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{\field{\*\fldinst {\lang4105  SEQ CHAPTER \\h \\r 1}}{\fldrslt }}\pard \fs28\qc 
{\plain \fs36 \b\fs36 Basic Instincts}{\plain \fs28 \b\fs28 :\par
}{\plain \fs28 \b\fs28 Participation, Economics and Institutional Choice   }{\plain \fs24 \par
}{\plain \fs24 \par
}\pard \fs24\qc 
{\plain \fs24 Neil K. Komesar\par
}\pard \fs24
{\plain \fs24 \par
}{\plain \fs24 \tab I have written many times about the central role of institutional choice and comparative \softline
institutional analysis in analyzing law and public policy.  I will return to this theme in the first \softline
two sections of this paper.  My primary focus, however, is on an approach to comparative \softline
institutional analysis and, therefore, to the analysis of law and public policy that can link \softline
disparate visions.  The central feature is participation.  Participation provides important links \softline
between economic, non- economic and even anti-economic analyses.  It should be comfortable \softline
both to those interested in law and economics and to those interested in civic republicanism. It \softline
provides a way for law and economics to return to the basic instincts of economics and to explore \softline
areas of law and public policy previously foreign to law and economics.  It also provides a way \softline
for non-economists to gain from valuable economic insights while remaining consistent with \softline
their primary intuitions.\tab In the first two sections, I will clear the ground for analysis by \softline
showing why institutional choice and comparative institutional analysis are the essence of \softline
economics and the core of law.  In the process, issues of participation and the dynamics of \softline
participation will begin to surface.  In the third section, I will focus on participation and show its \softline
place in the intuition of both economics and law.  In the fourth section, I will use these insights to \softline
explore the character of the courts and the interaction between goal choice and institutional \softline
choice. \tab \par
}{\plain \fs24 \par
}{\plain \fs24 I. The Essence of Economics \par
}{\plain \fs24 \par
}{\plain \fs24 \tab As with other disciplines, there are competing conceptions of economic analysis and, in \softline
particular, of the economic analysis of law and public policy. It is common to parse economics \softline
into categories like neoclassical and institutional.{}{\plain \fs24 \super 1{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 1}{}{\plain \fs24 There are various gradations such as new or neo-institutional.  I discuss this view in \softline
section IIIB.}}}
}{\plain \fs24   But these categories mask a fundamental \softline
point: The essence of economics{\u8211\'96} every sort of economics{\u8211\'96} lies in institutional choice and \softline
comparative institutional analysis.  Although economics already focuses on institutional choice, \softline
it does so in a particularly non-economic way.\par
}{\plain \fs24 \tab These points are obscured by issues of definition. The term {\u8220\'93}institution{\u8221\'94} has two \softline
meanings in economics.  Most commonly, institutions are defined as the rules of the game and \softline
the game is economic activity.  Institutional economists believe these rules of the game central to \softline
economic analysis; neoclassical economists see them as secondary.  The neoclassical view \softline
dominates the economic analysis of law and public policy.\par
}{\plain \fs24 \tab However, another form of institution and institutional choice prevails even for \softline
neoclassical economics.  Here institutions are decision-making processes.  Economists of every \softline
stripe focus on malfunctions in such decision-making processes as the market and the political 
process. In the welfare economics tradition, economists ask whether there has been a market \softline
failure and then explain, justify or criticize interventions by courts, legislatures or administrative \softline
agencies based on the character and extent of this market failure.  Similarly, another area of \softline
economics, public choice, addresses institutional choices such as deregulation, increased property \softline
rights and increased judicial review by analyzing the political process and its imperfections and \softline
malfunctions. This type of institutional choice is fundamental to all economic analyses of law \softline
and public policy.\par
}{\plain \fs24 \tab Paradoxically, however, economists commonly analyze institutional choice in a non-economic way.  They examine this choice by focusing on only one institution; their analyses are \softline
single institutional not comparative institutional. In welfare economics, there is no parallel \softline
examination of the intervening political process or court and, in public choice economics, there is \softline
no parallel examination of the substituted markets or courts. As I have shown}{\plain \fs24  elswhere, single \softline
institutional analysis is bad analysis.  But it is especially bad }{\plain \fs24 \i economic}{\plain \fs24  analysis. \par
}{\plain \fs24 \tab By ignoring a comparable consideration of alternatives, single institutional analysis \softline
breaches several canons of economics. Most basically, it violates rational choice. There is \softline
considerable debate both within economics and between economists and others about the degree \softline
of rationality and knowledge assumed by economics.  But, although the meaning of {\u8220\'93}rational{\u8221\'94} \softline
may be in doubt, the meaning of {\u8220\'93}choice{\u8221\'94} is not.  It is unassailable that choice entails \softline
alternatives.  \par
}{\plain \fs24 \tab The failure to compare alternatives also violates the logic of such economic constructs as \softline
opportunity costs and the role of complements and substitutes.  In economics, the cost of \softline
anything is defined in terms of its alternative uses.  These opportunity costs define the supply \softline
curve.  Similarly, the role of alternatives, in the form of variation in the prices of complements \softline
and substitutes, is essential in defining the demand curve.  It is simply non-economic to study any \softline
choice, let alone one as important as institutional choice, by focusing on one alternative. \par
}{\plain \fs24 \tab Yet single institutional analysis prevails. This prevalence reflects the economics of \softline
economics. Single institutional analysis is easier and cheaper than comparative institutional \softline
analysis. Since, others things being equal, cheaper is better, perhaps single institutional analysis \softline
is sensible after all. At the very least, market failure is a necessary, if not sufficient, condition for \softline
institutional choices such as government intervention. Moreover, the degree or extent of market \softline
failure would seem critical in assessing the case for intervention and, therefore, single \softline
institutional analysis would seem at least a good first approximation of comparative institutional \softline
analysis. \par
}{\plain \fs24 \tab On closer inspection, however, these rationales for single institutional analysis break \softline
down.  Market failure is a trivial necessary condition with little analytic value.  It is always \softline
fulfilled and, in the complex world in which we live, always significantly fulfilled.  As numbers \softline
and complexity increase, parades of horribles{\u8211\'96} lists of serious institutional malfunctions in the \softline
market, political and adjudicative processes{\u8211\'96} become increasingly long and dramatic.  But they \softline
also become increasingly less relevant as alternatives also grow worse.\par
}{\plain \fs24 \tab This brings us to the second and more important problem with the case for single \softline
institutional analysis. A single institutional approach to the analysis of institutional choice cannot \softline
be a good first approximation of comparative institutional analysis because institutions tend to \softline
move together. In particular, all institutions deteriorate as numbers and complexity increase.  And \softline
any good economist should know this.\par
}{\plain \fs24 \tab Conventional economic analysis is filled with instances in which changes in numbers and \softline
complexity make institutions move similarly.{}{\plain \fs24 \super 2{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 2}{}{\plain \fs24 By {\u8220\'93}numbers,{\u8221\'94}I mean the number of individuals impacted by a given transaction. }}}
}{\plain \fs24   I}{\plain \fs24 ncreasing numbers and complexity increase \softline
transaction costs, information costs and the possibility of collective action problems, producing \softline
failed transactions and externalities in the market, overrepresented concentrated interests and rent \softline
seeking in the political process, and underrepresented dispersed interests in the adjudicative \softline
process.  At base, problems of collective action and transaction costs{\u8211\'96} or, more broadly, \softline
