The Limits of Law

There is an important ideological reason to respect the limits of law. Traditional liberalism's institutions and ethos placed a thumb on the scales of social policy—a kind of rebuttable presumption against more law. Liberalism demanded affirmative justification for more law not because it opposed change but because its deepest commitment was to individual freedom and autonomy. This chapter introduces informal social norms and economic markets—law's two leading rivals in shaping social behavior—and compares them to law and to each other with respect to their capacities to regulate effectively, cheaply, fairly, and with public legitimacy. Law's relations to norms and markets are complex, as are their relations to it and to each other. Law makes markets both economically possible and socially acceptable. Social norms shape behavior through people's desires for social acceptance and communal identity. Law's transaction costs reflect the elaborate routines—institutional, procedural, consultative, and professional—through which people make, learn, communicate, apply, enforce, and review law.