Evaluating Justice Systems Through an Economic Lens

When is justice an economic good?

Evaluating Justice Systems Through an Economic Lens

Economists are huge fans of effective legal systems that hold power accountable to principle, support personal safety and facilitate the recognition and enforcement of civil rights and property. Economists like Hernando de Soto and his Institute for Liberty and Democracy advocate the recognition of private property rights as central to economic development. The zeal for measuring and promoting the rule of law internationally has, over the past 20 years, been taken up by the World Justice Project, the Bingham Centre for the Rule of Law, and others. The now vast field of law and economics has brought the efficiency and effectiveness of substantive areas of law under scrutiny using the tools of microeconomic theory. This has enriched our consideration of the design and assessment of areas of law such as contract and property law, consumer protection law, and many others.

Assessing our legal system through an economic lens is infused by the same desire to see the law deliver just outcomes but is focused more on the operational performance of the legal system and whether it achieves its stated goals and performance measures. The exercise does not have to be from a conservative perspective: it also offers a means of testing whether progressive measures are achieving their goals. If a measure is passed with the goal of reducing homelessness or poverty it is fair to ask whether it has done so.

Traditionally jurisprudence has largely engaged in practical philosophy: a legal principle is tested by whether it achieves a greater degree of justice and not whether it facilitates greater economic flourishing. Modern tests of legal systems clearly reflect an economists’ appetite for data and practical and comparable measurements of justice. Thus, the World Justice Project ranks legal systems by reference to factors that now include eight factors and 44 sub-factors; however, these are generally based on the values of the restraints of governmental and arbitrary power and the preservation of private rights. None are explicitly based on securing economic rights and interests.

So how might an economist view the operational performance of our Canadian justice systems? The results are probably mixed. On the positive side of the ledger the use of virtual hearings in the course of the COVID pandemic would warm the heart of even the most skeptical economist. Here is efficiency, innovation, and effectiveness being achieved in the course of a worldwide health crisis. Similarly, the growth of specialised tribunals that adjudicate both domestic and international disputes offer access to principled outcomes that promise enhanced quality, timeliness, and an over-all increase in the rule of law.

How would an economic lens view differently from some of the other challenges we face? The increase of self-represented litigants, despite many years of study under an economic lens, would likely focus on the barriers to entry of affordable legal representation. The tendency toward innumeracy within the legal profession raises a clash of cultures in which economists would likely give no ground to lawyers. The ways in which our measures of compensation preference non-economic concerns, the very partial right to recover costs in civil actions, the proper understanding of the time value of money, and other issues remain points of friction.

In general, the objective measures of outcomes championed by economists are by their nature less concerned with the questions of process that occupy much of civil and criminal procedure. Most measures of the rule of law properly include measures of fairness in the institutions and rules governing legal rights. Many now also include objective measures of performance. The calls for the promotion of a rule of law culture in many ways acknowledge that we are already living in a justice system that faces the type of accountability an economist would demand.