participation costs {\u8211\'96} haunt all institutions and collective action and participation costs are \softline
haunted by numbers and complexity. \par
}{\plain \fs24 \tab That institutions tend to move in a similar direction does not mean that they move \softline
identically.  As numbers and complexity increase and, therefore, transaction costs and other \softline
participation costs increase, institutions vary in the rate if not the direction of their movement.  \softline
Basic features of these decision-making processes either by design or happenstance interact with \softline
the dynamics of participation to produce differing results. \par
}{\plain \fs24 \tab It is here that comparative advantages and institutional choices are revealed.  In works \softline
like }{\plain \fs24 \i Law{\u8217\'92}s Limits}{\plain \fs24  and }{\plain \fs24 \i Imperfect Alternatives}{\plain \fs24 , I have offered my analytical approach to this task \softline
and have used it to make the case for various institutional choices.  But here the point is simpler: \softline
}{\plain \fs24 \i That institutions move together makes single institutional analysis irrelevant and comparative \softline
institutional analysis essential. }{\plain \fs24 \par
}{\plain \fs24 \tab Institutional choice{\u8211\'96} the choice between alternative decision-making processes{\u8211\'96}  is \softline
already central to economic analysis of all sorts.  Having opened the door to institutional choice, \softline
economists cannot legitimately employ single institutional analysis.  To be true to economics as \softline
well as to be relevant, the economic analysis of law and public policy must be comparative \softline
institutional.\par
}{\plain \fs24 \tab \par
}{\plain \fs24 II.  The Core of Law\par
}{\plain \fs24 \par
}{\plain \fs24 \tab Having established that any economic analysis of law must be comparative institutional \softline
analysis, I turn to legal analysis in general.  The last section was not meant to deride economic \softline
analysis of law relative to other analyses.  I am a purveyor of economics and in subsequent \softline
sections I will be arguing for an economics-based approach to comparative institutional analysis. \softline
My point goes beyond the economic analysis of law.  Institutional choice is at the core of law \softline
and, therefore, comparative institutional analysis must be at the core of legal analysis of every \softline
sort.  \par
}{\plain \fs24 \tab There is a primary disjuncture between the reality of law and its study and teaching. \softline
Although institutional choice is central to law and public policy, the analysis of institutional \softline
choice is not central to legal analysis and legal education.  It is quite possible and indeed \softline
common for judges and other legal analysts to avoid comparative institutional analysis or even \softline
the conscious realization of institutional choice.  Wrong, but sadly common.  \par
}{\plain \fs24 \tab But it is not possible for judges and other public decision-makers to avoid }{\plain \fs24 \i making}{\plain \fs24  \softline
institutional choices.  Every important decision  involves one or more serious and difficult \softline
institutional choice.  Judges and legislators make essential and difficult institutional choices at 
every turn{\u8211\'96} whether they recognize them or not.  Institutional choice is central. The issue is \softline
whether judges and other public decision-makers will make and scholars will propose \softline
institutional choices without reflection and analysis. \par
}{\plain \fs24 \tab It seems obvious that law is about institutional choice.  Look at law as discussed in legal \softline
scholarship, taught in law schools and decided by judges.{}{\plain \fs24 \super 3{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 3}{}{\plain \fs24 I am speaking of the US scholarship.  Given the universal nature of institutional choice, I \softline
doubt that the reality{\u8211\'96} as opposed to the rhetoric{\u8211\'96} is different elsewhere.  But I will leave other \softline
traditions to another day or another analyst.}}}
}{\plain \fs24   A single issue predominates{\u8211\'96} the role \softline
of courts: judicial review, judicial intervention, judicial restraint.  Courts, their role, and their \softline
structure is the story of law{\u8211\'96} at least in the US. \par
}{\plain \fs24 \tab But how is the judicial role dealt with by most legal analysts?  The most popular \softline
technique is to identify some goal{\u8211\'96} some definition of the good{\u8211\'96} and say that courts should \softline
pursue this goal.  But why courts as opposed to some other decision-maker?   The difference \softline
between regulation and non- regulation or between right and non- right does not follow from the \softline
importance of a goal.  It follows only when ones determines who should define and implement \softline
the goal making the issue of who decides primary.  \par
}{\plain \fs24 \tab There is a stark, but essential truth about the institutional character of the adjudicative \softline
process here.  Given the size or scale of the adjudicative process relative to either the market or \softline
the political process, there is no goal which the adjudicative process can, will or probably ought \softline
to dominate.  What the courts should and do decide cannot be determined by focusing solely or \softline
even dominantly on goals.\par
}{\plain \fs24 \tab Another popular technique for defining the judicial role is single institutionalism.  Courts \softline
should clean up the mess that institution X is making.  For those on the left, institution X is often \softline
the market.  For those on the right, it is often the political process.  But for the reasons I set out in \softline
the last section, nothing follows from the identification of the horrors of another institution.  \par
}{\plain \fs24 \tab My sophisticated and somewhat cynical friends tell me that comparative institutional \softline
analysis will not prevail because legal scholarship, legal education and law are not about \softline
analysis; they are about ideology or political viewpoint.  People adhere to or reject an analysis \softline
based not upon its quality but upon its perceived ideological position. Here analysis{\u8211\'96} \softline
comparative institutional analysis or any other variety{\u8211\'96} is only rhetorical window dressing.  \par
}{\plain \fs24 \tab Common ideological categories are pretty primitive.  Law and economics is on the right \softline
and critical legal studies and probably law and society are on the left.  This categorization is \softline
rough, but it roughly captures the prevailing view.  Faculties are split along these lines and \softline
students hear different messages from those in each category. \par
}{\plain \fs24 \tab Through the lens of institutional choice and comparative institutional analysis, however, \softline
ideology{\u8211\'96} at least in its common forms{\u8211\'96} is a sterile means of understanding law, constructing \softline
legal analysis, defining legal education or determining a program for reform. Common ideologies \softline
are either an attachment to a goal, such as equality, liberty or resource allocation efficiency or the \softline
position that a given goal is attached to a given institution or, at least, that a given goal means the \softline
rejection of a given institution.  But goals do not dictate programs.  As I have shown repeatedly \softline
in both }{\plain \fs24 \i Law{\u8217\'92}s Limits}{\plain \fs24  and }{\plain \fs24 \i Imperfect Alternatives}{\plain \fs24 , the same goal is easily associated with quite \softline
opposite results.  Translating a goal into law and public policy requires institutional choice.  And 
that choice is seldom self-evident.\par
}{\plain \fs24 \tab The power of institutional choice even in ideological thinking is reflected in a distorted \softline
way in the tendency to hard-wire goals to institutions.  Legal analysts holding strong ideological \softline
views often define them in institutional terms. Thus, for example, Richard Epstein{\u8217\'92}s ideology is \softline
defined by a deep aversion to the regulatory state and Margaret Radin{\u8217\'92}s ideology is defined by a \softline
deep aversion to the market. In the view of Epstein and Radin, their philosophers, Locke and \softline
Hegel, are associated with their institutional choices.\par
}\sect \sectd \sbknone\margrsxn1350\pgndec\headery1440\footery1440 
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\pard \fs24
{\plain \fs24 \tab But hard-wiring goals and institutions is untenable. }{\plain \fs28 \fs28  }{\plain \fs24 Institutional choice, at least \softline
institutional choice in the real world of high numbers and complexity, is filled with paradoxes and \softline
counterintuitive combinations of goals and institutions.  In }{\plain \fs24 \i Law{\u8217\'92}s Limits}{\plain \fs24 , I showed that Epstein{\u8217\'92}s \softline
goals are easily associated with unconstrained decision-making by the political process and that \softline
Radin{\u8217\'92}s are consistent with a heavy reliance on the atomistic market.  Perhaps Epstein{\u8217\'92}s or \softline
