Summary of Lawlessness and Economics

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8 Overall

7 Applicability

9 Innovation

9 Style


In Shakespeare’s Henry VI Part 2, a member of John Cade’s gang famously suggests that the rebels should, as an initial step toward utopia, “Kill all the lawyers.” Certainly, anyone who has forked over a hefty retainer can sympathize, but can societies function without legal systems? And if so, how? The answer, according to Princeton economist Avinash Dixit, is that they can indeed function and have for thousand of years, provided the right kinds of social institutions are in place. In fact, lawless systems can work better than traditional justice systems for some small, homogenous groups. Thus, extralegal institutions are still common, from trade associations that arbitrate members’ disputes to private security guards. While this slim book is thick with equations, getAbstract thinks it gives a nice overview of the empirical literature. The game-theory models yield a few surprising conclusions and many areas for further research. While killing all the lawyers still is probably not prudent, Dixit begins to show when quasi-legal institutions lubricate and when they gum up the wheels of commerce.

In this summary, you will learn

  • How some economies function with minimal or no laws;
  • When and why such lawless systems break down; and
  • How this information applies to developing economies.

About the Author

Avinash K. Dixit is a Professor of Economics at Princeton University.



Economics Without Law
“When the butcher comes to me to buy an animal,” says a Sicilian cattle breeder, “he knows I want to cheat him. But I know that he wants to cheat me.” Such mistrust is hardly good for commerce. The obvious solution is legal: a simple contract or the threat of a lawsuit...

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