My Study of Law and Economics. An Educational Journey with Knowledgeable Tour Guides

1 School Years in Bottrop, Germany

There were no scientists or academics in my family. My mother worked as a nurse in a military hospital in Münster until shortly before I was born in 1943. Her father had been a train driver. My father was a tailor who continued his father’s business in the mining town Bottrop after the war and later also offered made-to-measure clothing. That would have been the natural career for me, too. I could have lived with that. As a child I often watched my father at work, drawing lines on the cloth with a chalk pencil, cutting out the pieces and finally assembling them into a suit. So my parents sent me to Realschule, which was then the intermediate level of secondary education in Germany, with the prospect of starting an apprenticeship afterwards. But then a biology teacher really kindled my interested in the subject. I began collecting butterflies and set my mind on becoming a biologist. When I found out that path would require me to pass the Abitur (the highest secondary education exams, equivalent for example to A Levels in the UK) and study at university, I pestered my parents to let me change from Realschule to Gymnasium, the highest level of secondary education. My mother was very supportive of this – my father much less so, but eventually he gave in. So, in 1957, I made the switch. One of the ensuing challenges was that at the Realschule, Latin had not been taught – but at the Gymnasium, it was then the first foreign language, taught right up to the Abitur. I had a year to make up for the four years of missed Latin lessons with the help of a tutor and succeeded sufficiently. From then on I also took violin lessons and made it to concertmaster in the school orchestra. I even had the privilege to play the Carmina Burana under the baton of its composer Carl Orff, who was deeply engaged with school music at that time.

I completed the remaining five years at the Gymnasium without difficulty but not brilliantly. In my Abitur exams in 1962, I achieved excellent results only in individual subjects such as history and music. My enthusiasm for biology had not lasted. The most obvious thing for me to do would have been to study history to become a teacher. Instead, I chose economics. Practical considerations played no role in this decision. At that time, in a state of permanent full employment, the odds of getting a job were of no concern to us. Also, I had very little tangible information to base my decision on. Nor did my family provide any helpful suggestions or role models. The decisive factor in my choice of subject was probably my history teacher, who placed historical events such as the Stein-Hardenberg reforms, the German Customs Union, or the Great Depression in an economic context. From him I learned the names and basic ideas of Adam Smith, John Maynard Keynes, and Friedrich List, and I developed an appetite for more. Moreover, the economist Joseph Alois Schumpeter was well known among craftsmen and merchants in Bottrop. Several of my parents’ acquaintances claimed to know him personally and to have discussed economic problems with him. In fact, as a professor at the University of Bonn, Schumpeter had lectured frequently at chambers of crafts and trade in the Rhineland and Westphalia regions, using the fees to gradually pay off the debts he had incurred because of the bankruptcy of his Austrian bank before he went to Harvard in 1932 and shed his financial worries. In any event, my choice of studies was based on a narrow information base. Picking a theoretical subject over a more practical one was certainly not a conscious decision.

2 Studying Economics at Cologne University

Since I did not want to study far from home, especially for financial reasons, the only available choices at that time were Münster, Cologne and Bonn. I picked Cologne and began my studies in the winter semester of 1962. I attended lectures by Alfred Müller Armack, one of the academic fathers of the social market economy, who at the time held a chair in economic policy and was also a junior minister in Ludwig Erhard’s Ministry of Economic Affairs in Bonn. He had an unpretentious way of clearly presenting the essential elements of the Freiburg School and invited his students to join in the discussion. Another prominent exponent of the Freiburg School was Hans Willgerodt, an astute and precise economist who also placed great emphasis on the foundations of economics in philosophy, and history of ideas. I once asked him if he could recommend some basic literature. He recommended “The Open Society and Its Enemies” by Karl Popper, “The Road to Serfdom” by Friedrich von Hayek, and the “Communist Manifesto” by Karl Marx and Friedrich Engels. I took the advice and studied the three works. Although I disagree with Hayek regarding his market fundamentalist economic policies and his strident rejection of the welfare state and even the notion of “social justice” as an analytically empty and purely political battle cry, I have since developed and maintained a high opinion of him by reading more of his writings, especially his paper “The Use of Knowledge in Society” (1945). To this day, I believe that no scholar before him understood quite as clearly the nature of the market economy as a decentralized process of discovery. Popper’s book, in turn, has greatly enriched and influenced me for obvious reasons. I am also grateful for the reference to Marx, which one would hardly have expected from Willgerodt. At the time, many saw in Marx nothing but a prophet of a totalitarian system. Willgerodt seemed to have realized, even at the height of the Cold War, that this was a distortion of his work by Soviet propaganda and that Marx should be regarded as one of the great social scientists of the 19th century, on a par with, say, Max Weber or John Stuart Mill.

At that time in Germany, the theoretical, model-based style of economics was advocated especially by Theodor Wessels and his assistants. To me, it was a fascinating world of reductionist and mathematical models that yielded insights that would not have been possible by reasoned or clever argumentation alone and that, moreover, were often completely counterintuitive. At the time, I was particularly interested in international trade theory and its perplexing theorems. In retrospect, I also realized how difficult it is in this field to keep up quickly with scholarly research.

Probably in 1965, I attended a special course on game theory given by a young lecturer to a small group of students, in which we learned only about the zero-sum games of von Neumann and Morgenstern. The extension of game theory by John Nash, with his fundamental new concept of equilibrium, was not yet covered in this course, although it had then already been 15 years since Nash’s seminal publication on the subject. Its importance for social science has even been compared to the discovery of the double helix by Watson and Crick. I first heard the term “Nash equilibrium”, which is now very well-known even beyond economics, years later when I was already a research assistant. I had a similar experience in Cologne regarding the research of Reinhardt Selten, an economist teaching in Bonn, which often came up especially in lectures on business administration, but this only concerned his criticism of the rational choice model and his easily accessible version of “bounded rationality”. By contrast, during my studies in Cologne I never heard anything about his outstanding research result on subgame perfect equilibria, for which he later received the Nobel Memorial Prize together with Nash and which was published in German in 1965.

In Cologne, all students of economics and business administration had to attend lectures in law (mainly civil law), take a major civil law exam and pass an oral exam. I was not particularly interested in the legal courses for the most part. We were trained to be mini lawyers who had to solve simple civil law cases. We did not learn anything on the foundations or aims of the law, nor did we hear how much of the law is disputed and why. Much later I read the book “Introduction to Law” by Gustav Radbruch, which was based on a lecture he had given to business students before World War I at Mannheim. There was a world of difference between this book and the legal teaching for economists in Cologne at the time. A great exception to that uninspiring legal education was the course on constitutional law by Hermann Jahrreiß, which he had designed especially for students of economics, and which I still remember well more than 50 years later, for example for his excellent presentation of the principle of proportionality. Jahrreiß strongly rejected the social contract theories, but presented them in such a differentiated and vivid way that later, when I studied the works of Buchanan, Tullock and Rawls, I was equipped with solid prior knowledge and critical faculties.

I wrote my diploma thesis, supervised by Theodor Wessels, on the question of how currency devaluation affects the balance of trade. I travelled to London with two fellow students, one of whom was also working on international trade theory. We worked at the London School of Economics, where we received important input. My model-theoretic thesis was well received and helped to open up an academic career for me later. It was also in London that I met my dear wife, Doris. Later, we moved in together and got married in 1968. We have two daughters, Ilona and Anna, and have celebrated our golden wedding anniversary a few years ago.

Social policy became my special subject. I studied it with Gerhard Weißer, a committed Social Democrat and co-author of the Godesberg Party Program, in which the German Social Democrat Party made its peace with the market economy and NATO. At the time, Weißer developed ideas that resemble what Amartya Sen would much later call the “capability approach”. Unfortunately, Weißer’s writings on the foundations of social policy, which were only published in German, if at all, were never disseminated internationally. Weißer’s central concept of human welfare was the “Lebenslage” (life situation), which, as in Sen’s “capability approach”, does not derive social welfare solely from the aggregated subjective well-being or utility of individuals but uses more objective measures.

In 1966, I graduated in economics (Diplom-Volkswirt) after nine semesters with decent but not outstanding results, except for the thesis. In the meantime, me and my friend with whom I had already been to London had learned that it could be professionally advantageous to add a degree in business administration to our diploma in economics. The faculty encouraged the students to do so, facilitating the transfer of credits from one course to the other. So, after just one more year of studies, in 1967 I also passed my exams in business administration (Diplom-Kaufmann).

3 Bank Employee in Frankfurt, Research Fellow in Bochum

I wrote my doctoral thesis at the newly founded University of Bochum, where Willy Kraus, formerly a research fellow at the chair of Theodor Wessels in Cologne, was the director of the Institute for Development Research and Development Policy (IEE) and my supervisor. The thesis examined the then popular 20th century theories of imperialism in the light of modern international trade theory. And it served me well. I received the highest grade, the dissertation prize of the University of Bochum, and an offer to work as a post doc research fellow at the IEE. At that time, such positions were not advertised, but awarded at the professor’s discretion.

After submitting my dissertation, however, I first took a job in April 1970 at the Bank für Gemeinwirtschaft in Frankfurt, one of the big German banks at the time. I was to assist the board of directors. The chairman of the board, Walter Hesselbach, was a member of 16 supervisory boards, including Fried. Krupp GmbH (then still the largest German industrial company), Siemens, Volkswagen, and other large German firms. Before the supervisory board meetings, the managers sent around reports. My job was to go through them and write a memo containing the most important points for the CEO of the Bank für Gemeinwirtschaft. This was very instructive for me, because I quickly got to know the management problems of many large companies from a bird’s eye view. For the first time, I professionally encountered significant legal problems. High losses on individual projects were the prominent items on the agendas. Time and again, management had taken on unmanageable contractual risks in supply contracts by agreeing to fixed prices, resulting in eight-digit losses because raw material prices had risen, or the required effort had not been estimated correctly. Having only worked there for a year, I did not hesitate to accept the offer from Bochum and started work as a research fellow at the Faculty of Economics in April 1971. Scientific work and academic freedom ultimately seemed more appealing to me than a career in management. I never regretted this, although my workload became much greater than at the bank. Working in the private sector was not as possessive and debilitating as scientific work.

