ABOUT

In debates about the future of work, scholars and policymakers often treat economic efficiency and distributive justice as the central values at stake. Those who argue for the end of employment as we know it appeal to economic efficiency. Here, they extend law and economics scholar Ronald Coase’s classic theorization of “transaction costs.” Technological innovation, this argument goes, has dramatically reduced the transaction costs of economic coordination, such that work today can be more efficiently performed through independent contracting or automation than through the institution of employment. In response, those who defend the legal form of employment invoke distributive justice concerns. Employers, they argue, should not be able to short circuit the social safety net constructed around employment simply by re-organizing production. Yet, in centering the ends, rather than the legal form itself, some cede the potential acceptability of a world without employment, so long as the economic benefits associated with it carry over, through universal basic income, portable benefits, or other policy innovations.

In this Article, I argue that neither a transaction cost-centric analysis of employment nor one focused only on broader redistribution and equitable concerns fully conceptualizes all that is at stake in the institutional design and legal regulation of how we work. This is because there are transaction benefits, not just transaction costs, associated with the organization of work. While transaction cost economics has often treated the social activity attendant to economic transactions as inherently costly, a few leading scholars have begun to argue that such social activity can have benefits too. Work can be, under the right circumstances, a site of profound transaction benefits. And, unlike distributive justice, these benefits are not independent of work’s organization; there is no substitution for them. Transaction benefits arise, or not, at the point of production, from specific organizational forms, institutional practices, and the legal rules that structure each.

Herein, I provide the first in-depth theorizing of transaction benefits at work, and law’s role in shaping them. In a moment of crisis-level political polarization and social mistrust, we can no longer afford the illusion that work was ever, or should ever be, solely about material production. From Adam Smith to Émile Durkheim, scholars have long insisted that how we work shapes the quality and character of our social solidarity – the extent to which we are, sociologically speaking, a society at all. The future of work will shape the future of our society, whether we plan for it or not. It would be wiser to plan for it, to proactively incentivize the kind of work that produces social connectedness, rather than isolation and fracture. Just as the law has been used to minimize transaction costs, so too can it be used to promote transaction benefits.

Accounting for transaction benefits is essential as we contemplate both the future of work and the future of scholarship at the nexus of law and economy. Independent contracting and automation may reduce transaction costs; they also sacrifice transaction benefits. Employment as an institution – defined not by employer’s formal right to control or even by its attendant statutory protections, but as a regular and ongoing relationship – has meaningful benefits for social trust, cohesion, and solidarity that should not be disregarded. To be clear, the organization of work today is unsustainable by any number of metrics and change is needed. But further disembedding work from our social lives is not the solution.

This project also serves broader theoretical goals, by suggesting one potential bridge between the law and political economy and law and economics paradigms. If economics cannot be neatly separated from other aspects of social and political life, and if economic maximization does not necessarily ensure social flourishing, or even social survival, we have no choice but to better theorize these complex relationships and to better account for the things that matter, notwithstanding being hard to count. Still, insisting on this duality should not mean ignoring questions of productivity or efficiency. Nor will it alter the fact that there will always be tradeoffs, that we will have to make difficult decisions about what to prioritize and how, when faced with goals that diverge. In other words, imagining a humane and efficient future for work – buttressed by a policy framework that carefully calibrates transaction benefits, transaction costs, and distributional and dignitary commitments – can help us imagine a more humane future for cost-benefit analysis too.