Radin{\u8217\'92}s program is correct.  But if it is, it does not follow from either their goals or their belief \softline
that a given institution{\u8211\'96} the political process for Epstein and the market for Radin{\u8211\'96} is highly \softline
suspect.  Similar problems infect the positions of  Dworkin, Hayek and many others.{}{\plain \fs24 \super 4{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 4}{}{\plain \fs24  My examination of Epstein, Radin, Dworkin and Hayek can be found in Law{\u8217\'92}s Limits, \softline
chapter 8.}}}
}{\plain \fs24  \par
}{\plain \fs24 \tab Political or ideological position without comparative institutional analysis is largely \softline
random.  There is no there there. Without serious comparative institutional analysis, there is no \softline
reason to believe that goals and programs are at all related.  Ideology, either as a focus on goals or \softline
a simple association of a goal with an institution, is a deficient way to understand or prescribe law \softline
and public policy, do legal analysis or structure legal education.\par
}{\plain \fs24 \par
}{\plain \fs24 III. Comparative Institutional Analysis and Participation \par
}{\plain \fs24 \par
}{\plain \fs24 \tab Having shown that analysis of law and public policy{\u8211\'96} both economic and non- economic{\u8211\'96} \softline
must focus on institutional choice and employ comparative institutional analysis, the question is \softline
how to approach this essential but difficult task  My approach is basically economic.  But it has a \softline
feature that links economics to the instincts of law and of non-economic analyses of law. \par
}{\plain \fs24 \tab I see institutional behavior as a function of participation, participation as a function of the \softline
costs and benefits of participation and the costs and benefits of participation as a function of \softline
variables like numbers and complexity and the distribution of stakes.  Participation and \softline
representation lie at the core of many approaches to law from civic republicanism to law and \softline
economics. \par
}{\plain \fs24 \tab I see decision-making  processes as complex, sizeable and dominantly bottom-up rather \softline
than top-down.  The degree to which an institution is characterized by bottom-up versus top-down \softline
decision-making can be an important design feature.  But even institutions designed to be top-down are likely to be dominated by bottom-up, atomistic forces. Here the instincts of economics \softline
are valuable.  Done correctly, economic analysis focuses on bottom-up, atomistic forces, casts the \softline
impact of its variables as continuous and views most major impacts as produced by endogenous \softline
variables rather than by exogenous parameters. \par
}{\plain \fs24 \tab But I differ with most law and economics analysts in two ways.  First, I adopt a 
comparative institutional approach to the analysis of institutional choice{\u8211\'96} and, as I have shown, so \softline
must they.  Second, I am less convinced than they are that law and economics must be wedded to \softline
the goal of resource allocation efficiency.  That does not mean that I share the aversion to resource \softline
allocation efficiency felt by critics of law and economics.  Correctly understood, resource \softline
allocation efficiency is a valuable goal both as a matter of description and prescription.  My desire \softline
to cut the tether to this goal comes from analytical rather than programmatic or ideological \softline
grounds.  The power of economic analysis is not limited to this goal, especially once one \softline
recognizes the central place of institutional choice and comparative institutional analysis. \par
}{\plain \fs24 \tab In this section, I will explore several of these themes including participation as the link \softline
between economic analysis and legal analysis and the varying roles of bottom-up analysis across \softline
institutions.  I will turn to the difficult questions of the correct view of the adjudicative process \softline
and the interaction between goal choice and institutional choice in section IV.  \par
}{\plain \fs24 \par
}{\plain \fs24 A. Economics and Participation \par
}{\plain \fs24 \par
}{\plain \fs24 \tab The role of participation is not explicit in economics.  But it lies not far below the surface. \softline
It is embedded in basic concepts such as transaction costs, externalities and resource allocation \softline
efficiency.{}{\plain \fs24 \super 5{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 5}{}{\plain \fs24  A central focus on participation is inherent in foundational works of economics such as \softline
Coase (1960) and Olson (1965).}}}
}{\plain \fs24   Transaction costs are the costs of market participation.  Externalities are failures of \softline
market participation, arising when missing transactions induce allocative decisions that do not \softline
reflect all costs and benefits.  Resource allocation efficiency is defined by transaction costs and \softline
violated by externalities and, therefore, is a participation-based notion.  \par
}{\plain \fs24 \tab  Similarly, economic analyses of non-market institutions such as the political and \softline
adjudicative processes depend on the dynamics of participation.  The economic analysis of \softline
regulation and more broadly the interest group theory of politics emphasize distorted participation \softline
in the form of the overrepresentation of concentrated interests.  Distortions in participation and the \softline
factors which cause them are fundamental to these analyses.  Participation is also central in the \softline
adjudicative process, governing who litigates and the extent of that litigation.  The mix of issues \softline
reaching the adjudicative process determines its effectiveness as an alternative to the market or the \softline
political process.  As a general matter, the same collective action problems and issues of the \softline
economics of information used to understand participation in the market are important in \softline
understanding participation in the political process and the courts.  In all institutional settings, the \softline
dynamics of participation determine who is active and who is dormant and, therefore, whose \softline
interests are represented.\par
}{\plain \fs24 \tab In turn, numbers and complexity determine institutional participation.  In the market, \softline
increasing numbers and complexity increase transaction costs.  In the political process, \softline
concentrated high-stakes interests prevail over dispersed small-stakes interests where numbers and \softline
complexity are high.  Simple settings are easily monitored by even low-stakes players and low \softline
stakes majorities are active.  As numbers and complexity increase, the costs of information and \softline
organization increase and it becomes increasingly likely that low-stakes majorities will be \softline
dormant.  The economic theory of regulation depends on asymmetric information and, in turn, 
high numbers and complexity.  Similarly, litigation is absent or skewed when high numbers and \softline
complexity cause inaction or asymmetric action and, therefore, inaction or error by juries and \softline
judges.  \par
}{\plain \fs24 \tab All of this is inherent in existing economic analysis.  Explicating the role of participation \softline
will produce a more powerful economics that is better in touch with its basic logic.  It will allow \softline
the integration of the notions of market malfunction from welfare economics and political \softline
malfunction from public choice economics into an analysis where these failures can be compared.\par
}{\plain \fs24 \tab Moreover, understanding the dynamics of participation and the distortions they create is \softline
central not just to understanding the workings of the institutions of resource allocation efficiency, \softline
but also to understanding the workings of the institutions of all social goals.  The problems in \softline
participation captured in notions like market failure and political malfunction are as relevant to \softline
the question of which, among highly imperfect institutional alternatives, is best to produce fairer \softline
income distribution or better protection of individual liberty as it is to which will produce greater \softline
resource allocation efficiency.  \par
}{\plain \fs24 \tab Participation is even central to the definition of many goals.  Seemingly diverse views or \softline
philosophies accentuate the importance of participation and the detriments of inadequate, \softline
incomplete or unequal participation.  Civic republicans stress greater and more equal participation \softline
as the core of the goals they seek.  The amount, pattern and quality of participation seems inherent \softline
in egalitarian and  communitarian notions. As we have just seen, resource allocation efficiency, a \softline
seemingly quite different societal goal, is also defined in terms of  participation.\par
}{\plain \fs24 \tab Participation provides a robust and largely unexplored connection between economics and \softline
