Summary of Free Markets and Social Justice

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Cass R. Sunstein’s book is a serious piece of scholarship about very engaging legal and social issues concerning economics and law. The book derives both strengths and weaknesses from its beginnings as a series of lectures presented from 1990 to 1995. Each chapter presents a thoughtful thesis, but not all chapters link together in a clearly understandable manner. However, a reader who is prepared to put in the required effort will gain a wealth of thought-provoking material. getAbstract recommends this book to anyone who misses pure intellectual challenge. Lawyers, policy makers and economists are most likely to appreciate it.

About the Author

Legal scholar Cass R. Sunstein served as administrator of the White House Office of Information and Regulatory Affairs during the Obama administration. He is the author of Democracy and the Problem of Free Speech, The Partial Constitution, After the Rights RevolutionLegal Reasoning and Political Conflict, Can It Happen Here, The Cost-Benefit Revolution, Going to Extremes, On Freedom, How Change Happens and The World According to Star Wars. He is a frequent contributor to The New Republic and The New York Times Book Review.



Introduction and Overview

Economic analysis of law is a balancing act. On one side is the theory of free markets; on the other side is the regulation of social issues. Economic analysis of law respects the virtues and benefits of free markets, however, it also recognizes the state’s need to promote social justice. Absolute economic freedom tends to produce discrimination in the marketplace. In parallel, absolute governmental control tends to produce tyranny. Thus, society must strike a balance between free markets and social justice. In analyzing this balance, seven themes emerge:

  1. The myth of laissez-faire.
  2. Preference formation and social norms.
  3. The contextual character of choice.
  4. The importance of fair distribution.
  5. The diversity of human goods.
  6. The way law can shape preferences.
  7. Puzzles of human rationality.

These seven themes are analyzed in three areas: Foundational Issues, Rights, and Regulations.

Foundational Issues

Laissez-faire is a myth. A free market requires the rule of law. In fact, free markets depend upon...

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