked to inhibit this very same
tional promises to pay. Without these ideas and economic reorganization.
tools, commerce would be more difficult and less A key tool in the management of competition
predictable. Without the idea of the legal person, a and conflict, the facilitative legal environment also
complex business organization could not be a le- comes into play in businesses’ use of civil litigation
gitimate party to a contract, because it would not (Cheit 1991; Galanter and Rogers 1991) and in
be possible to know the standing of a business firm the concomitant rise in the number and status of
or its parts (see Trevino 1996 for an especially ac- both in-house counsel and independent corporate
cessible discussion of Weber’s ideas). law firms (Galanter and Rogers 1991). The in-
Further development and empirical instantiation crease in litigation itself results in increased insur-
of Weber’s arguments may be found in contempo- ance use (Cheit 1991); elevated bankruptcy rates
rary work emphasizing the enabling aspects of cor- (Delaney 1989); and less willingness to undertake
poration law (Sklar 1988; Roy 1990; Hurst 1970, high-risk innovation (Cheit 1991).
1982). Hurst (1970) highlights the key role of Organizations also engage the facilitative envi-
limited liability in promoting shareholder invest- ronment when they seek legal constraints on the
ment and economic growth in the early history of market or the regulation of competitive industries.
the United States, when commercial banks and Industries use law strategically to secure direct
business loans were not available to entrepreneurs. government subsidies and rules that limit entry
Differences in legal schema pertaining to the status into the industry, that hinder competitors or oth-
of land (with the United States accepting land as a erwise provide an advantage against competitors,
fully fledged tradable commodity) helped set di- and that allow the management of competition
vergent paths for U.S. and British economic de- (Stigler 1971; Gable 1953; Pfeffer 1974; Zhou
velopment (Hurst 1982). Fligstein (2001) and 1993). Industries and organizations also seek fa-
Waarden (2002) emphasize law’s role in stabilizing vorable rule-making outcomes from administrative
markets by reducing uncertainty, coordinating com- agencies (Posner 1974; Clune 1983; Hawkins
petition, and facilitating economic survival and 1984; Blumrosen 1993).
growth. Fligstein (1990), and Carruthers, Babb, Often, alignments between industries and regu-
and Halliday (2001) highlight the role of law as a lators come about over time through meaning-
tool for additional economic resource acquisition attribution and power-mobilization processes of
or for managing debt. law enforcement that we outlined previously. In
Horowitz (1977) argues that in the pre–Civil the case of property insurance, for example, rate
War period, courts and judges adopted a new, “in- regulation was enacted over industry opposition
strumental” view of the common law. In contrast but produced institutions and political settlement
to their eighteenth-century counterparts, who in- that protected insurance companies and agents
terpreted common-law rules with reference to fair- from price competition (Schneiberg 1999; Schnei-
ness among private litigants, nineteenth-century berg and Bartley 2001). In an important article on
judges interpreted these rules according to a dif- enforcing environmental laws, Sabatier (1975) em-
ferent standard: how a given decision would affect phasized that monitoring and active political mo-
American commerce. This fundamental shift made bilization by citizens’ groups help counteract ordi-
common law a powerful force for American eco- nary technical, financial, and access advantages of
nomic development. Far from merely responding powerful firms and industries.
to “new or special economic or technological pres- While our discussion so far has focused on for-
sure,” innovative reconceptualization of the role of mal legal procedures, the facilitative legal envi-
common law often preceded economic innovation ronment also provides an arena in which institu-
(Horowitz 1977, 3). tionalized norms and rituals develop around legal
Sklar (1988) provides an account of the recipro- processes, often becoming more influential than
cal relationship between specific legal and eco- formal law itself. Macaulay’s (1963) seminal study
 Law and Economy 537

of contract disputes showed that businessmen pre- power. Our political-institutional perspective on
ferred to handle exchange relationships informally law and the economy suggests that questions of
and to resolve disputes according to the norms of what the law facilitates and for whom should be im-
the business community rather than through law- portant guides to empirical research.
suits. Business culture is central to Macaulay’s analy-
sis, but businessmen themselves see informal dis-
The Regulatory Legal Environment
pute resolution as more efficient than litigation.
More recent work shows a rise in the use of al- The regulatory legal environment consists of
ternative dispute resolution techniques such as me- substantive rules that impose societal authority on
diation and arbitration to handle interbusiness dis- various aspects of organizational life. Antitrust,
putes (Lande 1998; Morrill 1995) as well as a health and safety, environmental, and labor and
dramatic rise in the use of internal grievance pro- employment statutes and directives all regulate
cedures and various informal dispute resolution organizations. Enforcement agencies such as the
techniques for handling intraorganizational con- U.S. Environmental Protection Agency, National
flict (Edelman et al. 1993; Edelman and Cahill Labor Relations Board, and Equal Employment
1998; Edelman, Uggen, and Erlanger 1999; Edel- Opportunity Commission issue myriad administra-
man and Suchman 1999). Other work focuses on tive regulations, standards, and adjudicative rul-
differences in disputing norms across organizations ings and guidelines, and courts issue substantive
(Cahill 2001) and nations (Gibson and Caldiera decisions articulating common-law principles and
1996; Kagan and Axelrad 2000; Kagan 2001; interpreting constitutions, treaties, statutes, direc-
Cahill 2001). This work suggests that when nego- tives, and administrative regulations. The regulato-
tiation occurs in the “shadow of the law” (Mnookin ry environment also includes informal norms that
and Kornhauser 1979), bargaining forms and out- have lawlike functions, for example, norms about
comes are determined by a combination of expec- diversity or consistent treatment of employees.