other approaches to law and public policy.  It draws economics closer to seemingly different \softline
views of the world on two levels: the use of the dynamics of participation to understand the \softline
institutional choices inherent in the achievement of all goals and the use of participation to \softline
explore the basic definitions of goals.  Economic analysis and legal analysis can be developed in a \softline
parallel fashion by emphasizing institutions as processes and the role of participation in \softline
understanding these processes. \par
}{\plain \fs24 \par
}{\plain \fs24 B. The Economics of Participation{\u8211\'96} Transaction Costs, Atomism, }{\plain \fs24 Continuousness, Endogeneity \softline
and the Economics of Information }{\plain \fs24 \par
}{\plain \fs24 \par
}{\plain \fs24 \tab An economics focused on participation has many lessons for those interested in \softline
institutional choice and the analysis of law and public policy.  Ronald Coase cast the character of \softline
market action, market failure and market organization in terms of transaction costs.  Transaction \softline
costs are the cost of participation in the market.  From this perspective, it is easy to see parallels \softline
between the market and non- market institutions like the political process and the adjudicative \softline
process.  Participation create analogous impacts in all institutions.  Interests go unrepresented or \softline
are inadequately or even perversely represented in the political or adjudicative processes because \softline
of the high costs of representation (participation) in these processes.  Unrepresented interests are \softline
external to decision-making in the political process and the adjudicative process just as they are in \softline
the market.  Informational asymmetries produce a misrepresentation of interests and values in \softline
non-market institutions just as they do in the market. \par
}{\plain \fs24 \tab Variation in the benefits of participation also impact all institutions similarly. The impact \softline
of variation in the benefits of participation shows up dramatically when significant social impacts 
are highly dispersed leading to small per capita stakes.  Small per capita benefits increase the \softline
chance of failure of representation of these impacts in all institutions.   Variation in the \softline
distribution of benefits{\u8211\'96} in particular,where there are dispersed benefits on one side and \softline
concentrated interests on the other{\u8211\'96} is inherent, if not explicated, in most conceptions of the \softline
political process and adjudicative process employed in analyzing the political process and the \softline
adjudicative process{\u8211\'96} including mine. In terms of the economics literature, the analysis of \softline
participation joins and extrapolates the work of Coase (transaction costs economics) and the work \softline
of Mancur Olson (collective action).{}{\plain \fs24 \super 6{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 6}{}{\plain \fs24 }{\plain \fs24 Mancur }{\plain \fs24 \f3 Olson, }{\plain \fs24 \i\f3 The Logic of Collective Action }{\plain \fs24 \f3 (1965).}}}
}{\plain \fs24   \par
}{\plain \fs24 \tab Participation translates through aggregate, bottom-up, atomistic decision-making \softline
processes.  From the time of Adam Smith, understanding the market has been a matter of \softline
understanding the interaction of many parties each seeking their own goals and operating through \softline
forces largely beyond their control to produce aggregate outcomes.  If things work well, these \softline
aggregate outcomes are attractive.  But whatever the attractiveness, the market has been seen and \softline
is correctly seen as a large scale, atomistic and bottom-up process.  Economists see the common \softline
{\u8220\'93}officials{\u8221\'94} of the market{\u8211\'96} moguls, corporate captains, CEOs etc.{\u8211\'96} as secondary.  At least as a first \softline
approximation, this is a powerful way to understand the market. It is a tribute to the power of this \softline
conception that no legal analyst (economic or not) ventures into an analysis of market- related law \softline
without a distinct awareness of the market as a bottom-up, atomistic process. \par
}{\plain \fs24 \tab Various analyses of the political process have adopted a bottom-up approach.  Theories \softline
like the economic analysis of regulation and more broadly the interest group theory of politics do \softline
not focus on legislators and administrators. They focus on the action of interest groups in \softline
lobbying, contributing, propagandizing and bribing.  I have taken these bottom-up approaches to \softline
the political process and expanded them into a continuum of political-process behavior ranging \softline
from over-representation of the few{\u8211\'96} the minoritarian bias that characterizes the views of the \softline
interest group theory of politics{\u8211\'96} to the over-representation of the many{\u8211\'96} the majoritarian bias that \softline
characterizes notions like the tyranny of the majority and animates the concerns of the equal \softline
protection clause.  This two-force model is driven by the same participation variables, such as the \softline
distribution of stakes and the cost of information, that underlie the narrower bottom-up models. \par
}{\plain \fs24 \tab A basic instinct of economics is at play in these bottom-up conceptions: atomistic forces \softline
overwhelm other forces.  All producers would like to charge exorbitant prices.  They cannot \softline
because the forces of competition will not let them.  Similar atomistic forces operate in the \softline
political and adjudicative processes.  These atomistic, reactive forces find the gaps in official \softline
action and exploit them.  These forces produce unforseen or unintended results.  \par
}{\plain \fs24 \tab These atomistic forces are powerful, for good or evil.  Institutional behavior is a function \softline
of these atomistic forces. Whether it is solely a function of these forces and the extent to which \softline
bottom-up versus top-down influences distinguish between institutions is a topic I will address in \softline
section IV.  But there is no avoiding the role of larger systemic, primarily bottom-up, forces in \softline
institutional behavior.\par
}{\plain \fs24 \tab Economics sees behavior as continuous with variation linked to a small number of \softline
variables{\u8211\'96} mainly costs and benefits.  These attributes pull together isolated observations and \softline
generate continua and interactive relationships as well as explaining variation in these 
relationships and, therefore, in outcomes.  Many things can be explained by the same set of \softline
variables (costs and benefits in one form or another) even as one moves from one human reaction \softline
to another. \par
}{\plain \fs24 \tab Economics at its best also generates results from within the analytical framework. \softline
Combined with the finite set of variables, this instinct for endogeniety provides a way to \softline
understand the dynamics of events that would otherwise be seen as discrete and fixed. For \softline
example, deterrence can be analyzed in terms of the simple observation (or belief) that people \softline
react to penalties or that people do not.  It can, however, also be carried on by asking whether \softline
there are variations in factors like the distribution of stakes (here the distribution of potential \softline
penalties) and the costs of receiving the deterrent signal.  In otherwords, a continuum of results \softline
can be generated by the costs and benefits of receiving the deterrent signal{\u8211\'96} a variant of the \softline
analysis of participation.{}{\plain \fs24 \super 7{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 7}{}{\plain \fs24  I have done this with the torts system. See Imperfect Alternatives, chapter 6.}}}
}{\plain \fs24   \par
}{\plain \fs24 \tab By emphasizing the central role of participation and, in turn, the costs and benefits of \softline
participation, a participation-based approach to institutional behavior can expand and deepen \softline
these economics tendencies.  Consider the economics of information.  Information, its cost of \softline
access and the incentives to acquire it are central in understanding institutional behavior.  \softline
Participation is heavily dependent on information.  But the causation is also reversed.  The \softline
acquisition of information is dependent on similar variables to those that determine participation \softline
in general{\u8211\'96} the costs of information and the distribution of stakes.  Consideration of the role of \softline
information is especially powerful where it treats information and its failings as an endogenous \softline
continuum rather than simply as an exogenous parameter (such as a simple observation of \softline
bounded rationality or consumer ignorance).  Who has information and who does not both \softline
determines and is determined by the dynamics of participation.\par
}{\plain \fs24 \par
