I spent part of my hurricane-induced sabbatical reading Nate Oman's Markets as a Moral Foundation for Contract Law (abstract here). I had first read some of Oman's work in 2008 while writing my Principled Pluralism and Contract Remedies (abstract here). In my piece I argued that none of the leading theories fully justified contract law and, further, that there seemed to be no principled way to combine the best of those competing theories to render a coherent whole. It was at this second point that I considered Oman's earlier work, The Failure of Economic Interpretations of the Law of Contract Damages, but found it wanting.
Oman, like many others (including me), began by observing that neo-classical economics provides a finely-grained tool by which to support and critique many of the rules of contract law. The challenges to a purely economic justification for contract law, however, are normative and political. First, even Pareto-superior transactions can produce results that are morally problematic. And second, imposing a regime of contract efficiency by way of contract law can, without more, offend against liberal political theory.
In his earlier work Oman sought to diffuse both criticisms by invoking John Rawls. In brief, Rawls concluded that a legitimate political order need only provide a "basic structure" and that the legitimately constituted order could fill in the blanks from a variety of resources including, e.g., efficiency. It was at this point I argued from several perspectives that Oman's argument failed.
Oman has significantly advanced his argument in his new piece. Rather than wedding neo-classical economics to the vagaries of John Rawls, Oman now cabins efficiency within a more concrete social practice, that of the market. Contract law is about supporting the market and not (directly, anyway) about creating an optimal distribution of resources or about vindicating personal autonomy. Indeed, by tethering contract law to supporting the market, Oman comes close to a virtue theory of contract law (although the virtues of the market tend more to phronesis than to sophia).
I'll leave it to interested readers to delve into Oman's piece. It is very good. I will, however, take this opportunity to offer two criticisms. First, Oman appears to take the market as the principal if not sole social substrate for the liberal political order. The market is no doubt a substantial factor in upholding political liberalism (a form of political ordering I largely--albeit critically--support in my Looking for Bedrock piece here). Yet I firmly believe that other forms of social order including the family and at least some voluntary social and religious institutions are equally critical to the maintenance of political liberalism. And at best the market exists in an uneasy relationship with these spheres of human life.
Second, and amplifying my previous observation, the virtues Oman associates with the market--cooperation, wealth-creation, and a habitus toward promise keeping--are largely this-worldly. Prioritizing such virtues are part of the process of secularization that Charles Taylor so amply describes in A Secular Age (see a few of my many posts on Taylor's magisterial work here and a four-parter beginning here). Such an observation is not to deny a right and high place for the virtues of this age but only to acknowledge (as does Oman) that there's more to a fully-flourishing view of humanity that this age alone and we must be careful not to let the successes of the market blind us to the need for certain other virtues for the age to come (Luke 12:13-21).
Oman, like many others (including me), began by observing that neo-classical economics provides a finely-grained tool by which to support and critique many of the rules of contract law. The challenges to a purely economic justification for contract law, however, are normative and political. First, even Pareto-superior transactions can produce results that are morally problematic. And second, imposing a regime of contract efficiency by way of contract law can, without more, offend against liberal political theory.
In his earlier work Oman sought to diffuse both criticisms by invoking John Rawls. In brief, Rawls concluded that a legitimate political order need only provide a "basic structure" and that the legitimately constituted order could fill in the blanks from a variety of resources including, e.g., efficiency. It was at this point I argued from several perspectives that Oman's argument failed.
Oman has significantly advanced his argument in his new piece. Rather than wedding neo-classical economics to the vagaries of John Rawls, Oman now cabins efficiency within a more concrete social practice, that of the market. Contract law is about supporting the market and not (directly, anyway) about creating an optimal distribution of resources or about vindicating personal autonomy. Indeed, by tethering contract law to supporting the market, Oman comes close to a virtue theory of contract law (although the virtues of the market tend more to phronesis than to sophia).
I'll leave it to interested readers to delve into Oman's piece. It is very good. I will, however, take this opportunity to offer two criticisms. First, Oman appears to take the market as the principal if not sole social substrate for the liberal political order. The market is no doubt a substantial factor in upholding political liberalism (a form of political ordering I largely--albeit critically--support in my Looking for Bedrock piece here). Yet I firmly believe that other forms of social order including the family and at least some voluntary social and religious institutions are equally critical to the maintenance of political liberalism. And at best the market exists in an uneasy relationship with these spheres of human life.
Second, and amplifying my previous observation, the virtues Oman associates with the market--cooperation, wealth-creation, and a habitus toward promise keeping--are largely this-worldly. Prioritizing such virtues are part of the process of secularization that Charles Taylor so amply describes in A Secular Age (see a few of my many posts on Taylor's magisterial work here and a four-parter beginning here). Such an observation is not to deny a right and high place for the virtues of this age but only to acknowledge (as does Oman) that there's more to a fully-flourishing view of humanity that this age alone and we must be careful not to let the successes of the market blind us to the need for certain other virtues for the age to come (Luke 12:13-21).
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