Below is a roundup of links on law (and institutions more generally) and economics, and how important the "rules of the economic" game are to analysis of any situation. It was mainly set off by a recent reading of two very interesting news articles found on BoingBoing and 3QuarksDaily respectively. The third is more of a fun piece that I recently recalled reading first over a year ago (and which I actually used in a presentation on U.S. contract law last summer).
"Colorado passes law to allow rainwater harvesting"
"Should nature be able to take you to court?"
"What's traffic in Hanoi and St. Petersburg got to do with institutional reform?"
What struck me about article 2 was how the problem is framed. Basically, it is argued we currently have a problem with exploitation of the environment because the environment does not have a "say" in how we use it. If we give it a "say", we provide it with the agency necessary to reduce its exploitation through the threat of legal action against the exploiting parties. Nature is given a freedom it previously did not enjoy and the result is a balancing of the scales, so to speak.
When one frames the problem in this way, one is assuming the law to be naturally fair, specifically with regard to market transactions. For an example that draws on an instrumentalist view of law, in the U.S. while both the employer and the employee have inalienable rights to life, liberty and the pursuit of happiness, this fact has not precluded the former from being exploitative of the latter. Alterations of political rights aside, the relationship between humans and the environment is an economic one that operates according to a different set of rules according to the economic system.
In article 1, a few of the comments make an interesting distinction between two competing conceptions of land use. Generally in the eastern U.S., rainwater is seen as part of common property and cannot be artificially diverted or collected. In the western U.S., "first use" is more prevalent, so since this house caught the water, they are fully entitled to it. In terms of the political economy of the issue, the policy of the eastern U.S. makes more sense. So, I think the Colorado law is unjust to the fact that everyone should share in the rainwater. A main problem with my view is the inevitable excess demand that will either result in driving up the price (leading to welfare issues) or simple exclusion of some groups from water entirely. But, there are welfare issues associated with the alternative model as well: "first use" requires an absolutist stance on private property that is not without its own logical consistencies.
Article 3 has some nice youtube videos that call into question the importance (or lack thereof) in establishing formal legal constraints, and how societies often are able to solve problems such as traffic congestion in other ways. It relates back to themes already touched upon in this blog, such as the myth of the tragedy of the commons (http://imagininghistory.blogspot.com/2009/06/lesson-in-defining-spheres-of-market.html) and humanitarian alternatives to the libertarian model of society (http://imagininghistory.blogspot.com/2009/07/radin-contested-commodities-trouble.html).
Overall, some very useful articles for understanding how the rules of the game affect society. Enjoy!
UPDATE: One more link! Here, in this very interesting video Paul Romer (of new growth theory fame) asks the question: can we form rules of technological competition in markets that factors out the traditional Schumpeterian "destruction" part of "creative destruction"? http://www.youtube.com/watch?v=jJ8aF6VQXOc