At the institute in Bochum, economists, sociologists, econometricians, and a legal scholar worked together on questions of international development cooperation in a collaborative research center funded by the German Research Foundation. I was also in touch with the chair of economic theory and taught introductory lectures on macroeconomics. In addition, I began lecturing on the economics of developing countries at Kabul University under a partnership agreement, and I also wrote a co-authored study on government revenue in Afghanistan. Between 1972 and 1975, I travelled to Kabul several times. At that time, the Universities of Bochum, Cologne, and the Technical University in Aachen were jointly establishing a faculty of economics there. I became involved in this project and made Afghan friends. Most of them later fled to Germany, and one of them became a professor at a German university. One of them died in the violent clashes between Moscow- and Beijing-oriented communists.

Over time, however, I became skeptical of development economics as it was taught then, including by myself. The scientific mainstream was partly based on a mechanistic growth theory that attributed economic growth primarily to capital accumulation and resource mobilization and which, from today’s institutional economics perspective, failed to address the causes of national poverty. There was virtually no growth theory that analyzed the deeper roots of underdevelopment – something that was quite naturally addressed in the writings of Adam Smith and the French physiocrats of the 18th century – and described the institutional, especially legal, preconditions for economic development. Although many legal scholars recognized the enormous importance of law for economic development, they considered this a know-how problem that could be solved by giving students from developing countries a first-class legal education in Western Europe or North America. This later proved to be a gross error of judgement. Development economics at the time was also characterized by a deep pessimism about the performance of market economies in poor countries. Leading economists – Nobel laureates Gunnar Myrdal and Arthur Lewis, as well as Harvard/Yale economist Albert Hirschman are just three of the most prominent names on a long list–diagnosed so many cases of systematic market failure in poor countries that could not be corrected by regulatory law that they attributed the decisive role in the development process to state planning and regarded the market economy as a luxury for rich countries. While this view was also subject to criticism, it dominated both academia and development policy regarding poor countries in the early 1970s.

In retrospect, the sociologists I worked with at the time were similarly mistaken. Among them circulated the idea that economic development in Sub-Saharan Africa would progress much faster than in Asia as the former would more readily adopt the European culture. By contrast, the hierarchical thinking that is widespread in East Asia and is culturally and religiously determined stands in the way of entrepreneurial activity and rapid economic development. Or so the story went – just as the East Asian tiger economies were beginning to rise from the group of the poorest to that of the richest nations in the world within half a century and Japan was already highly developed, a success that no country in Africa or South America has so far achieved.

At the beginning of the 1970s, the hitherto rapid growth of the German universities came to an end, and with it the seemingly endless flow of new professorships. Word spread quickly among the research fellows. The professional prospects were suddenly looking weaker. I therefore began to apply for professorships and fortunately soon received two offers, one at Wuppertal and one at the Law Faculty of the University of Hamburg. I gratefully accepted the position in Hamburg, mainly because it meant the end of all financial insecurity for me as a family man. There were no other reasons for me to leave the IEE in Bochum after only four years, apart from the fact that I had the feeling of being welcomed by my new colleagues in Hamburg. Little did I know that a lengthy, intense, and exciting journey through the law lay ahead for me.

4 Single-Stage Legal Education in Hamburg

At the University of Hamburg, in the summer semester of 1975, I became a professor of economics in the Department of Law II (and later also a member of the Department of Economics), which, pursuant to an experimental clause in the German Judiciary Act, offered a single-stage education in law. This reform curriculum ended in one rather than two state examinations and was quite interdisciplinary. Almost all of my colleagues were below 40 years of age and considered themselves the avantgarde of a far-reaching reform of legal education. The elements of this reform had been laid down in the so-called “Second Report”. Its authors included the President of the Hanseatic Higher Regional Court and the Judicial Examination Office, Walter Stiebeler, the Hamburg judges Kuno Roß and Ronald Randzio, the sociologist Fritz Haag, and the constitutional law scholars Wolfgang Hoffman-Riem, later a judge at the Federal Constitutional Court, and Hans Peter Bull, later Germany’s first Data Protection Commissioner, long-time Home Secretary of the state of Schleswig-Holstein, and Director of the Institute for Administrative Science, as well as the civil law scholar Claus Ott, who later became my co-author and friend. The Report contained fundamental programmatic statements on jurisprudence and the reform of legal education. It summarized and carried forward what had been debated for a hundred years and adapted it for the purposes of our reformed faculty. It did so in a style that was bold to the point of arrogance. The cooperation of different disciplines in teaching and research was apostrophized as the “integration of law and social science”, which ultimately denied the law the character of an autonomous discipline. The Report considered it axiomatic that neighboring sciences not only acquire significance for the foundations, history and facts of law, but are indispensable for the interpretation of legal texts and the development of judge made law. The authors and proponents of the Report were heavily influenced by Rudolph von Jhering’s program, according to which the understanding of legal texts in terms of the purpose of the law is an essential part of legal science, and a purely doctrinal approach focused on the concept and system of law that completely disregards its purpose will always be incomplete. From there it is only a small step to demanding an interdisciplinary jurisprudence that relies on research results that refer to end-means relations. For if the end is recognized as an important category in law, this leads to an interdisciplinary jurisprudence because then the alternative can only be to make statements about the relationship between ends and means either with scientifically founded findings or with intuitive everyday theories, which by their very nature are much more prone to error.

These ideas sparked an atmosphere of awakening and a pioneering spirit. For me, reading the Second Report was my introduction to law as a highly complex and intellectually challenging discipline. Hours of discussion were spent planning new courses. Moreover, there was a tendency among the colleagues to have extended conversations about jurisprudential content and disputes that had nothing to do with the concrete planning of the curriculum. My arrogance toward the study of law, especially civil law, which following my training in Cologne I had viewed as not much more than another form of stamp collecting, quickly faded. In a faculty of 15 professors, four of us had no law degree and were suddenly confronted with entirely new tasks.

However, I lacked the starting point of how the economics I had studied could be brought to bear on legal issues, as I had heard nothing about new institutional economics or the economic analysis of law by then. My microeconomics had featured some reference to competition law, and the macroeconomics made reference to constitutional law and Germany’s Stability and Growth Act, which was influenced by Keynesian theory and much discussed at the time–and that was it. Conducting a model experiment, the faculty was well staffed, so I was able to jointly teach some of these courses with Wolfgang Hoffmann-Riem and later with Lerke Osterloh, who also went on to become a federal constitutional judge. In this and similar ways, I was introduced to the subject of law. In contrast to these fruitful experiences, negative impressions also arose, such as the attempts to teach East Berlin-type Marxism, which was popular among students and individual colleagues. I vigorously rejected the idea of portraying the Stability and Growth Act as a neo-fascist enabling law and blocked proposals to introduce texts to that effect to the lectures. Among the students, where the theory of “state-monopolistic capitalism” enjoyed great popularity, my refusal was met with mixed feelings.

The impetus to look more closely at the writings of Ronald Coase, Guido Calabresi, Richard Posner, Harold Demsetz and Gary Becker came from a colleague, the civil law scholar Rainer Walz, who drew my attention to Coase’s paper “The Problem of Social Costs” (1960), which he had encountered during his studies in the USA and on which he had published one of the first papers in German. I began to read these authors and became convinced that something was emerging here that corresponded to the basic orientation of the reformed faculty of law at Hamburg University. We founded a reading group, which besides Rainer Walz also included the research fellow Detlev Rahmsdorf and the civil law scholars Gerd Struck and Helmut Kohl. We met every Monday afternoon for a two-hour session and discussed the writings of these founding fathers of the economic analysis of law and institutional economics – papers that have since become classics. In addition, Michael Adams, who had completed his habilitation with a thesis on strict liability and negligence from an economic perspective, came to Hamburg to teach law for economists in the economics department. He had boundless enthusiasm for this new line of research, comparing it to the reception of Roman law in the Middle Ages. He was later disappointed and demotivated by the fact that this new research area did not expand more rapidly in Germany. For many years, we met each week in a coffee shop and discussed almost exclusively the new line of research. Michael Adams was one of the founders of the “European Association of Law and Economics”, to which he drew my attention and whose conferences I began to attend regularly. I was also in contact with the civil and European law scholar Peter Behrens, who brought additional interdisciplinary thinking to our department.

The intensive study of the economic analysis of law was an exciting educational process for me, but initially had no impact on my teaching or publications. That only changed when the focus programs for senior students began. Claus Ott was in charge of the “commerce” focus, which covered commercial and corporate law as well as large parts of the German Civil Code in depth. I drew his attention to the economic analysis of law and offered to teach a course on the economic analysis of civil law as part of this program. Since then, I have taught a two-hour course in this program every year, focusing on the economic analysis of contract and tort law. I also began to give individual lectures in the relevant civil law courses.

A special interdisciplinary touch was added to the focus program by an annual weekend seminar that Claus Ott and I held together with a lecturer who in his main profession was a civil law judge at the Hamburg Regional Court. His task was to compile cases from his own practice and from the literature that were suitable for economic discussion. For many years Klaus Schülke, who later became a judge at the Federal Patent Court in Munich, assumed this task. Together with Claus Ott and the students we then discussed these cases. The students had to show whether the case had a structure that could be interpreted in economic terms. This was possible surprisingly often and quite naturally, which confirmed to all of us that economic considerations can be helpful in solving legal cases. Two examples may illustrate this.

