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THE GREAT RECESSION AND THE RHETORICAL CANONS OF LAW AND ECONOMICS, by Michael D. Murray

Abstract

The Great Recession of 2008 and onward has drawn attention to the American economic and financial system, and has cast a critical spotlight on the theories, policies, and assumptions of the modern, neoclassical school of law and economics—often labeled the "Chicago School"—because this school of legal economic thought has had great influence on the American economy and financial system. The Chicago School's positions on deregulation and the limitation or elimination of oversight and government restraints on stock markets, derivative markets, and other financial practices are the result of decades of neoclassical economic assumptions regarding the efficiency of unregulated markets, the near-religious-like devotion to a hyper-simplified conception of rationality and self-interest with regard to the persons and institutions participating in the financial system, and a conception of laws and government policies as incentives and costs in a manner that excludes the actual conditions and complications of reality.

This Article joins the critical conversation on the Great Recession and the role of law and economics in this crisis by examining neoclassical and contemporary law and economics from the perspective of legal rhetoric. The Great Recession already has caused several of the stars of the Chicago School to recant their hardest, most definite statements concerning market efficiency and the necessity of non-regulation and zero government oversight (or interference) in the financial system. The law and economics movement is likely to regroup or reform itself under a revised conception of market efficiency, as indicated by the chastened admissions of the leaders of the old school, or move in the direction of a revised conception of rational choice theory represented by the thriving school of behavioral law and economics. In order to better understand the law and economics movement now and in the future, this Article joins the discussion by pointing out the fundamental rhetorical canons of law and economics. These canons have made law and economics a persuasive form of discourse:

 Mathematical and scientific methods of analysis and demonstration;

 The characterization of legal phenomena as incentives and costs;

 The rhetorical economic concept of efficiency; and

 Rational choice theory as corrected by modern behavioral social sciences, cognitive studies, and brain science.

Law and economics has developed into a school of contemporary legal rhetoric with a particular, effective combination of topics of invention and arrangement and tropes of style that are relevant to legal rhetoric beyond the economic analysis of law. My Article is the first to examine the prescriptive implications of the rhetoric of law and economics for general legal discourse as opposed to examining the benefits and limitations of the economic analysis of law itself. This Article advances the conversation in two areas: first, as to the study and understanding of the persuasiveness of law and economics, particularly because that persuasiveness has played a role in influencing American economic and financial policy leading up to the Great Recession; and second, as to the study and understanding of the use of economic topics of invention and arrangement and tropes of style in general legal discourse when evaluated in comparison to the other schools of classical and contemporary legal rhetoric. My conclusion is that the rhetorical canons of law and economics can be used to create meaning and inspire imagination in legal discourse beyond the economic analysis of law, but the canons are tools that only are as good as the user, and can be corrupted in ways that helped to bring about the current economic crisis.

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