}{\plain \fs24 IV.  Quandaries and Projections{\u8211\'96} A Closer Look\par
}{\plain \fs24 \par
}{\plain \fs24 \tab We can see both the function and the challenges of a participation-centered comparative \softline
institutional analysis in three contexts: the analysis of the institution that should be most familiar \softline
to legal analysts{\u8211\'96} the adjudicative process, the interaction between bottom-up and top-down \softline
forces and the interaction between institutional choice and goal choice. \par
}{\plain \fs24 \par
}{\plain \fs24 A. The Character of Courts \par
}{\plain \fs24 \par
}{\plain \fs24 \tab There are well-established bottom-up visions of the market. As we have seen, these can \softline
easily be translated into the costs and benefits of participation.  Similarly, there are prominent \softline
bottom-up, participation-based visions of the political process including the economics theory of \softline
regulation and more generally the interest group theory of politics.  The same set of participation \softline
variables, when integrated into the two-force model of politics, can generate a broader spectrum \softline
of political outcomes ranging from minoritarian bias to majoritarian bias.\par
}{\plain \fs24 \tab But the adjudicative process remains less explored.  It is one of the paradoxes of legal \softline
analysis that legal scholars have the least to say about the institutional character and behavior of 
the institution that is their central focus.  Commonly, courts are either assumed to be an easily \softline
available, frictionless response for any political malfunction or market failure or courts are \softline
summarily abandoned based on the view that they make mistakes, are not majoritarian or lack \softline
legitimacy. \par
}{\plain \fs24 \tab There seem to be two prominent systemic differences between the adjudicative process \softline
and the market and political processes: the adjudicative process is less subject to bottom-up forces \softline
and the adjudicative process is smaller and less able to grow.  The first difference receives the \softline
greatest attention.  It is reflected in the often-mentioned independence of the judiciary and the \softline
associated judge-centered nature of legal scholarship.  Although it is roughly accurate as a relative \softline
statement, the role of bottom-up features remains important and perhaps even dominant even in \softline
the adjudicative process.  The second difference is reflected in occasional concerns about \softline
litigation explosions and managing of the docket of the US Supreme Court.  But the full \softline
implications of the growing gap between the size of the adjudicative process and the institutions it \softline
often reviews are both significant and unappreciated.  When these two features are explored, the \softline
results, I fear, will discomfort those who hold conventional views of the behavior and role of \softline
courts. \par
}{\plain \fs24 \tab }{\plain \fs24 The adjudicative process is structured to insulate judges and juries }{\plain \fs24 from the atomistic \softline
forces that operate so powerfully in the political process and the market. }{\plain \fs24 Various rules, such as the \softline
sequestering of jurors, the random selection of the jury pool and the restriction of ex parte \softline
meetings with judges, seek to reduce or eliminate direct and informal access to the judges and \softline
juries and, in particular, to their self-interest.  }{\plain \fs24 As is true so often with institutional features, there \softline
are trade-offs for the benefits of judicial and jury independence and a more controlled decision-making process. }{\plain \fs24 It is a trade-off between reducing bias on the one hand and reducing information \softline
and expertise on the other.  \par
}{\plain \fs24 \tab This trade-off shows up in the choice between the adjudicative process (judges and juries) \softline
and administrative agencies. }{\plain \fs24 There is a sizable literature raising doubts about the competence of \softline
judges and juries as decision-makers.  Jurors are randomly chosen from the general population, \softline
and individual jurors are often chosen in the voir dire explicitly to avoid expertise in the specific \softline
technical issue of the case. These inexpert juries are often then asked to absorb the technical and \softline
complex testimony of conflicting expert witnesses and to decide difficult substantive issues. \softline
Similarly, trial and appellate judges formally trained only as lawyers and coming from a wide \softline
variety of practice backgrounds are regularly asked to judge the facts and fashion the remedies for \softline
litigation about complex and sensitive issues of public policy. These judges, both trial and \softline
appellate, usually are not asked to specialize in one type of controversy and, therefore, do not \softline
obtain the expertise that frequent exposure would bring.\par
}{\plain \fs24 \tab These inexpert juries and judges are often contrasted with the technically more expert \softline
bureaucrats of administrative agencies who, like juries and judges, serve as fact-finders and \softline
implementers of the law.  From the perspective of technical expertise, these agencies with their \softline
narrower scope and more specialized staffing are superior to generalist trial court judges and \softline
randomly chosen juries.  They also have the distinct advantage of broader-based, informal \softline
interaction with the parties and interest groups impacted by the policies in question.\par
}{\plain \fs24 \tab But the very characteristics that make juries less expert make them less subject to \softline
systematic influence and bias in many settings.  Where the conditions for minoritarian bias are \softline
present, bottom-up forces will be skewed in favor of concentrated interests.  Here the structure of 
the adjudicative process can provide insulation from these skewed effects.  The transient jury is \softline
not a good target for one-sided efforts at influence associated with minoritarian bias. The \softline
constantly changing jury is difficult to influence through continuous long-term contact and \softline
propaganda. The parties are forced to sway the jury by advocacy in the more formally confined \softline
adversarial process, where opposing parties have more equal opportunities to present their \softline
viewpoints.  In addition, the random jury selection process makes any attempt to staff the jury \softline
with cronies difficult if not impossible.  Although inducement{\u8211\'96} most likely in the form of bribes{\u8211\'96} \softline
is not unknown, it is difficult both because juries are, to some degree, separated from the general \softline
public during deliberation and because the costs of bribery, including possible criminal sanctions, \softline
are seldom justified when the bribery will cover only one case rather than a set of cases.{}{\plain \fs24 \super 8{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 8}{}{\plain \fs24  As stakes rise, however, attempts to influence even temporarily sitting juries will \softline
increase.  The dynamics of participation inherent here will be discussed later in more detail in \softline
connection with the increasing role of bottom-up forces in the adjudicative process.}}}
}{\plain \fs24   \softline
Administrative agencies, in contrast, are fixed targets hearing many cases, and are easier and more \softline
worthwhile to influence via education, bribery, or restaffing.\par
}{\plain \fs24 \tab This tradeoff between the amount and skewedness of information is pervasive and cannot \softline
be counted just in terms of technical expertise.  There is a less noticed but more troubling and \softline
important tradeoff between information and independence in the adjudicative process: Insulation \softline
separates judges from information about the desires and needs of the public.  In politics, public \softline
officials must understand the wants and needs of the general public or at least the influential parts \softline
of the general public to remain in office or obtain higher office. These incentives link political \softline
officials to the populace and provide them with robust if biased access to public desires and needs.  \softline
Information on desires and needs is needed to make public policy; it provides the {\u8220\'93}weights{\u8221\'94} to be \softline
given the various opposing public policy positions or options. \par
}{\plain \fs24 \tab By contrast, judges and juries stand aloof.  They depend on others to convince them by \softline
controlled sources of evidence and reason, but they do not depend on these others for their jobs \softline
and livelihood. The adversarial process attempts to equalize the representation of positions and \softline
the delivery of information by assuring that both positions are at least formally represented and \softline
that information reaching judge and jury is more likely to be confined to that brought them by \softline
opposing advocates.\par
}{\plain \fs24 \tab The tradeoff is between a political process that integrates more information but with a \softline