1. A music lover and expert on old scores had bought the first print of a Mozart piano piece for a ridiculously low price at a flea market. He had not informed the seller that the sheet of music was of enormous value. The question was whether the buyer had a pre-contractual duty of disclosure, whose breach would lead to damages or to the contestability of the contract. From an economic point of view, this question must be answered in the negative. This would destroy any incentive for interested persons with expert knowledge to search for valuable pieces on such markets, or to acquire the expert knowledge in the first place. Unique pieces would then soon enough end up in the trash, rather than in a museum. Value would be destroyed.

2. Another case from the practice of the Hamburg Regional Court concerned a faulty car wash. The system was defective and caused several thousand marks of damage to a car. The car owner sued the operator, who is generally liable for any damages arising from negligence. The defendant denied negligence, claiming that his car wash was serviced professionally every month. He also presented expert testimony from his industry association to the effect that approximately three such incidents occur each year in Hamburg, and that the total damages incurred at all Hamburg facilities are only a small fraction of those costs that would be incurred if due diligence efforts were increased, such as inspecting the facilities twice a month or even every week. The total costs of avoiding damage would have been disproportionate to the total damage avoided as a result. In this respect, from an economic point of view, the operator was not negligent. However, he could have insured the damage and thus probably done the vast majority of customers a favor, even if this would have slightly pushed up the price of his service. The customer, on the other hand, cannot insure himself against this specific risk. The operator’s breach of duty thus consisted in failing to take available insurance. The victim’s claim was therefore to be upheld, even though avoiding the damage would have been unreasonable.

Over time, we probably discussed hundreds of practical civil law cases at the weekend seminars, always with the aim of finding out whether considerations from the law and economics literature introduced by Posner, Calabresi and others contributed to the understanding of the case and whether the economic solution could be reconciled with the law and legal dogma.

5 Consumer Protection Law as a Correction of Asymmetric Information

A further and, for me personally, important impetus to reposition myself scientifically arose from a course on “Consumer Protection”, which I gave together with Norbert Reich and Claus Ott. When I joined them, the course was already fully planned. It consisted of a general theoretical part and case material from the German Federal Court of Justice, mostly related to producer liability and the judicial control of terms and conditions (T & C). Norbert Reich had already made a name for himself in this field and founded a journal for consumer law, now the Journal of Consumer Policy. At the time, it was a much-discussed area of law, where the civil law tended to be much more caring than in other areas. The General Terms and Conditions Act, which essentially codified a pre-existing body of judge made case law, was passed at that time. Norbert Reich was a supporter of more consumer protection. Studying the case material on T & C control, I could only agree with him. The court decisions on the control of T & C seemed to me to deliver conclusive and comprehensible results. However, I felt there was an irreconcilable contradiction between the theoretical part of the course and the cases from practice, which did not seem to bother Norbert Reich – perhaps because he did not see it. The theoretical part consisted of literature that viewed the consumer as a helpless and spineless object of big business and powerful corporations. Among that literature was “Hidden Persuaders” by Vance Packard, as well as various writings by Kenneth Galbraith, in which he rejected the idea of consumer sovereignty in favor of “producer sovereignty”. In the age of monopoly capitalism, he argued, contract law oriented toward formal private autonomy should be replaced or supplemented. Norbert Reich even went one step further by introducing Marx’s distinction between use-value and exchange-value and maintaining that goods that have use-value, rather than just exchange-value, should not be subject to classical civil law – a logic which I found myself unable to follow.

The cases we discussed in class, on the other hand, had a different background and did not fit the theory part. The defendants were often medium-sized companies that did not enjoy monopoly power but were rather exposed to strong competitive pressure. A typical case was that of a young couple who had bought new bedroom furniture. On delivery, the colors of the individual pieces of furniture did not match. In the general terms and conditions, the buyers had waived all warranty claims for material defects except for rectification. The rectification failed. When the colors still did not match after a second, very time-consuming attempt at rectification, the buyers wanted their money back, rather than agreeing to further attempts to rectify the colors. The furniture store refused this with reference to the general terms and conditions. The Federal Court of Justice ruled in favor of the buyers and decided that after two unsuccessful improvements, the statutory warranty rights were revived. These general terms and conditions had been imposed on the buyers, although the furniture store was subject to strong competitive pressure, and in a city like Hamburg, the buyers could choose among dozens of competitors.

Consumers also seemed to me to be more autonomous and rational than suggested by the literature, which assumed that they could be completely manipulated. I rejected the idea that T & C could be rigged simply because they had not been negotiated but were imposed unilaterally on the consumer, as is virtually always the case. A buyer of bread generally cannot negotiate the quality of the goods. Nevertheless, the market reliably ensures that products that do not meet the buyers’ preferences will disappear. I brought up the example of the French car manufacturer Citroën, which like many of its competitors responded to the 1970s energy crisis by using thinner sheet metal to make the cars lighter and more fuel-efficient. But they did so without increasing the quality of the steel accordingly. This often caused corrosion of car bodies after only a year. However, at the time, the warranty only lasted six months, meaning that the buyers were left with large damages. Consumers reacted to this with a withholding of purchase, punishing the company with losses that ran into billions. Again, this did not fit the picture of the consumer being manipulated by monopoly companies. But I lacked the ideas and concepts to convincingly argue against this widespread but inadequate theory of consumer protection.

Finally, I was disturbed by a view among my colleagues that consumer protection always amounts to redistribution in favor of the consumer and at the expense of company profits. This is at odds with the fact that any legislation that improves the consumer’s position and redistributes risks to the supplier incurs costs that are reflected in the price, regardless of whether the company is in a competitive or monopoly market. More than one colleague rejected this point at the time, saying it had to be proven first. I learned then how difficult it is to argue with legal scholars, to whom thinking in terms of economic models and equilibrium prices is often alien. Ignoring the economic logic can lead to a situation where consumer protection measures can actually hurt consumers because the measures are mistakenly seen as redistribution between producers and consumers.

These questions preoccupied me at the time. They also frustrated me because it was clear to me that an accurate theory of consumer protection had to be valid not only for monopoly markets with market power but also for competitive markets and, moreover, could not be based on the image of a consumer who could be manipulated at will. But I was not yet able to provide such a theory. However, this changed during a stay in India, where I was confronted with consumer protection problems that were completely new to me.

The summer term of 1980 was my first research term, spent largely at the Delhi School of Economics, working on a monograph on economic development policy. With my family, including two young children, we lived with a wealthy family in New Delhi. At the beginning of our stay, the lady of the house gave us a crash course on consumer self-protection. She took us to the bazaar and showed us how to buy melons, chicken, oil, nuts and rice. For melons, she had brought a knitting needle. Before buying, she would stick the needle into the watermelon, pull it out again and observe if water leaked out of the hole. If so, this was evidence that the seller had injected water into the melon to make it heavier and thus to fetch a better price. Then the buyer would not only overpay but also run a health risk. If no water leaked out, the melon was safe to buy. Our landlady also impressed upon us to buy only live chickens that had been slaughtered, plucked and gutted in front of our eyes. She cautioned us not to buy packaged food and to sample from the stacked goods before buying. She bought cooking oil from a store whose vendor pressed the oil from nuts for his customers to see, so she could be sure the product was pure and unadulterated. Our landlady also bought a bag of rice. Back at the house, she poured out the entire contents and spread the grains on the kitchen table. Then she felt each grain of rice with her fingertips. She explained to us that this was necessary because some merchants mixed the rice with tiny, crushed pebbles that are indistinguishable from rice grains to the naked eye. This increased the weight and price when the rice was weighed and sold. For the customers, this brought the added risk of cutting their teeth if they faithfully consumed the rice. A note to the readers: Since then, the performance and information efficiency of Indian food markets have improved dramatically. Today, the product range of supermarkets in Mumbai or Delhi is no different from a comparable store in Hamburg or Shanghai.

When I told the story of the rice grains to an Indian colleague, he alerted me to a paper by the Berkeley economist George Akerlof, who had also come across the example of the rice grains during a visit to India a few years earlier. This had inspired him to write an article containing the rice example, which is now one of the most widely cited economic papers of the last 50 years: “The Market for Lemons: Quality Uncertainty and the Market Mechanism” (1970). In the paper, Akerlof showed how, in a competitive market without any monopoly power, with rational buyers but asymmetric information between buyers and sellers, markets can arise that offer only poor quality, contrary to buyer preferences. In a dynamic process, the higher-quality goods demanded by the buyers are gradually replaced by low quality goods. The result are markets that dwindle, like the rice market in Delhi, disappear altogether, or never form in the first place. Akerlof had provided the theory of consumer protection that I had been looking for. Of course, his theory can usefully explain not just pebble-studded rice portions but also unfair T & Cs and many other issues of consumer protection. The validity of this theory rests neither on market power or a structural imbalance of power in the conventional sense, nor on the assumption of irrational consumers, but merely on an information asymmetry between buyers and sellers that cannot be (fully) eliminated at the time of purchase. The ultimate result of Akerlof’s analysis is a market equilibrium with competitive prices that no longer include extra profits and in which low quality is sold at low prices (unlike in a monopoly). The end point is a degenerated competitive market, as in the rice example or in used car markets, or else the complete disappearance of the market. Unlike a monopolist the seller in a competitive market, who exploits the asymmetric information can make an extra profits only in the intermediate dynamic process before a new market equilibrium without extra-profits is reached again. Never have I envied an economist as much as Akerlof. To me, the rice-pebble example would have been but a curious anecdote. For Akerlof, it was the impetus for a major extension of microeconomic theory, showing for the first time how competitive markets with rational buyers can fail because it is too costly for the buyers to correct information deficits before buying. Back in Hamburg, I wrote a non-mathematical text on the Akerlof market and the resulting theory of consumer protection and introduced it into my teaching. The fruitfulness and practical significance of this theory lies in the fact that asymmetric information between sellers and buyers, which cannot be remedied by the market itself, provides a sufficient condition for consumer protection, while at the same time also imposing limits on reasonable consumer protection if no information asymmetry exists.