tations about what would happen if the dispute Both institutional and political processes operate
were negotiated in court and by institutionalized in the regulatory context. Economic actors incor-
norms about economic behavior that depend on porate and respond to the normative ideals of their
history, culture, and power (Commons 1924; regulatory environments, just as legal actors incor-
Lempert and Sanders 1986). porate and respond to the normative ideals that
In sum, the literature on the facilitative environ- evolve in economic fields. Meanwhile, regulatory
ment reveals both institutional and political process- environments are sites for overt contestation over
es at work. While the facilitative environment normative rules, as well as for mobilizing these
provides an arena in which certain types of trans- rules as resources.
actions, relationships, and governance structures The politics of mobilization and countermobi-
come to be taken-for-granted forms of economic lization are particular salient in the context of
exchange, it is also an arena of political struggle regulation (see Stryker 2000b; Kagan and Axelrad
and the reproduction of power (Dezalay and Garth 2000). Regulatory “capture” is said to occur when
1996). Legal procedures that facilitate economic organizational power leads regulators to overlook
activity for some actors often constrain the eco- or even to facilitate legally questionable practices
nomic activity of other actors. Legal constraints on of regulated organizations (Blumrosen 1965, 1993;
certain types of economic relationships render Wirt 1970; Ackerman et al. 1974; Conklin 1977;
some industries more powerful than others, en- Diver 1980; Clune 1983; Vaughan 1983; Hawkins
hance the power and prestige of some professions, 1984; but see Levine 1981; Horwitz 1986; Lu-
and alter the balance of power between labor and chansky and Gerber 1993). Industry exercises sig-
management. For example, the same legal princi- nificant power over regulators because of cash flow
ples in U.S. property and contract law that facili- to political candidates who then appoint regulators
tated large-scale industrial organization and growth and also because public agencies tend to rely on in-
simultaneously constrained unionization and dustry for expertise, information, and personnel to
working-class collective action (Commons 1924; staff their agencies (Bardach 1989; Breyer 1982;
Tomlins 1993; Forbath 1991a). Makkai and Braithwaite 1992; Yeager 1990).
Thus, facilitative legal environments provide a Political processes are also evident in research
venue for the institutionalization of forms of eco- showing how the consistent mobilization of social
nomic exchange, association, and competition and movement pressures on behalf of economically
for the reproduction of economic inequality and disadvantaged groups can help combat regulatory
538 Edelman and Stryker
capture (Sabatier 1975; Pedriana and Stryker contractual linkages—tend to incorporate institu-
1997, 2004). Stryker (1989) and Pedriana and tionalized ideas earlier than organizations further
Stryker (2004) showed that, in contexts of relent- from the public sector (Edelman 1990, 1992; Sut-
less social movement pressures from below, the ton et al. 1994; Dobbin et al. 1993; Dobbin and
National Labor Relations Board, the Equal Em- Sutton 1998; Edelman, Uggen, and Erlanger
ployment Opportunity Commission, and ultimate- 1999; Heimer 1999; Kelly and Dobbin 1998).
ly the Supreme Court interpreted and applied new Although institutional processes lead to a diffu-
statutory principles of labor or employment law in sion of legalized symbolic structures, those struc-
ways that, at least for a time, expanded employ- tures may become vehicles for the transformation
ment and other workplace benefits for labor, mi- of legal ideals. Professionals who manage legal re-
norities, and women. Capture is less likely when quirements and handle law-related complaints
regulatory agencies actively organize the informa- tend to recast legal norms in ways that infuse law
tion acquisition and monitoring capacities of citi- with managerial logic (Edelman, Erlanger, and
zen groups (Sabatier 1975), when the federal gov- Lande 1993; Edelman, Abraham, and Erlanger
ernment intervenes on behalf of women and 1992; Edelman, Fuller, and Mara-Drita 2001).
minorities (Burstein 1991), and when employees Furthermore, as these “managerialized” under-
can mobilize cultural resources to influence man- standings of law become widely accepted, they ap-
agement (Scully and Segal 2002). pear increasingly rational and gain legitimacy in
Research highlighting political processes empha- the eyes of judges and juries. Courts tend to re-
sizes that legal rules may produce unintended eco- conceptualize law in a way that subtly incorporates
nomic results (see, e.g., Sklar 1988; Roe 1994; organizationally constructed forms of compliance,
Fligstein 2001). For example, Dobbin and Dowd rendering the law “endogenous” to organizational
(2000) show how a Supreme Court decision un- fields (Edelman, Uggen, and Erlanger 1999; Edel-
expectedly upholding central provisions of the In- man 2002).
