Law and development in crisis: an empirical challenge to the current theoretical frames

This paper examines the current crisis in the field of law and development. It empirically demonstrates the limitations of the existent frameworks of analysis – the ‘law and economics’ and ‘law and society’ approaches. It does so through in-depth comparative case studies of two programmes – land-titling and microfinance – that illustrate the alternative approaches. While law and economics takes a fundamentally disjointed, Hayekian view of the relationship between the market and society, the formalist policy prescriptions that follow from this position fail – demonstrating the importance of embeddedness. The law and society approach – based on the Polanyian premise of markets embedded in society – yields richer institutional prescriptions in the short run, but also suffers from fetishising the social over the legal. A new economic sociology of law-based approach – combining the analytic and normative insights of law and society with the substantive learning and procedural rigour of law and economics – may be a way forward.