Twelve years later, at Berkeley School of Law, Claus Ott and I had the privilege of speaking with Fritz Kessler, a German-born legal scholar who had worked at the Kaiser Wilhelm Institute for Foreign and International Private Law in Berlin, the predecessor of the Max Planck Institute in Hamburg. He had fled to the United States in the 1930s, where he then exercised great influence on American contract law and the development of consumer protection. He was familiar with our book on the economic analysis of civil law and lauded its theory of consumer protection based on asymmetric information. It was flattering to hear this from an eminent legal scholar who, like Norbert Reich or Ludwig Raiser before him, had himself long been a proponent of the monopoly capitalist exploitation theory of consumer protection based on a structural imbalance of market power and had justified stronger legal intervention on the basis of an inadequate and selective economic theory.

6 Focusing on the Economic Analysis of Law

In 1982, I completed a development theory book on urban bias in the process of economic development. This work shows how agricultural countries often industrialized themselves by forcing their farmers to keep food prices for industrial workers down through artificially low prices, export tariffs and export bans, and by influencing the farmers’ choice of crops in favor of food. The aim was to keep labor costs low by low costs for food, thereby to raise industrial profits and thus to accelerate the rate of accumulation and growth of industry. For this purpose, I had intensively studied the French physiocrats Turgot and Quesnay, who had analyzed and sharply criticized the “urban bias” of the 18th century and had attributed France’s relative economic stagnation to its mercantilist industrial policy, which neglected and, in their view, even destroyed the country’s agriculture. Together with Adam Smith, these authors were among the founders of economics as a science. They considered legal and institutional issues to be crucial to economic development. Adam Smith even lectured on Roman law in Glasgow. Turgot and Quesnay convincingly explained why the hereditary subservience of peasants associated with sharecropping as well as the unavailability of noble estates for purposes of credit security led to the undercapitalization and relative backwardness of French agriculture, and they argued for agricultural land to be legally recognized as property – a demand that was ultimately implemented during the French Revolution. Such institutional economic issues and insights were lost from sight during the 19th and especially the 20th century. This reinforced my view that work at the intersection of law and economics was fruitful and that the complete separation of the two disciplines had been an aberration. I also became a member of the Committee on Developing Countries of the Verein für Socialpolitik (German Economic Association). From 1991 to 1995, I chaired that committee, even though I had already moved on academically by then.

After completing this book, I asked Claus Ott, with whom I collaborated in the focus program “Commerce” at Hamburg University, if he would write a book with me on the economic analysis of civil law that covered the areas I was teaching. While we had regularly been in touch about work, he was not one of the colleagues – like Ronald Randzio, Rainer Walz, and Michael Adams – with whom I constantly discussed law and economics issues or who belonged to our Monday debating group. Nevertheless, Claus agreed, and that was the beginning of an intensive collaboration. We discussed almost every problem we wanted to cover, sometimes for many hours or even entire days – be it about the extended retention of title or the issue of priority of supplier versus bank credit in insolvency proceedings and the associated incentive effects. I experienced Claus Ott, who besides his academic position also served as a judge with the Hanseatic Court of appeal in Hamburg with a workload of 10 percent, as a classic civil law scholar, who was extremely well versed in legal doctrine but was equally open to any economic argument. Our aim was not just to provide an overview of the new research area, but, to demonstrate its fruitfulness for legal questions and cases. We had a simple principle: Any content on which we could not reach agreement even after extensive discussion would not make it into the book. The work progressed well and after just over two years, in 1985, the manuscript was ready. Following the introductory part, it covered the economic analysis of contract law, tort law, property and pre-contractual obligations, as well as basic features of corporate law, in particular the function and limits of limited liability in corporations. The book was published by Springer in 1986, to a mixed reception. On the one hand, the only reviews we saw were two short pieces of no more than 10 lines each. On the other hand, the book sold well. Pablo Salvador Coderch, a civil law professor at the newly founded Catalan University in Barcelona, liked the book. He organized a Spanish edition.

By the early 90s, the first edition of 1500 copies had sold out. Springer offered to print a second edition. The book benefited from the fact that at the time there was a controversy about the importance and methodological place of the economic analysis of law within German jurisprudence, while in the USA, the research field first developed by Coase, Becker, Posner and Calabresi was really taking off. All the major US law schools recruited professors with a PhD in economics who continued the approach, expanded it, opened it up to new areas of law, and were also more methodologically sophisticated than the founding fathers, except for Gary Becker. I could easily list two dozen second-generation law and economics scholars who contributed significantly to making their field the most important new legal research discipline in the United States. Suffice it to mention just Steven Shavell, Robert Cooter, Michelle White, Susan Rose-Ackerman, Tom Ulen, Mitchell Polinsky, Henry Hansmann, Reinier Kraakman, and Lucien Bebchuk. These and many others contributed significantly to expanding and systematizing the field of research and giving it an important place in the argumentative arsenal of American jurists. A similar development occurred in Israel.

In Germany and other continental European countries, “Law and Economics” developed under more difficult conditions than in the US. This is also true for England, where this line of research did not spread nearly as widely as on the other side of the Atlantic. I think the most important reason for this divergence lies not in the difference between “civil law” and “common law” countries but in the fact that in the US there was already a long-standing and enduring influence of “legal realism” when the pioneering writings on the economic analysis of law emerged. “Legal realism” implies the belief that doctrinal, systematic, and conceptual legal considerations are not crucial to understanding norms and deciding hard cases. They cannot explain judge-made law and the judicial development of the law. This made American legal scholarship more receptive than European scholarship to influences from neighboring sciences. In England, where legal realism was not as influential as in the United States, the economic analysis of law encountered similar obstacles as on the European continent. Although I naturally regret the greater difficulties in the spread of this line of research in Europe, I confess that I am not a supporter of “legal realism” when it goes so far as to altogether questions the usefulness of classical legal doctrines. In fact, I have gained the greatest respect for legal scholarship that relies on system and concepts. Those implicitly contain the information that enables the study of law as a decision theory when either the social purpose of a norm or the end-means relations, or both, are not sufficiently known to decisionmakers. To my knowledge, economic decision theory has never convincingly addressed the actual capability of the method that legal scholars developed over centuries. Without having to say anything about purposes or ends-means relations they arrive at and justify socially relevant decisions when faced with difficult interpretive problems. However, the importance of that method declines as legal norms pursue clear ends and as scholarly research generates robust results on end-means relations.

In the 1980s, there were already several forums in Europe for scholars to present their research results on “law and economics”. These included, in particular, the European Association of Law and Economics, founded in 1984 by the Swedish economist Göran Skogh and others, and the annual workshop on institutional economics organized by Rudolf Richter from Saarbrücken, which was always attended by the leading representatives of the field. Richter was also the editor of the Zeitschrift für die gesamte Staatswissenschaft, which he renamed the Journal of Institutional and Theoretical Economics and opened to the new line of research. In addition to these venues, Claus Ott and I felt that to disseminate the economic analysis of civil law in Germany, it was important to have an interdisciplinary workshop that would be held in German and lead to German-language publications. Therefore, in 1988, we organized the first “Travemünde Symposium on the Economic Analysis of Law”, with about 15 legal and 15 economic scholars from German-speaking countries. Each presentation by a legal scholar was followed by a critical co-presentation by an economist and vice versa. In contrast to large international conferences, we allowed plenty of time for general discussion among the participants to promote interdisciplinary dialogue. The first conference was a success. The positive feedback encouraged us to organize this conference regularly every two years and to publish conference proceedings, initially with Springer Verlag and later with Mohr Siebeck. Georg Siebeck, one of the owners and our lector, put a lot of effort into these books. To him, promoting this new field of research was a personal concern. We were able to cover the conference costs through third-party funding from various funding organizations, especially the Fritz Thyssen Foundation and the German Research Foundation.

The European Association of Law and Economics also flourished. Under the leadership of Roger van den Bergh, the number of participants at the annual meetings swelled to 150 and more. From 2004 to 2007, I was president of this association and enforced new statutes which changed its legal status to a registered association under Belgium law, limited the term of the president to three years and drastically reduced the number of board members. A more professional structure of the association emerged, which ended its informal character from the pioneering days and is still in place today.

National law and economics associations also emerged elsewhere throughout Europe, for example in Spain, Italy, Poland and the UK. In 2002, at the Travemünde meeting, the German Law and Economics Association was founded, and I was its president for the first term. Since then, the association has held an annual conference.

This was part of a worldwide development that affected all continents, especially Asia and Latin America. For 15 years I was a member of the Board of the Latin American and Caribbean Association of Law and Economics. At its annual meetings, I was able to witness how the field of research was spreading there as well. I found it remarkable that when I first joined the Board, almost all the papers presented were in English. By 2015, that had changed substantially. The only English-language papers were those by authors from outside of the Spanish- and Portuguese-speaking world. In India Claus and I gave a series of lectures for young scholars at the CESS Institute in Hyderabad and the National Law School in Bangalore.

