Minseong Kim (University of Illinois at Urbana-Champaign) has posted Governance, Fidelity, and the Architecture of Adaptation: A Transaction Cost Economic Analysis of Constitutional Originalism on SSRN. Here is the abstract:
This paper analyzes the American constitutional debate between Originalism and Living Constitutionalism through the lens of Transaction Cost Economics (TCE) and the Theory of the Firm. By framing the US Constitution as an incomplete, long-term relational contract characterized by high asset specificity and bounded rationality, the analysis identifies “unprogrammed adaptation” as the central governance challenge. The paper argues that the “New Originalism” – specifically its distinction between fixed interpretation and flexible construction – functions as an efficient “hybrid” governance structure. This structure minimizes the sum of transaction and agency costs by preserving credible commitments (fixed meaning) while allowing for necessary adjustments (construction). Conversely, the paper contends that “Living Constitutionalism” essentially collapses the constitution into a hierarchical governance model (judicial supremacy) that is ill-suited for the specific hazards of the constitutional contract, failing to curb endogenous opportunism. Critically, the analysis explicitly frames these legal conclusions as conditional upon the validity of the underlying economic models, acknowledging the lack of a singular consensus within the theory of the firm itself. The apparent efficiency of originalism under TCE frameworks may alternatively suggest fundamental limitations in how transaction cost economics conceptualizes governance, commitment, and adaptation – pointing to the need for refinement or replacement of these economic theories rather than vindication of any particular constitutional interpretation methodology.
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