Institutional Law and Economics: The Legal-Economic Nexus

  The Council on Inclusive Capitalism ( https://www.inclusivecapitalism.com/ ) is a new group formed by CEO’s, global leaders and the Vatican that seeks to, “Capitalism lifts people out of poverty and powers global innovation and growth. But to address the challenges of the 21st century, capitalism needs to adapt. Through our commitments, actions and solutions, we will create stronger, fairer, more collaborative economies and societies, ultimately improving the lives of countless millions of people across the globe.” (Council on Inclusive Capitalism, 2020) What does Institutional law and Economics have to say about this kind of approach? First, we need to acknowledge that this group states their normative purpose up front and are not trying to hide beneath a cloak of doing something on the grounds of economic efficiency.  This is a good thing and one can agree or disagree with the group's aims but at least acknowledge that they are upfront and transparent about them. They make...

This post is a review of some recent remarks about defending capitalism  through an interview by the CEO American Enterprise Institute (a generally economic conservative think tank) of Whole Foods CEO John Mackey who has a new book called Conscious Leadership and who is an advocate for what he calls conscious capitalism.  Mr. Mackey is a donor to the American Enterprise Institute and he had done interviews recently in a number of other outlets about his new book. He starts off the interviews by setting that there is a fundamental misunderstanding of capitalism.  He states that the purpose of a for-profit business is not to make money but to have a purpose (thus the so-called Conscious Capitalism).  This is at least in in some sense contrary to neoclassical economics textbooks where the purpose or goal of the first is to maximize profit (or in some rare cases something maximize sales).  Mackey argues that business exists "to create value for other people" and the...