terstate Commerce and Sherman Acts set off a There is debate within the literature about
chain of interest-based adaptation that had pro- whether organizations experience their regulatory
found, though not readily predictable, results. The environment primarily as a set of externally im-
Court ruling made collusion among competitors posed constraints altering their cost-benefit calculi,
illegal without mandating an alternative, so the or as a set of normative ideals and institutionalized
Court undermined cartels without providing a busi- models of compliance. Economists, including law
ness replacement. A politics of mobilization and and economics scholars, generally favor the first
countermobilization of alternative business com- approach, while sociologists of law generally favor
petition principles ensued, and finance capitalists the second. Economic and political sociologists are
prevailed, giving them disproportionate influence divided.
on subsequent economic development. Work by economists investigating the impact of
Institutional approaches to the regulatory en- civil rights law on the employment of women and
vironment suggest that regulation also affects minorities suggests that regional and historical dif-
economic fields through more subtle institutional ferences in laws and their enforcement promoted
processes that do not hinge on such overt conflict. region- and time-specific incentive structures for
Because much law regulating organizations is am- employment by race and gender (Donahue and
biguous, the meaning of compliance tends to be Heckman 1991; Smith and Welch 1984; Leonard
collectively constructed by organizations over time. 1984, 1986). Scholars who view organizations pri-
Organizations respond to ambiguous legal norms marily as rational actors in their response to law
by creating “symbolic structures” such as affirma- suggest that organizations will calculate the rela-
tive action offices or discrimination grievance pro- tive value of compliance and noncompliance and
cedures that visibly demonstrate a commitment to alter their behavior accordingly (Diver 1980; Pa-
legal ideals. Over time, those structures tend to ac- ternoster and Simpson 1996; Braithewaite and
quire an institutionalized status as “rational” forms Makkai 1991; Genn 1993).
of compliance (Edelman 1992). The regulatory However, sanctions associated with noncompli-
environment takes form gradually through organi- ance often are insufficient to deter illegal behavior
zational mimicry, the diffusion of professional because the risk of legal judgments or administra-
norms, and the normative influence of state rules. tive fines often seems minimal compared to market-
In general, private organizations that are closer to related risks such as product failure. That is, legal
the public sector—either through administrative or sanctions usually are too small and slow to affect ra-
 Law and Economy 539

tional organizational planning (Stone 1975; Jowell do play some role in law-economy connections.
1975). Moreover, decentralization tends to obscure However, because economic sociologists ordinari-
the locus of negligence in organizations and to fos- ly view law as exogenous to economic fields, there
ter interdepartmental competition that subordi- has been little recognition of how what is per-
nates legal compliance to market performance. ceived to be economically and legally strategic is
In short, rational choice deterrence models give mutually constituted through interrelated institu-
a misleading picture of compliance. This does not, tional and political processes. Fligstein’s The Ar-
however, negate the idea of economic interest- chitecture of Markets (2001, 84) exemplifies the
based adaptation to regulatory environments. view of law as exogenous:
Rather, as we have tried to show, perceived strate-
The transformation of existing markets results from
gic adaptations are socially constructed through
exogenous forces: invasion, economic crisis or politi-
the very institutional and political processes that
cal intervention by states. . . . I propose an exogenous
we previously have outlined. For example, Edel-
theory of market transformation that views the basic
man, Uggen, and Erlanger (1999) show that when
cause of changes in market structure as resulting from
personnel professionals began to advocate internal
forces outside the control of producers, due to shifts
due process grievance procedures as devices to in-
in demand, invasion by other firms, or actions of the
sulate organizations from external lawsuits, these
state [including law].9
procedures did not, in fact, decrease external law-
suits. Yet, over time, courts acknowledged and in- In sum, research on the regulatory environment
corporated these procedures as evidence of com- shows that both overt political processes and more
pliance, so that what had been entirely “rational subtle institutional processes shape the form and
myth” began to confer economic cost savings. impact of regulation on the economy and infuse
In addition to Dobbin and Dowd’s (2000) re- economic interests into the law. Extant work on in-
search showing how late-nineteenth-century con- stitutional processes has focused on the United
stitutional law helped promote new models of busi- States. Thus, it is important that economic sociolo-
ness competition, mid-twentieth-century changes gists researching other parts of the world examine
in antitrust legislation and—even earlier—in Jus- empirically how institutional processes interact with
tice Department enforcement strategies promoted the political processes that have—to date—been
new concepts of business control (Fligstein 1990). emphasized in research on regulation in Europe
In general, antitrust laws in the United States and (e.g., Weiler 1990; Majone 1994; Vogel 1996).