Towards the end of the 1980s, I met Hein Kötz, who had been the Director at the Max Planck Institute for Comparative and International Private Law since 1987. He had none of the widespread reservations about the new research field. In a book that he co-authored with Konrad Zweigert and that has become one of the most influential works on comparative law, being read around the world, Kötz had argued that the solutions to hard legal cases found by supreme courts in various legal systems are often very similar, even though the applicable structures, systematics, and doctrinal theories of law are very different. While working on the book, he was at the University of Chicago in an office next to Richard Posner’s, who was then working on the first edition of his “Economic Analysis of Law” and with whom Kötz had discussed this “similarity hypothesis”. According to Kötz, Posner told him that the reason for the similarity is that legal outcomes are driven not by concepts and doctrines but by economic factors. Whatever one may think of the Zweigert/Kötz theory of similarity – it evidenced Kötz’s undogmatic view of civil law and openness to the economic analysis of law, as well as to all non-legal arguments, which was a rare quality among German legal scholars. Besides Claus Ott, Hein Kötz became my most important academic partner in discussion. For more than 20 years we met almost every week for a leisurely lunch at the Hotel Elysee, talking mainly about cases and problems of civil law. From time to time, we still meet today. Hein Kötz was always interested in economic approaches and was prepared to put aside a legal doctrinal position if an economic argument convinced him. And I gained civil law knowledge at the highest level in these discussions. Almost by the way, these conversations also led to joint publications. Over lunch, Kötz and I analyzed many civil law cases from tort law, contract law, pre-contractual duties of disclosure, and property law, and we almost always came to the conclusion that economic consideration help to understand the cases and can be taken into account in supreme court decisions to further develop the law. We later (2003) published some of these cases with our economic comments in a book entitled “Judex oeconomicus”. Kötz also regularly attended the Travemünde Symposia on the Economic Analysis of Law, which greatly benefited from his brilliant contributions.

7 The European Master in Law and Economics (EMLE) in Hamburg

After the publication of our textbook, Claus Ott and I published a number of articles, some in peer-reviewed English-language journals, some in German law journals, and regularly attended the conferences of American and European law and economics associations. These publications, together with the courses held in Hamburg, contributed to the fact that our department came to be regarded as a center of law and economics in Germany, and we received requests for cooperation with foreign faculties. The Belgian civil law scholar and legal historian Boudewijn Boukkaert, who teaches in Ghent, was one of the first European legal scholars to engage in depth with the new research field and, together with Roger Van den Bergh and Michael Faure, promoted it in Belgium and the Netherlands. He was so convinced of the viability of this research that in 1990 he founded a postgraduate course that also comprised legal and economic scholars from Cambridge, Rotterdam, Paris and Madrid. This “European Master of Law and Economics” (EMLE) is a one-year course divided into three terms, which the students spend at a minimum of two different participating universities. In the first two terms, the students are taught the basics of law and economics. In the third term, the partner universities offer specialized programs, for example on intellectual property law, corporate law or regulatory law.

This program owes its existence to the entrepreneurial spirit of Boudewijn Boukkaert. At the outset, it would have been virtually impossible to have all participating universities award the joint title “European Master in Law and Economics” because this would have required not just difficult committee decisions by the participating universities but also the approval of national authorities in most countries. Boukkaert circumvented this problem by founding a private association under Belgian law called the “European School of Law and Economics”. This association comprised all the professors teaching in the program and issued a certificate to the students upon successful completion of their studies. That way, it was possible to start the program if only enough teachers could be found in the partner universities and enough students were interested in the program. In Hamburg, we received the offer to participate as a “third-term university” shortly after the program’s foundation in 1992. As chance would have it, this occurred just as the German universities were receiving additional federal funds. The University of Hamburg reserved some of these funds for Europe-related activities. We successfully applied to the university for a share of these funds and received a 10-year budget, from which we were able to pay an additional professor, five assistants, guest researchers and external lectures. This allowed us to participate in the program in all three terms and to increase the total number of students in the program from 25 to 60 and later to 100. This gave the University of Hamburg a central position in the EMLE program and at the time the only professorship for the “Economic Analysis of Law” in Europe. Roger Van den Bergh from Belgium was the first to hold that position. When he was later called to our partner university in Rotterdam, Thomas Eger succeeded him. Shortly thereafter, Claus Ott became the director of the entire consortium of partner universities, and I became the local director of the program in Hamburg. Ten years later, when the federal funding expired, the president of the University of Hamburg, Jürgen Lüthje, saw to it that our budget continued in full. For this he removed one professorial position from the economics department to the law department. For us this was very welcome, but the Dean of the economics department reacted with an annoyed comment.

8 Other Activities in Law and Economics

Since our textbook had sold out by 1992, Claus Ott and I used the summer term of 1993 to prepare the 2^nd edition. We had already met Robert Cooter and Daniel Rubinfeld from Berkeley Law School at international conferences. They knew of our plans, invited us to Berkeley, provided us with an office, and helped us where they could, including accommodation in Berkeley. The German Research Foundation financed a six-month working stay for both of us. The second edition was more ambitious and detailed than the first. In Berkeley, we had the leisure to discuss almost every aspect before writing the texts. Following the Berkeley stay, I received an invitation from the Norwegian Academy of Sciences for an eight-month research stay in Oslo, where I was able to get the second edition ready for print and write more articles on the economic analysis of tort law. It was a productive time. The second edition of the textbook was also successful. English and Chinese editions followed. Today, the book has been on the market for 36 years and is in its sixth edition (2020). A second English edition was published in 2022. To younger colleagues who are considering writing a book I can only recommend retaining the copyright for foreign language editions if they can. This saves agonizingly long and complicated negotiations later, always with the risk that the foreign-language edition will never materialize.

Anthony Ogus (Manchester) and Robert Cooter (Berkeley), having served as the long-time editors of the International Review of Law and Economics, offered that Claus Ott and I take over their roles. For more than 15 years, until 2009, we performed this editorial function in collaboration with Avery Katz (Columbia University). We were responsible for all submissions from outside of North America. This was an interesting task, marred only by having to stand idly by and watch the monopolistic practices of Elsevier Publishing. They increased the price of an annual library subscription by a factor of six within the space of a few years. The publisher had realized that the elasticity of demand for established scientific journals was very low because well-known specialized libraries that heeded their reputation could not afford to cancel them even if the price rose sharply. In fact, sales numbers of the International Review of Law and Economics to libraries fell by less than 10 percent despite this price increase. Elsevier felt its way to the Cournot monopoly price for many of its several thousand journals and made billions. Such monopolistic practices have led to a discussion which continues today as to whether academic publishing should be organized in a completely different way.

In 2000, on the recommendation of Francesco Parisi, who was teaching there at the time, George Mason University School of Law in Arlington (now Scalia School of Law) offered me a visiting professorship. In later years Dean Mark Grady upgraded this to the position of “distinguished visiting professor”. For more than 10 years, during the first half of each winter semester, from late August to October, I lectured either on economic aspects of European law or on the relationship between law and economic development. I enjoyed this time very much, not least because of the intense culture of debate. Although I disagreed with the radical libertarian and unfettered market spirit that prevailed there, I admired the intellectually stimulating climate and debates. Every week, a faculty member or someone from outside presented their research in a colloquium. In addition, there was a weekly law and economics workshop, which about half of the faculty members attended. The discussions were often fierce. Gordon Tullock, who along with James Buchanan is one of the fathers of public choice theory and modern social contract theory, was on the law faculty and known a redoubtable debater. What I found most remarkable was that the debates crossed disciplinary boundaries within law. That a criminal lawyer should attack the views of a civil lawyer and vice versa would be almost unthinkable in Germany but occurs quite naturally in the United States. I have held guest professorships at many universities around the world. In my experience, the intensity and lack of preconditions for academic discussions among colleagues is an unmistakable sign of a faculty’s academic excellence.

Arlington is where many of my English-language papers or the ideas behind them originated. I attribute this to the many discussions I had with colleagues such as Francesco Parisi, Lloyd Cohen, Daniel Polsby, and Nuno Garoupa, all of whom worked in the field of law and economics. I also had interesting conversations with Dean Mark Grady and with Gordon Tullock, who at the time was working on social organization among ants. While he was quite gracious to me personally, he was also known to be rather rude at times. When the Governor of Virginia once visited the Law School, the Dean took him to meet the most famous researcher on the faculty. Legend has it that the Governor asked Tullock if there was anything he could do for him, to which the latter replied that his air conditioner was not working properly – could the Governor fix that?

On September 11, 2001, I was in my office in Arlington and had a 10 a.m. class. I went to the lecture room a few minutes before and saw 2 secretaries holding radios to their heads. When I asked them what was going on, they said that there had been an explosion at the World Trade Center in New York. I kept walking. One of my female students came up to me and said she was scared. A plane had crashed into the Pentagon. She led me to the window, from where a column of smoke could be seen in the direction of the Pentagon. Not knowing whether to give my lecture, I went to the dean’s office, but he was sitting in a chair in the hallway, not in his office, with his head between his hands and staring straight ahead. Later, I walked to the subway to make the two stops to my apartment and family in Falls Church further outside Washington. All the stores were already closed. Handwritten notes gave the reason, “due to current events.” A police officer said to me that there were attacks with airplanes. More attacks were to be expected. He told me to get home as soon as possible. The trains from Washington were completely overcrowded. People were fleeing the city by all means of transportation and in all directions because they feared further attacks. Finally, I got a standing room in the completely overcrowded subway, where stoic silence and discipline prevailed. Not a loud word was heard, nor were any abrupt or nervous movements seen. It took several days for the mood to change, and American flags of all sizes were hoisted everywhere.