more significant risk of bias and corruption and an adjudicative process that suppresses \softline
information but decreases distortions present in the political process. The adjudicative process \softline
hears and considers less, but can be more evenhanded in what it hears and considers. The price of \softline
this evenhandedness is most dramatically revealed in that range of social issues where the \softline
adjudicative process hears nothing{\u8211\'96} a significant disability traceable to the high cost of \softline
participation.  This tradeoff between information and evenhandedness is among the most \softline
challenging issues in institutional choice.\par
}{\plain \fs24 \tab The formal barriers set up to isolate judges along with the central place given judges and, \softline
in particular, appellate judges inadvertently creates the most prominent systemic feature of the \softline
adjudicative process: its limited size.  The appellate courts are difficult to expand and this \softline
bottleneck constrains the growth of the adjudicative process in general.  Each judicial system 
within the United States has at its apex a supreme court. These courts are staffed by a small set of \softline
judges{\u8211\'96} nine in the case of the Supreme Court of the United States. The most obvious reform, \softline
increasing the number of judges on these high courts, does not easily or even necessarily increase \softline
the output of this court.  Although an increase in judges would decrease the per judge load of \softline
opinion writing, increasing the numbers makes collective appellate decisions more difficult and \softline
time consuming.{}{\plain \fs24 \super 9{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 9}{}{\plain \fs24 See Richard Posner, }{\plain \fs24 \i The}{\plain \fs24  }{\plain \fs24 \i Federal Courts,}{\plain \fs24 14.}}}
}{\plain \fs24   The bottleneck of the appellate courts makes it impossible for the adjudicative \softline
process to be expanded as easily as the market and the political process, thereby producing the \softline
prospect of increasing demand for adjudicative services without a parallel increase in supply.  \par
}{\plain \fs24 \tab We can see the influence of these systemic pressures and the implications of bottom-up \softline
and top-down elements in the adjudicative process in the context of constitutional law where they \softline
cast doubt on the relevance of conventional modes of constitutional analysis.  }{\plain \fs24 Most legal scholars \softline
tell the story of US constitutional law, constitutional rights, and judicial review in terms of a \softline
search for fundamental values and, therefore, fundamental rights.  Scholars and judges describe \softline
these rights in broad and resounding terms.  Rights seem to represent what is most important in \softline
society. }{\plain \fs24 \par
}{\plain \fs24 \tab }{\plain \fs24 In truth, however, rights have a limited correlation with importance. Critics of the \softline
fundamental rights tradition have pointed to the significant gap between the claims for and the \softline
reality of fundamental rights.{}{\plain \fs24 \super 10{\footnote \pard \fs24
{\tab }{\plain \fs24 \super 10}{}{\plain \fs24 }{\plain \fs24 The mysteries of the notion of fundamental rights and values in US constitutional \softline
jurisprudence are well captured by John Ely: {\u8220\'93}IT]he list of values the Court and the \softline
commentators have tended to enshrine as fundamental is a list with which readers of this book \softline
will have little trouble identifying: expression, association, education, academic freedom, the \softline
privacy of the home, personal autonomy, even the right not to be locked in a stereotypically \softline
female sex role and supported by one{\u8217\'92}s husband. But watch most fundamental-rights theorists \softline
start edging toward the door when someone mentions jobs, food, or housing: those are important, \softline
sure, but they aren{\u8217\'92}t }{\plain \fs24 \i fundamental.{\u8221\'94} }{\plain \fs24 Ely (1980), 59 (footnote omitted).\par
}\pard \fs24\sa240 
}}}
{\plain \fs24   This has sent constitutional scholars scurrying to find some basis \softline
for fundamentalness in natural law, moral phi\-losophy, tradition, or consensus}{\plain \fs24 .  From an \softline
institutional choice perspective, however, it is not difficult to understand both the role and \softline
limitations of fundamentalness in constitutional jurisprudence.  Form follows function and law \softline
follows institutional choice.   \par
}{\plain \fs24 \tab In US constitutional jurisprudence, a judicial finding of {\u8220\'93}fundamental rights{\u8221\'94} allocates \softline
decision-making responsibility.  A finding that legislation affects a fundamental right removes \softline
that issue from the legislative process and allocates responsibility for its determination to the \softline
judiciary.  If housing, jobs, food, commerce, taxation, national defense, and foreign affairs were \softline
declared {\u8220\'93}fundamental,{\u8221\'94} the judiciary would have to take a serious hand in their effectuation.  At \softline
least in the US, that is not the case nor could it be.  \par
}{\plain \fs24 \tab These subjects are not excluded from the list of {\u8220\'93}fundamental rights{\u8221\'94} because they are \softline
socially unimportant.  If anything, they are excluded because they are too important.  More \softline
exactly, they are excluded because the political process handles them better (less worse)than the 
adjudicative process.  Although these issues are often handled badly by the political process, their \softline
scale, difficulty, and the basic need to tap the feelings and desires of the populace generally make \softline
even the highly imperfect political process superior to the adjudicative process.  The severity of \softline
political malfunction sometimes warrants the courts deciding sensitive issues of considerable \softline
import, but they simply cannot dominate important societal decision-making. \par
}{\plain \fs24 \tab Thus, although it appears that the term {\u8220\'93}fundamental rights{\u8221\'94} defines institutional choice in \softline
the form of increased judicial review, in reality, the causation is reversed.  Institutional choice \softline
defines {\u8220\'93}fundamental rights.{\u8221\'94}  Fundamental rights arise when it is sensible to substitute judicial \softline
for legislative decision-making.  Constitutional scholars who look for the meaning of this \softline
constitutional construct in natural law and moral phi\-losophy are looking in the wrong place.  \softline
Certainly, we do not want to allocate scarce judicial resources to totally unimportant values.  But \softline
we cannot and do not allocate the determination of all or even most fundamental issues to the \softline
courts. Even that small subset of important issues where courts play a role remains subject to \softline
constant change.  The correlation between rights and importance is indeterminate and, because at \softline
high numbers and complexity institutional choices are often evenly matched, we get close calls \softline
and cycling of decisions.  Shallow and fluctuating rights result.\par
}{\plain \fs24 \tab }{\plain \fs24 The courts can only play a limited role in societal decision-making.  }{\plain \fs24 The limits of \softline
constitutional law stem from size and resources not legitimacy}{\plain \fs24 .  Budgetary constraints interact \softline
with the dynamics of participation to confine and define the judicial role.  }{\plain \fs24 Even if we ignore limits \softline
on judicial competence and distortions in the dynamics of litigation, we cannot envision the courts \softline
seriously considering even a small fraction of important societal issues.  It is even doubtful that \softline
they could dominate any issue of serious breadth for an extended period.  \par
}{\plain \fs24 \tab }{\plain \fs24 It is easy to see why many legal academics love courts.  They can talk to them.  Discourse \softline
and reason are easier to imagine in top-down decision-making.  To some degree, this is true.  But \softline
only a limited degree.  }{\plain \fs24 Systemic elements like scale and bottom-up elements such as the dynamics \softline
of litigation dominate even judicial decision-making. }{\plain \fs24 No one can really understand constitutional \softline
law without understanding these features.}{\plain \fs24 \par
}{\plain \fs24 \par
}{\plain \fs24 B. Further Iterations on the Impacts of Atomism and the Trade-off between Bottom-up and Top-down \par
}{\plain \fs24 \par
}{\plain \fs24 \tab When characterizing an institution as bottom-up or top-down, it is common to treat this \softline
determination as exogenous to the analysis.  The balance between top-down and bottom-up forces \softline
is fixed unless altered by structural changes external to the analysis. But, in fact, the degree to \softline
which the judiciary is top-down is itself dependent on the dynamics of participation.  The design \softline
of the adjudicative process affects the dynamics of participation by changing the costs and form of \softline
