Socio-Economic Review Advance Access originally published online on October 7, 2008
Socio-Economic Review 2009 7(1):35-65; doi:10.1093/ser/mwn019
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This article appears in the following Socio-Economic Review issue: SPECIAL ISSUE: Changing institutions in developed democracies: economics, politics and welfare [View the issue table of contents]
Legal origin, juridical form and industrialization in historical perspective: the case of the employment contract and the joint-stock company
CBR, University of Cambridge, Cambridge, UK
Correspondence: s.deakin{at}cbr.cam.ac.uk
The timing and nature of industrialization in Britain and continental Europe had significant consequences for the growth and development of labour market institutions, effects which are still felt today and which are visible in the conceptual structure of labour law and company law in different countries. However, contrary to the claims of the legal origin hypothesis, a liberal model of contract was more influential in the civilian systems of the continent than in the English common law, where the consequences of early industrialization included the lingering influence of master–servant legislation and the weak institutionalization of the juridical form of the contract of employment. Claims for a strong-form legal origin effect, which is time invariant and resistant to pressures for legal convergence, are not borne out by a growing body of historical evidence and time-series data. The idea that legal cultures can influence the long-run path of economic development is worthy of closer empirical investigation, but it is premature to use legal origin theory as a basis for policy initiatives.
Key Words: varieties of capitalism • financial markets • industrial relations • institutional complementarity • labour law • labour market institutions • corporate governance
Earlier versions of this paper were presented to: the 14th International Economic History Congress, Helsinki, August 2006; the conference on Changing Institutions in Developed Democracies: Economics, Politics and Welfare, Paris, May 2007; the Annual Conference of the Law and Society Association, Berlin, July 2007; and as part of the Tanner Lectures on Human Values delivered at Oxford University in February 2008. I am grateful for the feedback received on those occasions and from an anonymous referee.