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Law and economics is a significant field of analysis in legal studies and in
economics, although there have been a number of controversies about how best to
understand the relationship between economic relations and the regulatory role of
law. Rather than surveying this field and offering a criticism of various theories and
engaging in the dispute between different perspectives on the relationship between
the two, in this article I take an approach rooted in neither mainstream economics
nor in formal legal philosophy. Rather drawing on a recent well-rounded statement
of behavioural economics and a synthesis of previous work on the narrative of the
rule of law, I seek to explore how and why contemporary capitalism seems to have
become so tied up with the rule of law, and what this might tell us more generally
about the role of law in market relations. This analysis goes beyond the relatively
commonplace observation that capitalism requires property rights, contract law and
market institutionalisation to function, to ask ‘what exactly is it about the rule of law
that seems so necessary to establishing and maintaining market exchange(s)?’