Path Dependence and German Corporate Law: Some Skeptical Remarks From the Sideline


5 Colum. J. Eur. L. 189 (1999)

Helmut Kohl. Professor, Johann Wolfgang Goethe-Universitait, Frankfurt am Main, since 1979; Professor, University of Hamburg, 1975-79; Dr. Jur. University of Konstanz, 1973.

For many decades, if not centuries, jurists and others have wondered why some legal rules and institutions which might have been beneficial in the past survived even though they now seem useless, cumbersome or downright detrimental, and why some rules which for a long time were almost forgotten, suddenly are revitalized. Some cases are obvious. If a medieval law is still on the books entitling the hangman to a five shilling fee for services rendered, then we can comfortably live with that in a legal system where both the shilling and the death penalty have been abandoned. In some other cases, legal historians might furnish us with useful information about the reasons why these rules and institutions were introduced. But the basic question remains why we today still have to live with regulations that, according to our present understanding, are second best or even harmful. Why do we not choose the optimal solution?

Mark Roe has advanced a fascinating theory combining classical United States evolutionary models from law and economics, modifying them β€œto accommodate three related concepts-one from chaos theory, another from path dependence, and finally one from modem evolutionary theory,” which promises β€œa richer understanding of what makes legal and business institutions.”

In this paper I shall attempt to quickly sketch the basic ideas of these concepts, to inquire whether the German experience in the areas of merchant and corporate law lend support to one of these concepts-path dependence- and, finally, to add some observations.