Europe shaped firms and markets in both intended Similarly, in contrast to the portrait of law as ex-
and unintended ways (Jacoby 1985; Roy 1990; ogenous that is found in much economic sociolo-
Fligstein 2001). Much scholarship documents the gy, some recent research suggests that regulation
impact of labor law on unionization and strikes often follows and reflects business practices and in-
and analyzes cross-national variation in regulatory stitutions that were themselves responses to the
regimes (Rubin, Griffin, and Wallace 1983; Isaac regulatory environment. Thus, researchers would
and Griffin 1989; Ebbinghaus and Visser 1999; do well to abandon models of law as exogenous in-
McCammon 1990; Kagan and Axelrad 2000). fluence in favor of an explicitly dynamic view that
Streeck (this volume) shows that laws involving examines the reciprocal reshaping of legal and eco-
pension provision and financing, unemployment nomic actors and institutions. Fligstein’s research
insurance, and social assistance have affected em- with Stone Sweet (2002) on the interrelated dy-
ployment, wages, and unionization. Deregulation namics of law and markets in the European Com-
of capital flows appears to intensify the relationship munity is exemplary in this regard, although it fo-
between methods of social security financing and cuses almost exclusively on political mechanisms
unemployment rates (Scharpf and Schmidt 2000). of institutionalization. The authors show that con-
Stryker and Eliason (2003) suggest that cross- tests between the European Court of Justice and
national variation in laws pertaining to day-care national legal regimes affected trade patterns, which
provision and labor market flexibility contributes in turn spurred more litigation. More litigation
to variation in female labor force participation both further expanded cross-border trade and pro-
across Europe. moted EC-level legislation and lobbying, which
The empirical patterns detailed by all these au- then increased trade still further. Another excellent
thors are consistent with an assumption that eco- example of an endogenous approach to regulation
nomic actors’ perceptions of their interests, and is Schneiberg’s (forthcoming) nuanced analysis of
the costs and benefits of alternative lines of action, how state policies and market failures altered polit-
540 Edelman and Stryker
ical alignments and institutional arrangements in and lobbying. Similarly, legal constructs such as
the American property insurance industry, allow- “standing to sue,” “limited liability,” “corporate
ing new groups to mobilize legal resources to re- veil,” “sovereign immunity,” and “federal ques-
shape policy and markets. tion” define which economic disputes may be re-
Future research should treat the endogeneity of solved within the legal system and which are out-
law and the relative role of political and institution- side the purview of law.
al processes as empirical questions. It is likely that The constitutive legal environment is also a key
under certain conditions, law acts as an exogenous factor in legitimating and institutionalizing various
shock and under other conditions is simultaneously organizational institutions, so that organizational
constitutive of and constituted by economic forces routines for hiring, firing, and promotion, or prac-
within intersecting legal and economic fields. It is tices and policies regarding leave, dress, language,
also likely that in some situations law operates pri- or accent appear natural and normal. Constitutive
marily as a set of incentives and disincentives and in legal environments, moreover, shape abstract eco-
others as a set of normative ideals. nomic thinking about the nature of markets, of
capitalism, and of how economy and polity are dis-
tinct, differentiated realms (cf. Krippner 2001).
The Constitutive Legal Environment
For example, Majone (1994) points out that a key
The constitutive legal environment consists of impact of the European Court of Justice and the
concepts, definitional categories, labels, and ideas recent creation of “American-style” regulatory
that play a subtle and often invisible role in how agencies to police newly privatized industries in
economic actors, including but not restricted to Europe was that, for the first time, the concept of
organizations, come into existence, organize their regulation had a meaning in Europe similar to its
activities and relationships, and arrange their gov- meaning in the United States.
ernance. Rather than providing procedural tools or The constitutive legal environment, then, is the
substantive rules—as do facilitative and regulatory arena of meaning-making with regard to both law
legal environments—the constitutive legal envi- and the economy. Consistent with our political-
ronment provides cognitive possibilities and values institutional framework, material manifestations of
that influence the structure, form, and strategies of normative and cognitive frames are socially con-
organizations. structed through both institutional processes and
For example, law generates understandings of political processes. A number of studies that have
what is and is not a corporation, of who is and who already been discussed in connection with the fa-
is not an employee, and of what constitutes a bind- cilitative and regulatory legal environments also
ing agreement between employer and employee or address the constitutive environment.
