Vol. 6, No. 1 (January,1996) pp. 13-15

IMPERFECT ALTERNATIVES: CHOOSING INSTITUTIONS IN LAW, ECONOMICS, AND PUBLIC POLICY by Neil K. Komesar. Chicago: University of Chicago Press, 1994. 287 pp.

Reviewed by Ken I. Kersch, Department of Government, Cornell University

Over the course of the last decade or so, more and more scholars studying law and politics have abandoned traditional approaches to their field and decided that the most useful window on the political world is that provided by economics. In IMPERFECT ALTERNATIVES, law professor Neil Komesar, a true believer in the power of economic reasoning, seeks to recast the field of public policy analysis by insisting that consideration of rational decisionmaking at the margin be central to all analysis of law and public policy. In this book Komesar lays out the rudiments of a theory about "deciding who decides." That is, he considers how choices are made regarding which of three key institutions -- markets, courts, or the political process -- will resolve social and political problems. In this well-written and engaging book, Komesar both synthesizes and improves upon some of the best of the economics-focused approach to politics. That it will leave many with continuing doubts over the adequacy of that approach, however, does not detract from the signal contribution it makes to its field.

Komesar begins by bracketing the issue of the selection of policy goals and focuses on the potential routes and roadblocks to the achievement of given goals through key institutions. Komesar insists that any meaningful policy analysis must be a "comparative institutional analysis." To look only at how a single institution, such as the judiciary, resolves an issue is to understand nothing about why that issue is before that institution or about whether that institution is the appropriate institution to grapple with the issue.

After asserting that all policy analysis must be comparative, Komesar contends that, in addition, it should be "participation-centered." Participation-centered analysis focuses on the costs and benefits to transacting both within a particular institution and the comparative cost/benefit choices made between institutions. Komesar offers his book as a corrective to variety of flawed approaches to law and politics. As a law professor, he has apparently waded through too many manuscripts (including those by prominent law and economics scholars like Richard Posner) that focus only upon the courts. Such single institutional analysis, he argues, can tell us nothing about the policy process as a whole. Similarly, Komesar criticizes both traditional welfare economics with its focus only on market imperfections and the public choice school with its focus only on imperfections in the political process for their failure to undertake comparative analysis.

After laying out his general theory in the first part of his book, Komesar maps what he sees as the characteristic traits of each of the three institutions he had selected for study. Komesar argues for a "two-force model" of analysis of the political process which is able to predict whether majoritarian or minoritarian forces will dominate a particular policymaking process. In this effort he is less successful than the political scientists he cites only in passing, James Q. Wilson and

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Theodore Lowi. Both present policy models that are sharper and more susceptible to testing than is Komesar's. In his chapter on the market, Komesar takes a Coasian approach, arguing for the primacy of comparative cost/benefit analysis. In the courts section of the book, after painting a portrait of the courts as institutions, Komesar uses that portrait as a guide to help him make predictions about the type of issues likely to come before the courts for resolution and those likely to be resolved elsewhere. Following a review of these three institutions, Komesar applies his approach to three areas of public policy which have long been of interest to law professors, tort law, constitution making, and constitutional judicial review.

In its insistence upon intra-system, inter-institutional, comparative analysis, Komesar's book is clearly onto something. Comparative analysis yields insights that single variable analysis cannot deliver. Unfortunately, however, many scholars study primarily one institution for the same reason that, in his section on constitution-making, Komesar's book examines the politics of only one country: the acquisition of universal expertise is extremely costly. Moreover, Komesar should acknowledge that solid comparative institutional work is possible only because single institutional scholars have laid the groundwork by providing useful descriptions of key social institutions.

A more significant failing of this book concerned with "deciding who decides" is the odd uncertainty Komesar leaves us with regarding the answer to that very question. IMPERFECT ALTERNATIVES provides us with an intelligently annotated policy menu comprised of three selections: markets, courts, and politics. But Komesar seems to have glossed over the issue of who it is who is reading the menu and thus making the selection. Relatively late in the book, Komesar seems to come to the tentative conclusion that it is the judges who choose whether to feast upon an issue or whether to leave it to be devoured by either politics or the market. This is, I think, an extremely limited conception of the nature of political choice. Although Komesar wants his model to focus more on institutions and less on individuals, his use of the framework of cost/benefit analysis and of marginal choice brings him inevitably back to a focus on the individual -- the judge -- with all the distortions such a focus implies. Komesar's model does not allow for the possibility that institutional selection may not be a choice after all -- at least not in the way in which we commonly understand the term "choice."

A related drawback of Komesar's approach is that, in accepting the nature of institutions as given, the model is utterly static. Komesar rightly ascribes certain distinctive characteristics to each institution. But -- unlike a prominent institutionally-oriented economist not so much as mentioned in this book, 1994 Nobel Prize Winner Douglass North -- Komesar does not account for developmental change in institutions over time. In this way, Komesar bleeds out of his story precisely those historical and political processes that many scholars find most interesting. Instead, he offers a theory of de-contextualized snapshots of someone (usually a judge) making a single choice at a single hypothetical point in time.

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Komesar is also of multiple minds over whether his theory is meant to be positive, normative, or both. Overall, the book seems to be prescriptive. It seems to be directed at judges (or at least those who can influence judges), offering rigorous advice to them regarding when to attempt to resolve a policy issue and when to leave that issue to other institutions. At the same time, however, by arguing that certain issues tend to be resolved by certain institutions, Komesar seems to want to deny the agency that his propensity to advise assumes.

Komesar can use his cost/benefit analysis to both explain anything that happens and to critique anything that does not happen. As such, it is not so much an explanatory framework as it is a language for discussing key public policy issues. Which brings us back to politics. Perhaps the language of comparative cost/benefit analysis is the ne plus ultra for understanding public policy in America. But, as the weaknesses of Komesar's approach demonstrate, traditional, historically informed forms of institutional political analysis yield many insights (and ask many important questions) that narrow economic models forsake. Every institution that Komesar discusses is constituted by and changes via politics. Let's hope that not everyone gives up on the political analysis of public policy quite yet