participation.  But it also works the other way: the dynamics of participation influence the degree \softline
to which the structures of the adjudicative process actually protect judges and juries from bottom-up forces. Bottom-up activity will increase as the importance of the judicial decisions increases.  \par
}{\plain \fs24 \tab Increasingly, interest groups have attempted to alter the output of the adjudicative process \softline
by operating directly on the adjudicative process itself.  The appointment and confirmation of \softline
federal judges and in particular the appointment of Supreme Court Justices have become \softline
increasingly impacted by the bottom-up efforts of various interest groups as issues important to \softline
these groups have been drawn into the adjudicative process.  Less noted but potentially as 
important is the increased presence of special interest activity in the election of state court \softline
judges.{}{\plain \fs24 \super 11{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 11}{}{\plain \fs24  See David Goldberger, The Power of Special Interest Groups in Judicial Election \softline
Campaigns, 72 U. Cinn L. Rev 1 (2003).}}}
}{\plain \fs24   The most organized of these campaigns have focused on electing judges sympathetic to \softline
reducing tort liability and damages.    \par
}{\plain \fs24 \tab Whatever ones position on tort reform or the politics of appointments to the US Supreme \softline
Court, this activity is interesting from the vantage of institutional behavior.  Increased interest \softline
group activity in the election judges can be seen as the product of the dynamics of participation{\u8211\'96} \softline
in particular, the growing impact of judicial decisions.{}{\plain \fs24 \super 12{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 12}{}{\plain \fs24  At first blush, a growing importance for judicial decisions may seem at tension with my \softline
assertion that the adjudicative process is growing smaller relative to the political process.  The \softline
adjudicative process, however, can and is growing in absolute terms (albeit much more slowly \softline
than the market and political process) and, therefore, turning out more decisions. }}}
}{\plain \fs24   Stakes have risen and now it is worth \softline
investing in judicial elections. Given the right configuration of the distribution of stakes and the \softline
costs of participation, atomistic forces{\u8211\'96} bottom-up activity{\u8211\'96} will alter judicial decision-making \softline
without operating through the dynamics of litigation and the adversarial process.  If the stakes are \softline
sufficient, atomistic forces will find a way around the barriers meant to insulate judges and juries.  \softline
The independence of the judiciary becomes a function of the forces of participation. \par
}{\plain \fs24 \tab There is a broader point here. Even if scholars and public officials will not do comparative \softline
institutional analysis, atomistic actors will.  They will choose among institutions based on the \softline
costs and benefits of participation in these institutional alternatives.  As the costs or returns of one \softline
institution change, others will be substituted.  High-stakes players will hunt for the differences or \softline
advantages of one set of institutions over another.  They will seek loopholes or gaps in the \softline
structures of an institution and exploit them.  What was unforseen is revealed.  If reformers do not \softline
understand how various actors will respond to the institutional choices inherent in their reforms, \softline
they will never see the holes in their well-intentioned plans.{}{\plain \fs24 \super 13{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 13}{}{\plain \fs24 Consider here the evolution of the implied warranty of habitability in a series of 1970 \softline
cases from the D.C. Circuit.  These cases were masterfully lawyered and constructed by some of \softline
the best judges of their generation{\u8211\'96} judges like Skelley Wright and David Bazelon.  Yet the \softline
realities of this important judicial work are impacted significantly by the atomistic workings of a \softline
market likely to pass the costs of the improvement in housing quality to the low income tenants \softline
that the doctrine was clearly meant to help.  These atomistic forces may well have turned a \softline
triumph into a loss.  See Komesar }{\plain \fs24 "Return to Slumville: A Critique of the Ackerman Analysis of \softline
Housing Code Enforcement and the Poor," 82 Yale L.J. 1175 (1973).}}}
}{\plain \fs24   People make institutional choices \softline
constantly and what law and public policy is and can be is a function of these choices and, \softline
therefore, these choices should not lie below the radar of judges, lawyers and legal scholars. \par
}{\plain \fs24 \tab Atomistic forces of a different variety may operate to control the extent of judicial activity \softline
even if judges are oblivious to the consideration. Here a bit of economics helps.  In response to \softline
critiques of rationality assumptions in economics, Gary }{\plain \fs24 Becker suggested a non-rational theory of \softline
the downward-sloping demand curve based on budget constraints.  As prices rise, an individual 
otherwise oblivious to price changes would simply have less to spend and would consume less \softline
thereby producing a negative relationship between price and quantity.  The same phenomenon \softline
could be used to understand a reducing judicial role relative to other institutions as these other \softline
institutions and, therefore, the demand for judicial review expands.  A judicial agenda produced \softline
without direct concern about the implications of strain on resources would simply run out of \softline
resources{\u8211\'96} it would be limited even if the rationing process is unintended. \par
}{\plain \fs24 \tab It is unlikely that judges are in fact oblivious of scale.  There are too many examples in \softline
either judicial language or in judicial reaction not to see conscious weighing of the implications of \softline
scale.  At the least, we can expect ex post rationing in which judges consciously respond to \softline
significant scale problems by cutting back either in those projects which are now showing their \softline
hidden costs or by rationing the remaining resources by some ranking of the net benefits of \softline
various judicial projects.  Scale matters{\u8211\'96} even with little or no judicial consciousness of the issue.  \par
}{\plain \fs24 \tab I have spent most of the latter part of this paper examining various aspects of the \softline
adjudicative process.  Systemic features like scale distinguish the adjudicative process from the \softline
market and political processes.  It is also distinguished by the greater role of top-down features \softline
although, as I have also shown, the same sort of bottom-up so familiar in analyses of markets and \softline
even of political processes operate in the adjudicative process. \par
}{\plain \fs24 \par
}{\plain \fs24 C. Goal Choice and Institutional Choice \par
}{\plain \fs24 \par
}{\plain \fs24 \tab I argued earlier that focusing on the dynamics of participation also expands the tools of \softline
economics beyond the world of resource allocation efficiency, that participation provides the link \softline
to the workings of the institutions of all social goals not just resource allocation efficiency and \softline
that participation seems central to the definition of wide range of goals. These assertions deserve a \softline
closer look.  \par
}{\plain \fs24 \tab That participation provides the link to the workings of the institutions of all social goals \softline
not just resource allocation efficiency }{\plain \fs24 seems self-evident.  No social goal can be realized without \softline
assigning implementation and even definition to one of the large scale decision-making \softline
institutions we address normally in connection with resource allocation efficiency.  These \softline
institutions are complex decision-making processes influenced by the dynamics of participation \softline
and these basic attributes do not change because an institutions is assigned a different goal.  Any \softline
societal goal will have to run the same gamut of institutional interactions and alternatives.  There \softline
will be no frictionless institution for any goal.  Nor will it be obvious which institution matches \softline
with which goal{\u8211\'96} at least not in the real world of high numbers and complexity.\par
}{\plain \fs24 \tab The task of integrating institutional choice and goal choice is made difficult by the \softline
inadequacy of the attempts to define these goals.}{\plain \fs24   Philosophers and the philosophically- inclined \softline
among analyst of law and public policy do not do a good job defining the goals upon which their \softline
analyses are supposedly based.  Of direct relevance, they have a tendency to link goal choice and \softline
institutional choice without much recognition of{\u8211\'96} or thought about{\u8211\'96} the link. The vague goals \softline