While in the US, I kept in touch with the economists at Berkely Law School, especially Robert Cooter. We shared a biographical fact: I had not started my academic career as a law and economics scholar but had focused on development economics and published on “urban bias”, the politically motivated disadvantage of the agricultural sector in the development process. Bob Cooter had started out as an anthropologist. One of his first papers dealt with the legal status of the agricultural land of indigenous tribes in Papua New Guinea. Cooter had found that Papuan land ownership rights were extremely complex compared to modern absolute rights such as private property. For example, the members of a pastoral tribe had the right to graze their cattle on the crop farmers’ fields every 10 years. This right was not based on contractual agreements but was a quasi-property right. Cooter also recognized that such in rem rights work only in small societies and must yield to simpler norms as societies become larger, more specialized, and more anonymous. For property rights, unlike contractual rights, oblige any third party to observe them. Therefore, modern absolute rights tend to be easily understood even without knowing the context, for example by relying on a simple “hands off” rule. Bob Cooter, who knew my background, offered to write a book together on law and economic development. This was most welcome, and it allowed both of us to return to our roots. A period of extensive discussions began. I suggested Cooter for the Alexander von Humboldt Research Award, which he received, and which enabled him to come to Hamburg for several months, where we worked together every day. Later, I also traveled to Berkeley for several months. In 2012, our joint book was published by Princeton University Press, entitled “Solomon’s Knot: How Law Can End the Poverty of Nations.” “Solomon’s Knot”, an iconic symbol of fruitful and trusting cooperation, points to a dilemma: Economic development depends on entrepreneurs with business ideas finding investors to fund those ideas. This potentially very fruitful relationship can be exploited opportunistically by both parties and by third parties, so that investments do not materialize, and business ideas do not come to fruition. Law or effective substitutes for formal legal norms can eliminate or mitigate this dilemma.

9 Two Guiding Stars, Amartya Sen and Rudolph von Jhering

My academic career would not have been possible without the close collaboration with other scholars. In this context, I would also like to mention my long-time office neighbor Ronald Randzio, who besides his professorship was also a half time judge at the Hamburg Regional Court and whom I often disturbed with questions about legal cases and problems, which he answered with infinite patience. These colleagues allowed me to access civil law in a fashion that would not have been available to me through self-study alone.

My mention of other scholars would not be complete if I failed to mention two more names, one of whom I know only distantly and the other I have never had the opportunity to meet: the Indian American economist and philosopher Amartya Sen and the German jurist Rudolf von Jhering (1818–1892).

Amartya Sen is world famous for his writings on welfare, freedom, social justice, and equal capabilities. I already followed his writings when I was a research assistant in Bochum and Sen was dealing with central and much discussed questions of development economics. He was already well known in the close circles of development economists since his doctoral dissertation on “Choice of Technology”, which he wrote at the University of Cambridge (England). Only later did he research the basic issues of collective choice and also presented a new explanation for the causes of famine that contrasted sharply with conventional and intuitive ideas. I have studied his writings through the decades. Sen long defended utilitarianism as a theory of social welfare because he realized the tremendous cost that abandoning this concept would have on a progressive theory of economic policy. Utilitarianism views social welfare as the sum of individual utilities. Together with the law of diminishing marginal utility of income, this theory leads to a concept of social welfare in which large income inequality is detrimental to social welfare. Utilitarianism assumes not only that everyone’s welfare can be expressed as a number, but also that these numbers can be added up and that the sum is a result that can be meaningfully interpreted. Especially the last point, the interpersonal comparability of utility, has been widely criticized. Sen has never denied the information problems of utilitarian social decision-making but has considered them surmountable and has shied away from abandoning utilitarianism in favor of the pure efficiency criterion, which does not require adding utility values. For the latter implies abandoning philosophically justifiable statements about distributive justice. If interpersonal utility comparisons are rejected, there is no welfarist philosophical basis for the claim that one must help a starving person if the only way to do so is to take something away from a rich person. This decision must then be entrusted to a social decision-making mechanism alone, such as a majority vote, with each outcome being equally good from a philosophical standpoint. Also, utilitarianism is not haunted by the well-known problems of the Arrow impossibility theorem of aggregating individual to social welfare. Sen, along with many others but by no means most economists, rejected this outcome and insisted on the possibility of interpersonal utility comparisons with what he called the extended sympathy approach. It took decades for Sen to distance himself from utilitarianism and those other social-ethical theories, which postulate that social welfare should be determined exclusively based on individual welfare (welfarism). Instead, Sen developed his own theory, according to which the most urgent social policy task is to ensure equal capabilities.

Crucial to Sen’s eventual departure from the welfarism were certain social decision outcomes created by that concept, which raise the question of whether the common good depends exclusively on information about the welfare (utility) of the members of society as assessed by themselves. This welfarist requirement has rarely been questioned by economists, but it does raise certain problems. Suppose a government budget can only be spent either on subsidizing an opera house or to help a group of severely disabled people. Now if the beneficiaries of the opera subsidy are great music enthusiasts and the disabled cannot really enjoy their lives anyway because of their disability, the utilitarian and welfarist conception of the common good requires that the opera house be subsidized. Sen was not prepared to accept such results of welfarism and therefore developed a new theory in which more objective factors than the mere aggregate utility of the members of society determine social welfare. Instead of individual welfare (utility), he focused on capabilities, which should be as equal as possible.

The 19th century jurist Rudolf von Jhering in turn impressed and encouraged me more than he influenced me. I know only parts of his work, which have, however, instilled in me the greatest admiration. In preparation for the first Travemünde conference on the economic analysis of law, I read his paper “Culpa in Contrahendo” (1861). It begins with a hard case from the time of the introduction of telegraphy, which then caused a similar hype as the internet does today. One no longer needed retail shops but could instead order everything directly from the manufacturer by telegram. In this case, a German citizen had ordered cigars by telegram, the quantity being designated as a “Kasten” – a small box, holding about 20 cigars. However, the text was garbled on the way to the recipient, who saw an order for a “Kiste” of cigars – a large box, containing about 2000. Knowing about the unreliability of this new technology, the postal service had excluded any liability for transmission errors. The cigar company delivered the large box. The customer, expecting a small box, paid no heed to this delivery, caring neither about the humidity spoiling the cigars on his doorstep nor about the invoices and payment reminders that the supplier sent. When the company claimed damages from him, he argued that no contract had been concluded and that consequently there was no contractual claim. Nor was there a claim in tort because no-one incurs a duty of conduct as a result of someone else placing something on his doorstep unasked. Von Jhering critically examined the doctrinal positions that had been assumed regarding this much-discussed case. He argued that only the sender of the telegram, if anyone, could have avoided the potential harm. His argument, albeit implicitly, was based on the concept of the “cheapest cost avoider”, as popularized much later by Calabresi. Von Jhering also argued that when the telegram was sent, the contract that failed to be concluded could already trigger a legal duty, even though it existed only as a possibility. I found this quite impressive and entirely consistent with economic thinking. Later I read that the legal concept of “culpa in contrahendo” that von Jhering had developed was over time introduced in more than 70 jurisdictions around the world, including in the “common law” country USA, to which the aforementioned Fritz Kessler contributed significantly.

The second example from von Jhering’s writings is even more impressive for an economist. In the 1860s, the most important, if not the only, environmental norm against pollution was the injunction of the landowner (actio negatoria). This was then a “property rule” in the terminology of one of the most widely cited law and economics papers by Calabresi and Melamed. These two authors argued that such injunctive rights must in principle take precedence over claims for damages because they guarantee that the victim will only accept the injury if the polluter compensates him with a sum that is at least as high as his subjectively perceived damage. This guarantees that rights to resources will go to those who value them most. This was precisely the argument of von Jhering, who criticized the acts of pollution as coercive servitudes and demanded that the factory owners acquire servitudes from the affected property owners who sanction the pollution, or they must buy all potentially polluted property in the vicinity or retreat into seclusion. Calabresi and Melamed argue, however, that sometimes the defensive right should be replaced with an entitlement to damage compensation, namely when transaction costs are prohibitively high and thus market forces are too weak for a voluntary transfer of property rights. This was also von Jhering’s thought once he saw that a market for pollution rights entailed excessive transaction costs and that the pure right of defense hindered industrial and economic development in Germany. He then advocated solutions for damages and influenced further case law, in which differentiated, and more efficient results were achieved using the concept of locality, where pollution sometimes triggers a right of defense, sometimes only leads to a claim for damages, and sometimes gives the victim no claims at all. Thus, in my view, von Jhering anticipated both the Coase theorem and the basic Calabresi-Melamed proposal. In the second English edition of the textbook on the Economic Analysis of Law (2022, pp. 540), I have attempted to pay tribute to von Jhering for this pioneering work, which predated essential insights of economic analysis by 100 years. In the light of von Jhering’s writings, it baffles me why an economic analysis of law in Germany did not emerge on this basis as early as the 19th century. Perhaps it has to do with the fact that economics in Germany at that time was dominated by the historical school, whose achievements are undeniable, but which marginalized the analytical, model-theoretical economics that is indispensable for the explicit formulation of such insights.