between organizations. Similarly, law helps define Among such research are studies on employee
“economic” categories of competition, coopera- governance structures and logics (e.g., Edelman
tion, and exchange, as well as such fundamental 1992; Sutton et al. 1994), conceptions of control
constructs as economic fairness, efficiency, ration- and models of competition in firms, markets, and
ality, and value. Legal labels such as corporate person, economic fields (Roy 1990; Fligstein 1990, 2001;
employee, union, property, mutual fund, security, Dobbin and Dowd 2000), and the collective iden-
and bankruptcy help to define which interactions tity and behavior of the U.S. labor movement
and activities are legitimate and which are not. (Forbath 1991a; Tomlins 1985, 1993). Also in-
Further, many conceptual dichotomies that are cluded are studies of such new organizational
central to the economy, such as employer/employ- forms and actors in the economy as corporations
ee, public/private, procedure/substance, capital/ and their boards of directors (Commons 1924;
labor, labor market/domestic labor, exempt/non- Hurst 1970, 1982), multinationals and conglom-
exempt, full time/part time, and permanent/con- erates (Fligstein 2001), investment funds and cap-
tingent, derive meaning and impact in part from ital markets in post-Communist Russia (Spicer
the constitutive legal environment. Similarly, the 2002), financial markets in the United States (Roe
constitutive environment confers meaning on labor- 1994), cooperative and mutual organizational
market related concepts such as “labor pool,” “ap- forms in the United States (Schneiberg 2002), and
plicant,” “qualified,” and “merit.” trading areas and monetary unions (Majone 1994;
Legal categorizations define opportunities and Fligstein and Mara-Drita 1996; Scharpf 1999;
limits for economic actors to take formal-political Fligstein and Stone Sweet 2002). Some of these
roles, defining rules of the game for fund-raising studies emphasize the causal significance of institu-
 Law and Economy 541

tional processes (e.g., Edelman 1990, 1992; Edel- in cross-national variation in these countries’ legal
man, Uggen, and Erlanger 1999; Dobbin and Sut- professions.
ton 1998; Sutton et al. 1994); others of these At the most fundamental level, the constitutive
studies emphasize the causal significance of politi- legal environment profoundly shapes social norms
cal processes (e.g., Fligstein 1990, 2001; Fligstein about human agency, responsibility, and account-
and Mara-Drita 1996; Fligstein and Stone Sweet ability (Lempert and Sanders 1986). Likewise, it
2002; Spicer 2002; Schneiberg 2002; Dobbin and shapes concepts of economic rationality and effi-
Dowd 2000; Scharpf 1999). ciency, offering basic logics that seep into the cul-
Research on the constitutive legal environment ture and infrastructure of social interaction within
also has addressed ways in which contract law de- organizations. In a now classic article, Meyer and
lineates symbols and rituals for forming binding Rowan (1977) emphasized that both modern or-
agreements (Suchman 1995); how property law ganizations and modern law embrace a logic of
shapes ideas about organizations’ control over re- legal rationality, or the importance of general and
sources and ideas (Campbell and Lindberg 1990); distinctively legal rules. Legal rationality is not en-
and how bankruptcy law affects organizations’ pri- tirely the product of formal law; formal-legal and
orities with respect to their various stakeholders organizational actors interact in ways that reinforce
(Delaney 1989). Other studies show that law gen- the logic of legal rationality in both law and the
erates particular organizational features, such as af- economy, generating lawlike ideas of industrial cit-
firmative action policies (Edelman and Petterson izenship (Selznick 1969) and fairness (Edelman
1999) or the “poison pill” takeover defense (Pow- 1990).
ell 1993; Davis 1991). Yet other research suggests As we discussed in prior sections, research by
that law codifies ground rules for entire organiza- Edelman and her colleagues (e.g., Edelman 1992;
tional forms. For example, law helped to construct Edelman, Uggen, and Erlanger 1999) elucidates
the modern limited-liability corporation (Coleman institutional mechanisms through which constitu-
1974, 1990; Seavoy 1982; Roy 1990; Creighton tive legal environments work. Edelman (Edelman,
1990; Klein and Majewski 1992) and to shape the Uggen, and Erlanger 1999; Edelman, Fuller, and
boundaries between, and forms of, private firms, Mara-Drita, 2001) describe reciprocal meaning-at-
public agencies, collective enterprises, and non- tribution processes through which economic and
profit organizations (Nee 1992; Hansmann 1996; formal-legal actors interact to make their world.
Campbell and Lindberg 1990). Managers and professionals in organizations con-
There is much empirical research showing that struct the meaning of compliance, and courts in-
the rise of the regulatory state and cross-national corporate these interpretations into the meaning of
differences in its form and content are bound up formal law. In all this research, endogeneity of law
with the creation of new occupational categories works by infusing into the law evolving ideas of jus-
in the economy. Edelman (1992), Edelman, Ug- tice, legality, and rationality in the economic realm.
gen, and Erlanger (1999) and Edelman, Fuller, Edelman, Uggen, and Erlanger (1999) show
and Mara-Drita (2001) show that the post-1964 that ideas about good-faith efforts at compliance
American regulatory state gave rise to the profes- and rational organizational governance that were
sional roles of diversity trainer and affirmative ac- devised by organizations in response to the overt
tion officer. Similarly, Jacoby (1985), Sutton et politics of the civil rights movement and attendant
al. (1994), Dobbin and Sutton (1998), and civil rights legislation in the 1960s were uncritical-
Baron, Dobbin, and Jennings (1986), highlight ly accepted as rational and just by courts in the
how legal changes both before and especially after 1980s. And Edelman, Fuller, and Mara-Drita
World War II influenced growth of the personnel (2001) show that ideas about civil rights were
profession in the United States. Stryker (1994) transformed in the context of managerial rhetoric
emphasizes how “technocratization” of law in about diversity. Similarly, courts tend to accept
regulatory states created new occupational roles, ideas about “rational” economic behavior that
such as the professional expert witness, for scien- originate in economic fields, thus legitimating or-
tists. Halliday (1987) shows that changing capac- ganizational practices such as word-of-mouth hir-
ities of the American state influenced the collec- ing, accent and language requirements, dress codes,
tive identity of the American legal profession over internal labor market procedures, and market-
time. Finally, Rueschemeyer (1986) highlights based pay rates (Edelman 2002; Edelman, Uggen,
differences in state structures in the United and Erlanger 1999; Nelson and Bridges 1999).
