The third in the series on the development of law and economics in Europe

Law and Economics in Germany

By Hans-Bernd Schäfer


When cosmologists tried to estimate the total amount of matter in the universe, they used two different methods. The first method was to add up the estimated matter of every visible star and galaxy. The second method included calculations derived from the movement of stars, which are influencedby the matter around them. Surprisingly the second method led to more than 10times more matter than the first method. Therefore physicists now believe that there is a lot of "dark matter" in the universe. With regard to law and economics writings there is a lot of dark matter in many countries -including Germany- too. These writings are almost invisible to the international audience. The authors write in their national language and publish in national law journals.

In a very informative article Oren Gazal has counted the international presence of law and economic scholars on international conferences and in international journals in different countries. He finds two countries outstanding in law and economics, Israel and the United States. Others follow in a great distance. I think this is basically correct but overlooks the large literature not written in English. In Germany there exist now more than a dozen of habilitation theses, dozens of Ph.D. theses and hundreds of articles on law making extensive and diligent use of economics, all in German language. They describe the consequences of legal norms, interpret the law with the help of economic tools, compare alternative rules and discuss regulatory competition. In the Max Planck Institutes as well as in various universities excellent legal studies using economic tools were produced and published in German language. The authors are lawyers, who gain little reputation inside their own profession, when they publish in English. They want to be read by peers, by judges as well as by attorneys. They want to be quoted in High Court decisions and be used in the classroom. And unlike economics, which is an international discipline, law is much more a cultural discipline, embedded in the national legal dialogue and language. A scholar of civil law, criminal law, constitutional or administrative law cannot earn a reputation in Germany by publishing predominantly in English. I believe that this is not likely to change over the foreseeable future.

The number of articles by German lawyers in international law and economics journals therefore reveals little about the importance of this field for legal scholarship in Germany. The impact of law and economics on legal scholarship is clearly increasing. Among German lawyers who publish continuously in this field in German language and use economic arguments are Behrens, Eidenmüller, Fleischer, Kirchner, Köndgen, Kötz, Leyens, Rühl, Schantze, Schweitzer, Spindler and Wagner. Their Law and Economics thoughts have not only entered textbooks on law but also commentaries such as the influential “Münchner Kommentar zum Bürgerlichen Gesetzbuch”. This will influence the legal language and court decisions. I think that now the majority of younger law scholars in the field of intellectual property law and corporation law believe that they cannot understand their own discipline without economics. And many civil lawyers welcome and support economic reasoning within their discipline. The idea of legal competition between German States and within Europe has become prominent among politicians, practitioners and scholars alike. A gradual and unspectacular shift from legal formalism to consequentialism is observable in legal scholarship. This does not necessarily imply much more teaching in law and economics as a separate discipline in separate courses but a change of content of existing courses.

There are places, where law and economics is particular prominent as a discipline, such as at Hamburg University, where the law faculty lends its support to a Ph.D. program in Law and Economics, an international master program and a specialisation program in law and economics for Hamburg students. But also the private Bucerius Law School and the Max Planck Institute for international and comparative law in Hamburg support research and teaching in law and economics. There are now many law faculties in Germany, where law and economics is taught on a regular basis, including Berlin, Humboldt-University, Bonn, Hanover, Munich, Göttingen, Kassel, Saarbrücken. In Bonn lawyers and economists work in the same faculty and regularly meet for law and economics seminars. This creates a very fruitful atmosphere, conducive for research. I cannot see any aggressiveness against law and economics in German law faculties anymore, much unlike 20-25 years ago. It has become a normal and accepted part of the legal scholarly debate and thinking.

All advanced law students in Germany have -since a recent federal reform of legal education- to register in a program of specialisation, before they can take the state exam. This can be law and economics. The exam results for this program count for 30 per cent of the state exam. Section 5a(2) of the reformed “Deutsches Richtergesetz”, a skeleton law, which regulates legal education, points explicitly to specialisation with interdisciplinary content. This makes it legally easy for law faculties to introduce a specialisation program in law and economics. Hamburg established such a program. But law and economics as a separate subject is also taught in introductory courses and in seminars in many places across the country.

What is not observable in Germany is what Nuno Garoupa describes for the USA, where law schools hire large numbers of social scientists as law professors. A habilitation in the discipline of law remains the entry ticket for becoming a law professor. A habilitation in another discipline –even if it is closely related to law- together with an additional law qualification –is very unlikely to qualify for a position of professor of law in a German law faculty. The practice is somewhat more lenient for law professors in business or economics departments. I think this will not change in the foreseeable future. This practice is certainly a constraint on high standard interdisciplinary research in German law faculties. On the other hand Max Planck Institutes presently put together interdisciplinary groups of lawyers and economists to work on joint and similar projects. This might result in high quality research within a couple of years.