10 At the United Faculty of Law of Hamburg University

In 1998, the two law faculties in Hamburg were merged. This was a direct consequence of a political decision that had already been taken in 1984, when the federal legislator deleted the experimental clause from the German Judiciary Act and thus put an end to the single-stage legal education, a decision that our entire faculty deplored. The decision lacked all meaningful scientific evaluation of the model experiments and was purely politically motivated – at the time, the balance of power in the German Parliament had shifted in favor of the traditionalists among the lawyers, who saw no need for educational reform. The Hamburg State Ministry of Science did not exert any pressure on the two faculties to merge but made it clear that only limited funding was available for legal education at the University of Hamburg. This led to a rapid learning process among the colleagues in both faculties. It would no longer be possible to offer the same range of teaching specializations within a single faculty. Relations between the two faculties had not been friendly for a long time. Now, however, the impetus to merge came not from the state administration but from among the professors in both faculties as an insight into the necessity. Before the negotiations on the merger began, Claus Ott surprised me by proposing that all the existing activities in law and economics at the Department of Law II be combined in a newly formed institute, which would then be an independent organizational unit of the merged department. This would prevent a fragmentation of responsibility in the area of law and economics after the merger. This plan required a decision by the Faculty Council of Law II, which had reservations not just regarding law and economics but also regarding institutes in general, which some colleagues considered authoritarian because of their hierarchical structure. At the decisive meeting, Claus Ott gave a brilliant speech in support of the proposal to establish the Institute of Law and Economics. The motion was passed with a one-vote majority. Shortly thereafter, negotiations on the merger of the two law faculties began and were quickly concluded in a collegial spirit. The Institute of Law and Economics continued as established.

I had expected reservations against law and economics in the unified faculty, but in decision making processes there were none – quite the contrary. As the Hamburg director of EMLE, it was my task to ensure that the program was allowed to award a master’s degree or LL.M. – back then, the graduates still received a certificate from the Belgian association. The reader is reminded that LL.M. stands for “legum legum magister” – the master of both Roman and canon law. Ensuring this was not an easy feat, especially since the program admitted not only graduates in law but also economists and occasionally social scientists with little knowledge of the law, if any. The faculty council had to agree to this. The decisive factor, however, was the view in a professorial meeting. I explained that at that time several law faculties in Europe already awarded LL.M. degrees in, for example, medical law, even though those programs were also open to non-lawyers, and that an LL.M. degree for non-lawyers was therefore nothing fundamentally new. None of my colleagues objected, and the motion later passed smoothly in the faculty council. Opposition did however come from the state administration, where officials recommended that the Science Secretary deny awarding an LL.M. because the EMLE course took not three semesters, as required by the Higher Education Act, but only three trimesters. This matter dragged on until the Secretary finally agreed, overriding the objections. I had a similar experience later when I became director of the overall EMLE program and problems arose with our new partner universities in Poland and in India. In the case of the Indira Gandhi Institute in Mumbai, which is financed and managed by the Reserve Bank of India, questions arose regarding the conditions under which an Indian economic institution could award a “European Master in Law and Economics”. We were eventually able to solve those problems because there was an understanding in the university administrations and responsible ministries that it is hardly possible to involve several universities from different countries in a joint study program with a degree that fully meets all legal requirements in each country. Such problems could be solved in many but not all cases. And the reward for solving the problems was rich. Roger van den Bergh, the local coordinator in Rotterdam became very active and very successful in applying for funds from Brussels. The European Commission ranked EMLE together with 10 others as one of the best Master programs in the EU, and paid generous scholarships, a support that continues to this day and was recently prolonged for another 8 years period.

After the merger of the two law faculties, I applied to the German Research Foundation for funding to establish a graduate school on “New Forms of Private Law Cooperation and Civil Liability” with the necessary support of the faculty. The application was approved, and that really made the Hamburg law faculty the center of law and economics in Germany. It now offered a master’s degree and a structured doctoral program with scholarships, and we had the funds to invite almost all the well-known researchers in this field – especially from the USA – for lectures and talks. Colleagues from the faculty of economics and directors of the Max Planck Institute were also involved as PhD supervisors. Over the years, the number of law and economics researchers in Hamburg had grown to such an extent that Hamburg became a natural location for such a school. In addition, for several years we received funding from a special program by the German Academic Exchange Service for foreign doctoral students who came to Hamburg for a few months as visiting scholars to participate in discussions and various events. The graduate school, whose spokesperson I was from 1999 to 2008, became a successful training ground for young researchers. 11 of the doctoral students and postdocs supported by the school are now professors at German and European universities, in Israel and China. During the initial review process, the German Research Foundation had indicated that some of the reviewers found the program interesting but were concerned whether the doctoral students would be able to hold their own on the academic job market with an interdisciplinary doctoral thesis. These concerns were no longer raised during subsequent reviews. It later turned out that the graduate school had performed very well in this regard.

The Hamburg law faculty was also open to admitting doctoral students who had not passed a German state examination. My first doctoral student in the unified faculty, a Chinese lawyer who is now a professor at Shanghai International Studies University, still had to pass three major sit exams on German civil, administrative, and criminal law in German language before being admitted as a doctoral student. Later, much more flexible rules were introduced. Reinhard Bork was the chairman of the doctoral committee for many years and would probably not mind be called a classical lawyer. Yet he developed great understanding for new developments. He often helped me, for example, when in 2008 we joined the “European Doctorate in Law and Economics” in cooperation with the universities of Bologna, department of economics and Rotterdam, department of law. The program is open to economists and lawyers, who wish to pursue PhD studies at all three locations. Each participating university awards the doctoral degree to each graduate according to the local doctoral regulations (so-called multiple degree). The solution was a sui generis doctorate, the “Doctor of Law and Economics”, which can be awarded either by the Faculty of Law or the Faculty of Economics and Social Sciences in Hamburg. The program has thrived since our accession in 2008, thanks not least to financial support from the European Commission. By 2019, a total of 12 professors at law or economics departments around the world had emerged from it.

The law faculty also supported me when, following Claus Ott’s retirement, I applied for the introduction of a focus program in law and economics. Until 2005, when the new specialization program was established, the subject had only been taught as part of the focus on commercial law. The faculty also planned ahead in terms of personnel, deciding to keep the position of the Director of the Institute of Administrative Science vacant for my successor at the Institute of Law and Economics. That way, the faculty was later able to fill the position with a highly qualified scholar. These and other far-sighted decisions broadened the scope of the Institute and secured its future in research and teaching. They also helped to later attract Anne van Aaken, a well-known younger law and economics researcher in St. Gallen, to the Institute to continue her research in behavioral law and economics in Hamburg. She was awarded the generously endowed Alexander von Humboldt Professorship and brought several million euro of external funding to the Institute.

Recalling the general role of the Hamburg law faculty in establishing a center for the economic analysis of law, I am full of gratitude, while of course there was also room for aggravation about individual decisions. But when this line of research began in Germany, some younger scholars who sought to achieve similar things at their universities failed. Without hiding my light under a bushel, I can say that a faculty like the single-stage law school and later the unified department of law greatly helped in this regard. In the single-stage law school, there was a climate of effervescent and even exuberant enthusiasm for interdisciplinary legal research, without which I probably would not have become so deeply engaged in the economic analysis of law and in the study of law. The unified law faculty later set the course for the consolidation and further development of the Institute of Law and Economics with far-reaching structural decisions on research, teaching and staffing. Today, with the exception of the Max Planck Institute in Bonn under the direction of Christoph Engel, there is no academic institution in Germany or in Europe that conducts this line of research with the same intensity and conveys it in its teaching.

11 Recent Developments

Over the last two decades, law and economics research has changed considerably. It has become more psychological and empirical. Until the 1990s, the most important publications were applications of economic concepts and models to legal norms. Under the influence of behavioral research initiated by the economist Kahneman and the psychologist Tversky from Israel, this changed greatly. Hundreds of studies emerged showing that in laboratory experiments, people’s decision-making systematically deviated from the axioms of rational behavior and that people are more easily manipulated than economic theory and rational choice theory had generally assumed. These insights also yielded legal proposals that seek to realize socially desirable behavior without material incentives, i.e., through so-called ‘nudging’. The Institute of Law and Economics in Hamburg was not much involved in this research until the legal scholar and economist Anne van Aaken was appointed to a chair in “Law and Economics” in 2012. In Germany, the Max Planck Institute in Bonn, headed by Christoph Engel, has much contributed to this research. The importance of this research for economics in general and for research on the effects of legal norms remains controversial. The greater their importance, the more it seems justified to correct the irrational decisions of individuals by mild forms of paternalism. A mediating position is to principally rely on the rational choice model for the analysis of legal norms, but to reject it in favor of a psychologically informed analysis when tangible evidence from behavioral economics suggests this. It is however inconsistent to fundamentally assume that human beings are inherently irrational and unable to make reasonable, comprehensible, and justifiable decisions and, at the same time, to praise private autonomy as the highest good of the legal order.

Law and economics today is also much more empirically oriented than it was in the beginning, although empirical work has always been an important part of this research. Especially in comparative legal research, the use of econometric methods has enabled important insights in many areas. It seems to me that the reliability of empirical research has also improved thanks to new methods. For econometric analysis, all processed information must be coded as numbers. Legal scholars have often struggled with this, and econometricians have often lacked comprehensive and systematic knowledge of the legal matters they were studying. As a result, their precise methods sometimes produced incorrect results. I pick out only one spectacular result by La Porta, López-de-Silanes, Shleifer and Vishny, according to which American corporate law is far superior to that of continental European countries. The underlying theory is that portfolio investors are better protected by rules that limit the arbitrariness of management (antidirector rights). This leads to a more efficient use of the resources tied up in the company and better prevents exploitative practices by managers and powerful major shareholders at the expense of portfolio investors. These results were based on a coding that closely followed the legal texts and thus failed to take into account the influences of the legal system, legal doctrine and important supreme court decisions in civil law countries. When expert legal scholars were finally brought in and the coding was changed, it turned out that the original results of the superiority of American or Anglo-Saxon corporate law could not generally be reproduced.