States, Germany, Britain, and Japan that resulted Research on the constitutive environment, then,
542 Edelman and Stryker
suggests that because of the overlap between eco- ploying law in economic transactions and new ways
nomic and legal fields, ideas about the rationality of responding to or circumventing regulation.
of economic institutions that develop within eco- Further research on the constitutive environ-
nomic fields flow easily into legal fields. Thus when ment should explore the interplay between overt
employers cite the “efficiency” of particular prac- political contestation of meanings and more covert
tices, courts tend to accept that logic as legitimate institutional diffusion of meanings. It may be that
and to overlook the role of these practices in per- we should expect an overt politics of law to domi-
petuating disadvantage for groups that the law nate in periods of economic or political crisis, while
views as requiring extra protection. For example, institutional processes dominate during periods of
word-of-mouth hiring often severely disadvantages more routine response to law. At the same time,
racial minorities (Kirschenman and Neckerman both theoretical and empirical work show that
1991), historical race and gender stereotypes are overt politics are not banished in “more routine”
perpetuated through apparently neutral internal settings, but rather contained within substantive
labor market job categorizations (Baron 1991), and procedural limits (Stryker 1994, 1996).
and internal grievance procedures may legitimate Research should also examine cross-national dif-
discriminatory practices (Edelman, Erlanger, and ferences in the meanings attributed to legal con-
Lande 1993). structs. Legal concepts may be expressed in super-
While much of the work of the constitutive en- ficially similar language, yet have a long history of
vironment occurs through subtle institutional diverse meanings across contexts. For example, the
processes, overt politics also play a role as organi- meaning of employment in Britain simply denotes
zations and lawyers seek to construct their legal an occupation undertaken for remuneration and
environments through litigation and lobbying— subordinate to an employer. It does not imply any
often devising new conceptual categories or ma- rights of protection whereas the French emploi
nipulating legal symbols for political advantage (employment) does invoke norms of protection
(Powell 1993; Suchman 1995). For example, em- (Clarke, Gijsel, and Janssen 2000).
ployers successfully defended Title VII discrimina-
tion claims based on comparable worth principles,
by mobilizing taken-for-granted market logics to CONCLUSION
argue against their own responsibility and legal li-
ability (England 1993). Similarly, employers suc- The framework that we have developed in this
cessfully mobilized such logics in equal pay litiga- chapter offers a sociological approach to the inter-
tion, diminishing the resource value of equal pay play of law and the economy. It builds on classical
legislation for American women (Nelson and social theory—in particular the work of Max
Bridges 1999). Yeager (1990) shows that taken- Weber—and on the broader notion of law as legal-
for-granted notions of the worthiness of private ity that is central to the sociology of law. The cen-
business activity led regulators to treat environ- tral tenet of our approach is the endogeneity of
mental crime as less deserving of moral disappro- both law and the economy: legality derives mean-
bation than street crime, and thus to weaken envi- ing from and sustains economic structures, action,
ronmental enforcement. and power, while economic structures, action, and
In short, political and institutional processes op- power draw on and reconstitute legality. The re-
erate in tandem to produce meanings that are ciprocal construction and reconstruction of law
shared across legal and economic fields.10 Research and the economy occurs at the intersection of legal
on the constitutive environment highlights “the and economic fields, which are social realms that
limits of law.” While court adjudication is a realm are centered upon legal and economic institutions,
for overt resource mobilization, as is the contesta- respectively. We identify two processes that pro-
tion and negotiation between regulatory agencies mote this endogeneity: institutional processes that
and regulated parties, taken-for-granted assump- involve taken-for-granted meanings, and political
tions shape how these conflicts are framed and may contests and power struggles that involve overt
limit the impact of regulation. More generally, re- conflict. The two are interrelated in multiple ways:
search suggests that the constitutive legal environ- for example, institutionalized rituals and taken-for-
ment plays a critical role in shaping facilitative and granted routines shape interests and coalitions and
regulatory legal environments. The cross-fertiliza- help to define the boundaries of disputes; actors
tion of ideas at the intersection of legal and eco- mobilize institutionalized rituals and models as
nomic fields provides fodder for new ways of em- symbolic resources for political struggles; political
 Law and Economy 543

shifts may disrupt institutionalized patterns and phasized both the overt and covert exercise of
allow new institutional processes to arise. The in- power. We showed how the interplay of these two
teraction of institutional and political processes forms of power contributed to the complex and
helps to explain both stability and change in legal sometimes contradictory nature of the role that law
and economic fields. plays in overlapping legal and economic fields. Cap-
To review extant knowledge about the interplay italist political economies are characterized both by
of law and the economy, we used Edelman and opportunities for enhanced justice and by the “lim-
Suchman’s (1997) typology of legal environments. its of law.” The openings that law provides to in-
The three facets of legal environments that we dis- crease the well-being of disadvantaged economic
cussed represent different aspects of intersection actors are circumscribed in ways that keep funda-
between legal and economic fields and further illu- mental asymmetries of economic power intact.