they propose frequently stem from implicit gut reactions to institutional failures which are seldom \softline
if ever explored.  Consider the work of two prominent philosophers, John Rawls and Ronald \softline
Dworkin.  \par
}{\plain \fs24 \tab Dworkin{\u8217\'92}s analysis relies heavily on his notion of reflective, carefully reasoning judges{\u8211\'96} in \softline
his terms, Herculean judges.  I have already alluded to the deep attraction of the seemingly more 
top-down adjudicative process to legal scholarship.  Here are people to converse with{\u8211\'96} people like \softline
us. Dworkin{\u8217\'92}s reflective judges are the ultimate pen pals.\par
}{\plain \fs24 \tab But, even if we assume that judges are the ultimate in reasoning, this imagery runs into the \softline
hard reality that the adjudicative process is not simply or even dominantly top-down.  Even the \softline
best of judges are deeply ignorant and increasingly so.  They are situated in the larger adjudicative \softline
process.  Their insights are determined by systemic feature like the dynamics of litigation, the \softline
twists and turns of the adversarial process and the limits on physical size.  When we consider the \softline
role of bottom-up atomistic forces in determining not only what judges see, but also who they are, \softline
defining values let alone law and public policy against the background of idealized discourse \softline
looks foolish.{}{\plain \fs24 \super 14{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 14}{}{\plain \fs24  See the discussion of Dworkin and the Rule of Law in Law{\u8217\'92}s Limits, chapter 8.}}}
}{\plain \fs24   \par
}{\plain \fs24 \tab John Rawls attempts from the outset of his work to cordon off considerations of the \softline
character of real-world decision-making institutions from his search for the correct set and \softline
hierarchy of values.  His is the ultimate attempt at goal choice divorced from institutional choice.  \softline
Unfortunately, it is impossible to understand his preferences or the preferences he supposes the \softline
correctly-situated would have without immediately running into institutional choice.  For \softline
example, his significant preference for liberty makes sense only when one supposes serious \softline
political malfunction.{}{\plain \fs24 \super 15{\footnote \pard \fs24\sa240 
{\tab }{\plain \fs24 \super 15}{}{\plain \fs24  See the discussion of Rawls in Imperfect Alternatives, chapter 2.}}}
}{\plain \fs24   Many of the most traditional notions of fundamental values{\u8211\'96} like liberty{\u8211\'96}  \softline
reflect deep if unarticulated (and unexamined) perceptions of institutional failure{\u8211\'96} often political \softline
malfunction.  These traditional perceptions are likely even truer today where the political process \softline
functions at increasingly high numbers and complexity.  But from a comparative institutional, \softline
rather than a single institutional, perspective increasing political malfunction tells us virtually \softline
nothing about the basic constitution.  Fundamental constitutional values and their manifestation as \softline
traditional rights presuppose more than a long tradition of distrust of government; they also \softline
suppose the attractiveness of substituting institutions like the adjudicative process.  As we have \softline
seen, the attractiveness and even the availability of judicial responses is at best limited.  Even \softline
assuming the severe political malfunction inherent in central concerns about liberty, the \softline
reasonable individual behind the veil of ignorance would as likely ignore liberty{\u8211\'96} thereby leaving \softline
it to the highly defective political process{\u8211\'96} as to single it out for special concern and judicial \softline
decision-making.  The same can be said for other values{\u8211\'96} like income distribution{\u8211\'96}  central in the \softline
Rawlsian world.  Even ranking values requires deep and sophisticated institutional choice.  For \softline
both Rawls and Dworkin, institutional choices and suppositions are already central.  It is \softline
institutional analysis that is missing.\par
}{\plain \fs24 \tab Also blocking the way to understanding goal choice is the tendency of legal scholars to \softline
invent a new goal for every issue.  Statements like the courts are pursuing{\u8211\'96} or should pursue{\u8211\'96}  the \softline
goals of corporate harmony or contractual integrity{\u8211\'96} or the always popular {\u8220\'93}freedom of contract{\u8221\'94}{\u8211\'96} \softline
fill the pages of law reviews and books.  Most of these considerations could be blended into \softline
standard goals like resource allocation efficiency, equity, fairness or equality (of various \softline
varieties).  Of course, these standard goals suffer from problems of definition.  If the enunciation \softline
of new goals was an effort to better specifying aspects of these broader goals, it might be worth 
the effort.  Unfortunately, the plethora of new goals are suggested without much examination or \softline
further definition.  They seem to be a rough description of the legal subject matter, the repetition \softline
of some vague judicial phrase or the author{\u8217\'92}s implicit conclusion without any awareness of \softline
whether that result was the product of a devotion to a particular value or the product of other \softline
considerations such as institutional choice.  In part, these fractured goals also reflect the \softline
simpleminded connection between goals and institutional choice inherent in common ideologies. \softline
For example, fighting pollution is a goal that can be integrated into resource allocation efficiency, \softline
but it seldom is because of the unreflective association between resource allocation efficiency and \softline
anti- regulation common to both law and economics scholars and their opponents. \par
}{\plain \fs24 \tab Fractured goals weaken the analysis of goal choice and of the choice of the decision-making institution to achieve them.  In turn, the allusiveness of goal choice obscures decisions \softline
that are dominated not by some vague goal but by an important and difficult institutional choice.  \softline
For example, as I showed in my various analyses of the }{\plain \fs24 \i Boomer}{\plain \fs24  case, variation in legal outcomes \softline
is less likely to be the product of variation in the desire to protect property and more a question of \softline
the means of protecting property and the institutional choices involved in achieving that goal.\par
}{\plain \fs24 \tab All of this forces me back to basic propositions.  Legal analysts need to think much harder \softline
about whether and when they are talking about institutional choice and when they are talking \softline
about goal choice.  My basic intuition is that goal choice is simply not as important as people \softline
believe.  Most people share an amorphous definition of the good that is part resource allocation \softline
efficiency (the size of the pie) and part equity (the division of the pie).  This is generally joined to \softline
notions of freedom and liberty that reflect implicit institutional choices based on long-held (and \softline
no longer consciously recognized) beliefs about the dangers and evils of various institutions, \softline
particularly the government.  Carefully considering institutional choice and, therefore, \softline
comparative institutional analysis provides a way to more thoughtful and better articulated goal \softline
choice.  If we can separate out institutional choice elements, definitions of goals will benefit.  \softline
Here analysis can be sharpened and we can better understand where and why people actually \softline
differ and the implications of these differences. \par
}{\plain \fs24 \par
}{\plain \fs24 Conclusion\par
}{\plain \fs24 \par
}{\plain \fs24 \tab Whether it is convenient or not, institutional choice is the essence of economics and the \softline
core of law and, therefore, comparative institutional analysis should be a central element in all \softline
analyses of law and public policy and in the teaching of law.  In facing this daunting task, a focus \softline
on participation and the dynamics of participation is crucial.  Participation links economic and \softline
legal thinking and forms the basis for effective comparative institutional analysis.  Economics{\u8211\'96} at \softline
least the economic analysis of law and public policy{\u8211\'96} needs to recognize that participation and \softline
comparative institutional analysis are its basic instincts.  Thus conceived, economic analysis has \softline
valuable contributions to make to the comparative institutional analysis of law and public policy \softline
such as the respect for the power of atomism and the instinct for endogeniety and continuity.  An \softline
economic analysis sensitive to its basic focus on the dynamics of participation can serve to \softline
enlighten not just issues of resource allocation efficiency, but also issues concerning most social \softline
goals. }{\plain \fs24   }}