In my opinion, it is therefore deplorable how little comparative law research in Germany makes use of state-of-the-art statistical methods. Even very open-minded legal scholars often only use descriptive statistics if any. More interdisciplinary teamwork is needed here. I see the risk that substantial parts of crucial legal research in Europe will in the future be conducted outside of the law departments, and I would like to illustrate this assessment with a personal experience. More than 10 years ago, I gave a talk on “law and development” at the World Bank in Washington. Like other similar organizations, the World Bank had in the 1990s recognized the centrality of law and substitutes for formal law to economic development. The research departments began collecting data on contract, property, commercial and corporate law on an unprecedented scale. This yielded econometric comparative law research which concluded that common law was conducive to economic development, while civil law, especially the French code civil, impeded development. This argument played a role in the discussion of my presentation. I was surprised that almost everyone present was firmly convinced of this, and they were even advising developing countries to replace the supposedly development-hampering code civil with common law-style judge-made law. These were economists who had read the relevant literature. I recall only one French jurist who rejected the hypothesis of the negative development effects of French civil law but was unable to comment on the methodological shortcomings of these studies. There are not enough comparative law scholars who are able to professionally question and criticize the results of such studies or come up with more reliable results themselves. Thus the present state of comparative law includes the Zweigert Kötz hypothesis according to which there exists not much difference in private law across countries, and the research results of La Porta, López-de-Silanes, Shleifer and Vishny, and others that common law is conducive to economic development, whereas civil law, especially French civil law is a path to economic backwardness. Comparative lawyers in Europe tend to reject this as wrong without having the methodological skills to do so. It is obvious that two such opposing propositions cannot coexist for long. Presently it does not seem that classical comparative law scholarship can contribute much to this debate of outstanding theoretical and political importance. This is not so much true of American law schools as of European law schools, which often do not sufficiently value sophisticated empirical research methods. I know of three younger law scholars, fully qualified lawyers from Germany, Italy, and Taiwan (where German civil law plays a prominent role), who have acquired statistical and econometric skills at great expense and in addition to their very extensive legal and comparative law training, and who have recently accepted calls to the law schools of Columbia University, Cornell University, and Harvard University, respectively. It is precisely legal scholars like them who should be made attractive offers to induce them to stay in their home countries.

12 At Bucerius Law School

Shortly before my mandatory retirement from active service at the University of Hamburg in October 2008, I was quite unexpectedly asked by the private Bucerius Law School in Hamburg whether I would like to join them as an Affiliate Professor. I gladly accepted and have been working at Bucerius Law School since 2009, teaching three courses a year. For five years I coordinated the non-law courses. During that time, I introduced an economics certificate, which is awarded along with the bachelor’s degree to students who complete a total of six economics courses and pass the associated exams. About a third of the students take advantage of this opportunity. In 2016, I became the head of a committee to make proposals to promote interdisciplinary research at the law school. This was a particular concern of our president Katharina Boele-Woelki. The commission’s proposals led to the establishment of a special program with a budget to be used for interdisciplinary research. The funding goes to research projects conducted by scholars from Bucerius Law School in cooperation with external researchers from other disciplines. The latter are given the opportunity to come to Bucerius Law School as Visiting Research Professors and to produce joint interdisciplinary publications with local colleagues, without any teaching obligations. Funding is also provided for interdisciplinary workshops that comprise legal scholars and representatives of other disciplines and which lead to a publication. I chaired this program, which has yielded many joint interdisciplinary publications by law and social science scholars, for five years until February 2022.

13 A Plea for More Interdisciplinary Legal Research

For the deliberations in the interdisciplinary committee at Bucerius Law School, I conducted some online research and was surprised by the extent to which interdisciplinary legal research has grown and become institutionalized around the world over the last couple of decades. At that time, I found 34 law-related institutes and research centers founded between 1990 and 2016 where legal scholars collaborate with representatives of other disciplines. They tend to be called Law and Economics, Law and Public Policy, Law and Business, Law and Society, and such like. Today, besides economists, the scholars involved are often political scientists, sociologists, social scientists, historians, computer scientists, and philosophers. Publications are often the joint work of two or more authors, incorporating different methodological and professional skills. Empirical research that relies on the analysis of “big data” with millions of pieces of information is also on the rise. This is a worldwide process that can be observed especially in highly ranked universities in North America, Great Britain and East Asia, and less so in Germany and continental Europe. To make a small case in point, I once counted the number of publications with more than one author that were published in the Archiv für die civilistische Praxis, a prestigious German law journal, over a ten-year period. I came up with three. In the Journal of Law and Economics, the figure was more than 100.

Many factors hinder interdisciplinary legal research in Germany. Doctrinal legal work is too strongly rewarded in the recruitment of academic staff. Some of the most promising younger scholars in my research area in Europe have had difficulty obtaining adequate positions in their home countries and have instead gone to the U.S., where an economist or social scientist with an interdisciplinary economic doctorate can apply for a law professorship if he or she completes a three-year law degree (JD). Fritz Kessler, whom I mentioned earlier, one of the most influential legal scholars in the U.S. in the 1950s and 1960s, had passed both German state exams, completed a dissertation and published a few papers when he fled the Nazis and tried to get a foothold at Yale University. He told me the dean simply asked him to teach the common law course next semester. Such a thing would be unthinkable in the reverse case, either then or now.

If law faculties in Germany want to promote interdisciplinary work in research and teaching, they must appoint either non-law professors who, however, cannot hold core courses, or law professors who are strongly involved with neighboring sciences. However, there are insufficient incentives for the latter. While an applicant may get extra points if her venia legendi also includes the subject of law and economics or legal sociology, publications of methodologically demanding and time-consuming interdisciplinary articles in respected international journals are hardly rewarded. Under these conditions, a German Guido Calabresi or Richard Posner is unlikely to emerge any time soon. Both of them, as young legal scholars, spent a great deal of time and effort immersing themselves in economics and harnessing it for their research. This never made them outsiders, quite the contrary. Calabresi quickly became well known in the U.S. and internationally, then dean of Yale Law School and later a federal judge, similarly to Richard Posner. Calabresi told me that in the late 1960s he gave a lecture at the Max Planck Institute in Hamburg on his unfinished research project, “The Cost of Accidents”, when Konrad Zweigert was its director. At the end of the event, Zweigert told him that the lecture had been very interesting but had nothing to do with law. Calabresi returned, “Maybe not yet today, but it will in the future.” In Germany, Calabresi’s work would have made him an outsider.

In the 1960s and early 70s, the renowned Italian commercial law scholar Pietro Trimarchi published a series of articles in Italian and German that contained, independently of the parallel developments in the USA, central early results in law and economics. I became aware of him through a German-language publications, which I used in the textbook on the economic analysis of civil law. Trimarchi once told me how those early papers came about. As a young professor, he taught law to economists and felt that he had to offer them something that matched their understanding. That way, he arrived at law and economics insights entirely on his own. Calabresi, who is from an Italian immigrant family, knew all of Trimarchi’s writings. He was full of admiration for that work and found it incomprehensible that it remained almost unknown. Had Trimarchi lived in the USA and published there, he would have been a well-known scholar instantly. As president of the European Association of Law and Economics, I later insisted that Trimarchi receive the Association’s first scholar prize. For this I was criticized by some colleagues because Trimarchi’s writings on law and economics had remained largely unknown, his reputation in Italy resting only on his subsequent classical legal writings.

It is possible to change the incentives for young law graduates in Germany and the EU, too. This requires not legal or institutional reforms but a rethinking of habilitation and appointment committees. Their members should be more aware of how interdisciplinary the most relevant writings in law have become. They should specifically look for applicants whose work demonstrates a professional use of research results and methods from neighboring disciplines. Easy access for economists and social scientists to law chairs, which is possible in the USA following completion of a three-year law degree, is unlikely to happen in Germany, much as it is to be desired. It is, however, possible to have such scholars teach in focus programs, as for example at the law school of the University of Hamburg. In the USA, too, the economics-trained, second generation of law and economics scholars, such as Robert Cooter, Steven Shavell and Mitchell Polinsky, were professors not of law but of “Law and Economics”.

14 Looking Back

My career owes much to a coincidence. As an economist, I became a part of the single-stage legal education in Hamburg, where the “integration of law and social sciences” had an almost axiomatic status, forcing me to take a closer look at this scientific program, its justifications and contents. I had colleagues such as Rainer Walz and Michael Adams who quickly drew my attention to law and economics, of which I had not heard before. In the civil lawyers Claus Ott and Hein Kötz and the economist Robert Cooter, I had colleagues who were willing to engage in hundreds of extended technical discussions with me. This was a privilege without which many publications would not have arisen. I was also fortunate to be involved with this new discipline at a point when it was on a steep upswing, which made it easier to attract external funding. The single-stage legal education in Hamburg ultimately remained an episode. While after the merger of the two law departments in Hamburg I was mostly involved with “classical” lawyers, the faculty made far-reaching decisions about staff structure, the recognition of interdisciplinary courses, a law and economics focus program, and an international and interdisciplinary doctoral program. These helped to expand and consolidate the activities of the Institute of Law and Economics, which Claus Ott and I had already initiated back in the days of the single-stage legal education.

In 2013, the annual meeting of the European Association of Law and Economics was held in Warsaw, and I was made an honorary member of the Polish Law and Economics Association. When I received the award, I thought of my father, who had marched through Warsaw, headed for Russia, as a prisoner of war in 1945. He later told me that the city was not ruins, but rubble, and that it would be 100 years before Germany could again have any sort of civil or even friendly relations with Poland. He would probably have been pleased with this honorary membership, even though he would have preferred me to become a tailor and take over the family business, as he had from his father.