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Legal Institutions, Legal Origins, and Governance
"Napoleon set out to promulgate the codification of all codifications, the French Civil Code, which went into effect in 1804.
Napoleon took a great interest in his code. He personally chaired many of the meetings of the consul committee reviewing the work of the drafters. No doubt Napoleon, the man of action, insisted on the practicality of the code and perhaps its clarity and simplicity. He certainly was proud of his work; after the defeat at Waterloo, he proclaimed: “My true glory is not that I have won 40 battles; Waterloo will blow away the memory of those victories. What nothing can blow away, what will live eternally is my civil code.” That was perhaps why Napoleon wanted the code understandable by the common man. But it was drafted by professors and reflected their approach, rather than that of men of practical affairs, and certainly not that of merchants.
Being the product of professors, the French Civil Code was abstract, reflecting the “abstract reasoning [that] had characterized the French approach to law and to life in general” during the Age of Reason. But its generality and it emphasis on understandability meant that one had often to take into account a variety of provisions to determine the legal rules covering a given set of facts. Its very generality gave it staying power, with no important changes made until 1880 (except for the repeal of divorce in 1816 after the Catholic monarchy was restored). And indeed even today the core provisions of Napoleon’s code remain in place despite increasingly numerous statutory changes. No doubt it was its generality and clarity of language—Napoleon’s army and French imperialism aside—that made the French Civil Code so influential in much of the nineteenth century world that is spoken of today as the developing world. Alan Watson has made the point that when countries choose the law of another country, the prestige of the legal system under consideration counts. No doubt about it, the French Civil Code was prestigious...
Countries whose law derived from the common law had stronger legal systems for financial development and hence faster economic growth than civil law countries. An obvious conclusion was that the common law provided a superior legal base for a country (and this was true whether new countries received their law through conquest or colonization).
Equally striking was the finding that French law was the worst among civil law systems for the development of the financial sector and that German and Scandinavian legal systems were situated between common law and French legal systems. And in a related 1997 article, “Legal Determinants of External Finance,” (which was based on the same research involving the same countries), LLSV showed that common law origin countries had grown faster than French origin countries—4.30 percent per capita versus 3.18 percent... Indeed, an oddity of their work on the financial sector was that it concerned primarily the protection of minority shareholders under corporate law and the protection of creditors in bankruptcy law. Yet both corporate and bankruptcy law are legal areas where most countries—common law and civil law countries alike—rely on statutory law, much of it quite recent, rather than judge-made common law or nineteenth century civil law codes...
A different approach is to be found in an article by Mahoney, who rejected the notion that the prime influence of legal origin on economic growth was through financial development. He favored an explanation concerning the greater role for the state relative to the individual citizen in French law. Mahoney explicitly tested the relation of legal origin to economic growth, finding that common law countries grow at least 0.7 percent faster than civil law countries... Nearly a century later, in 1900, Germany adopted its own distinctive civil and commercial codes. Those codes became the base not just for German-speaking Austria and multilingual Switzerland but also the point of origin for the codes in Japan, South Korea, and Taiwan; these countries have been growing more rapidly than most of the rest of the developing world, thereby, according to a common intuition, supporting the view that German law is superior to French law for developing countries...
Merryman wrote an astute article in 1996, before the legal origin literature appeared, advancing the thesis that French law may be fine for France but is unsatisfactory for former French colonies... Merryman, in his critique, went on to contrast French law in France with French law in former colonies, arguing that when other countries adopted French law, they were not so practical:
The attempt to depict the judicial function as something narrow, mechanical and uncreative and to portray judges as clerks … has had a self-fulfilling effect. Judges are at the bottom of the scale of prestige among the legal professions in France and in the many nations that adopted the French Revolutionary reforms, and the best people in those nations accordingly seek other legal careers. One result has been to cripple the judicial systems in a number of developing countries. In France, where everyone knows how to do what needs to be done behind the separation of powers façade, misrepresentation of the judicial function does not have severe consequences. But when the French exported their system they did not include the information that it really does not work that way, and they failed to include a blueprint of how it actually does work. That has created, and continues to create, problems in nations with limited legal infrastructures and fragile legal systems"