minate how legality and market logics may be mu- While the three facets of legal environments are
tually constitutive through institutional and politi- presented as analytically distinct ideal types, any
cal processes. empirical situation (say, firms responding to anti-
The facilitative legal environment is the realm of trust law or unions responding to labor law) is like-
procedure. Here law provides a set of tools, norms, ly to involve multiple facets at once. More impor-
and routines that shapes the form of economic ac- tant, the three types of legal environments affect
tion. And conversely, economic strategies and po- each other through interrelated institutional and
litical interests shape the range of legal tools that political processes. Changes in the constitutive
are available and conventions about how and legal environment affect the legal tools available
under what conditions these tools are used. The fa- through the facilitative environment and the mean-
cilitative legal environment is simultaneously a set ing of rules in the regulatory environment, and the
of institutionalized conventions that shape the use reverse is true as well. Regulation is itself a facilita-
of law and a set of resources that may be mobilized tive tool in some contexts as industries seek to con-
in power struggles over market share, occupation- trol competition through rate regulation or tariffs
al boundaries, the use of technology, conditions of or antitrust maneuvers. And the facilitative envi-
labor, and many other elements of economic life. ronment shapes the constitutive and regulatory en-
The regulatory legal environment is the realm of vironments, as the creative use of legal procedures
normative social control. Here law operates both often generates new symbols, meanings, norms,
as a set of incentives and disincentives and as a set principles, and substantive rules.
of normative ideals that shape the behavior of firms. The political-institutional model we propose has
In contrast to accounts that see regulation as an significant implications for economic sociology.
exogenous force to which organizations respond, First and foremost, our model suggests that the in-
our model suggests that the norms embodied by sights of economic sociology on the social embed-
the regulatory environment are responsive to the dedness of markets must be extended to law. While
everyday problems and institutionalized rituals of law may operate under some circumstances as an
economic life and that they are often the subject of exogenous shock to economic fields, law and le-
battles between industries, labor and management, gality are more often both produced by and a
and other economic constituencies. Political lob- product of economic constructions. Most obvious-
bying, regulatory capture, structural networks, and ly, economic actors lobby and litigate for particular
social movements render the regulatory legal envi- legal rules and administrative interpretations of
ronment as much the product as the producer of rules. Somewhat less obviously, judicial construc-
economic life. tions of law necessarily reflect conceptions of ra-
The constitutive legal environment is the realm tionality, efficiency, fairness, and compliance that
of meaning-making, symbols, and culture. Institu- are tested, contested, institutionalized, and some-
tional processes within the constitutive legal envi- times fractured within economic fields. Lawyers,
ronment powerfully bind the logics of legal and judges, personnel professionals, employers, and em-
economic fields as legal language and constructs ployees act as conduits of institutionalized ideas
shape the form and basis of capitalism and capital- and as contestants in political battles to shape the
ist logics shape legal conceptions of fairness, effi- meaning of law in overlapping legal and economic
ciency, rationality, and business necessity. But fields. It is therefore critical that economic sociol-
political processes are also operative as opposing ogy treat law not as a force outside of the socially
forces contest the meaning of law and justice. embedded economy but rather as a force within,
In all three types of legal environments, we em- and a product of, that economy. Ordinarily, legal
544 Edelman and Stryker
and economic fields will be mutually endogenous, willing to compensate those who are made worse off (Coot-
through a reciprocal, causal dynamic that is, at er and Ulen 2000).
3. Recently, some law and economics scholars have begun
once, institutional and political. to elaborate neoclassical economic theory to posit endoge-
Our model also stands as a sociological alterna- nous preferences (Dau-Schmidt 1990; Sunstein 1993). Al-
tive to law and economics scholarship. We incor- though these accounts come considerably closer to recog-
porate the notion from economic sociology that nizing the social embeddedness of economic action, they
generally recognize the role of law but not of culture in
markets should be understood not as the interac-
shaping preferences, and they retain the assumption of pref-
tion of individual preference-maximizing rational erence-maximizing rational actors.
actors but rather as social fields in which ideas 4. Building on the Progressive Era tradition, Rose-Acker-
about rationality are collectively defined and insti- man’s (1988, 343) “reformist law and economics” takes
tutionalized. But by also incorporating a broader issue with dominant strands of contemporary law and eco-
nomics. While operating within the basic paradigm of eco-
notion of law as legality manifested in institution- nomic theory and retaining methodological individualism,
alized social fields overlapping with economic Rose-Ackerman does not presume the primacy of existing
fields, we challenge the idea that “economic ra- property rights distributions or the superiority of common
tionality” can be understood apart from its law- law to legislation.
