Towards a Legal Theory of Price

Abstract

A new wave of legal scholarship has challenged the dominant neoclassical account of price formation, demonstrating that prices are not formed according to its prescripts and do not perform the task of economic coordination in line with its axioms. As opposed to emerging from voluntary exchanges between private actors, prices on this alternative reading are the products of processes of political and legal ordering that constrain the choices and opportunities of some social groups as they enable and empower others. Prices, legal scholars insist, are ‘legally engineered’. But what possibilities emerge from such a reframing? Could legal analysis be used to model and predict the behaviour of prices in the political economy? And would doing so give us any inroads into making the prices that seem to ‘inhere’ in the objects around us any more just? In this article, I build the case for the development of a new research programme that investigates the role of law in processes of price formation. I also problematize the engineering metaphor that stands at the centre of contemporary legal scholarship on prices. Drawing on the traditions of Old Institutionalist Economics (OIE), Legal Realism, and Marxist Economics, I argue that prices are not produced by the state mechanistically commanding the political economy through its interventions and legal frameworks, but emerge from the deeper, historically conditioned structure of legal rights in society. Highlighting that capitalism must be understood as both a juridical order and as a totality, I argue that in order to develop a legal theory of price with explanatory power, we first need to understand how the ‘system of mutual coercion’ that OIE and Realist scholars show to be central to the formation of market prices operates on the global scale.