5. There are multiple strands of institutional theory in
related social construction.
sociology, and each conceptualizes institutions and insti-
Law both incorporates and reinforces economic tutional processes somewhat differently (see Scott 2003;
understandings of rational action, and of the prefer- Stryker 2003). Those who emphasize how state institu-
ences that economic models usually treat as exoge- tions shape the relationship between politics and policies
nous. Rather than providing a context within which sometimes call themselves political or historical institu-
tionalists. Neoinstitutionalists of organization have been
actors make “rational choices,” law tends to reify criticized for insufficiently attending to political conflicts,
ideas of rationality that predominate in economic but some have emphasized such conflicts (see Powell and
fields. To the extent that institutionalized ideas in DiMaggio 1991; Stryker 2000a). To enhance the analytic
economic fields bolster the power of capitalists over clarity and utility of our framework, we provide particu-
lar conceptualizations of “institutional” and “political”
workers or support organizational practices that dis-
processes, highlighting the two as distinct social (and
criminate against minorities and women, law tends causal) mechanisms. However, because broader traditions
to legitimate those power relations. Extraordinary labeled institutional and political intersect, some of the lit-
conditions, such as economic crises and depressions, erature we cite can be appropriated fairly by either or both
and massive crises of political legitimacy coupled traditions.
6. Prior to the 1970s, most work in organization theory
with sustained social movement pressure from focused on organizations as the key unit of analysis and con-
below, loosen the taken-for-grantedness of prior ceptualized organizations as rational and goal-oriented. Con-
economic routines. This creates somewhat larger sistent with much thinking in economics, scholars sought to
openings for the disadvantaged to influence institu- understand how organizations could most efficiently respond
to their technological needs, hire and manage labor, and man-
tionalization in intersecting legal and economic
age competition (Blau and Scott 1962; Thompson 1967;
fields. Short of such extraordinary conditions, law in Pfeffer and Salancik 1978; see Scott 2003 for a review).
capitalist political economies tends to legitimate and 7. Debating issues such as the “relative autonomy of the
reify the status and power hierarchies that are played state,” neo-Marxist political sociology in the 1960s and
out in economic life. 1970s provided a foundational set of concepts and social
mechanisms to specify possibilities and limits of progressive
social reform in democratic capitalism (e.g., Miliband 1969;
Poulantzas 1973; Offe 1975; Therborn 1978; Block 1987).
Causal mechanisms often were divided into those consid-
NOTES ered “instrumental” and those considered “structural.” The
former operated through overt resource mobilization,
1. Preferences, moreover, are often understood as “re- whereas the latter operated covertly, including through cap-
vealed” through an individual’s choices. Thus the actions ital’s ideological hegemony. Structural mechanisms also de-
that individuals take are assumed to reveal their preferences pended on the fact that capitalist states were excluded from
irrespective of social constraints that may shape individual private economic production, but depended on capital accu-
actions, rendering the revealed preference theory tautologi- mulation in the private economy for their capacity and legit-
cal (Gould 1992). Choices that appear to deviate from ra- imacy in governing.
tionality, moreover, tend to be explained as involving the 8. For a more complete summary of this argument, in-
maximization of a different dimension or are attributed to cluding extended elaboration of examples, see Stryker 2003.
lack of information. The legal history literature makes much the same points
2. Economists define Pareto efficiency as the condition about the constitutive power of law as do sociologists of law
where no person can be made better (according to his own who emphasize law as legality.
preferences) without another person being made worse off. 9. Fligstein (2001) recognizes that law as a dependent
A variant, Kaldor-Hicks efficiency, holds that some persons variable varies according to the balance of power among di-
could be made better off if they would at least in theory be verse political-economic actors. But his 2001 book does not
 Law and Economy 545

recognize that legal and economic forms, norms, and fields in Action in New Jersey: A Law-Sociology Study.”
are intricately intertwined in an endogenous system. Rutgers Law Review 19:187–287.
10. Interestingly, post-Coasean law and economics schol- ———. 1993. Modern Law: The Law Transmission Sys-
arship implicitly incorporates elements of the constitutive tem and Equal Employment Opportunity. Madison:
environment without appreciating its full implications. For
University of Wisconsin Press.
example, law and economics scholars note that law may af-
fect the relative appeal of “constituting” market contracts as Bourdieu, Pierre. 1987. “The Force of Law: Toward a
opposed to hierarchical organization through its impact on Sociology of the Juridical Field.” Hastings Law
bargaining costs or “transaction costs” (Williamson 1975, Journal 38:814–53.
1981, 1985, 1991; Posner 1972; Masten 1990). Likewise, Braithwaite, John, and T. Makkai. 1991. “Testing an
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Bumiller, Kristin 1987. “Victims in the Shadow of the
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