Legal Economic Analysis Related to the State Concept of the Welfare Law

Abstract

The purpose of this essay is to identify how economic analysis of law and its link to the notion of welfare state legislation as embraced by the Indonesian State. This is a normative juridical research that is based on primary, secondary, and tertiary sources that are studied qualitatively by presenting the outcomes of the data employed descriptively. The study's findings include an economic analysis of the legislation that emphasizes efficiency in allocating and utilizing resources in order to be efficient and successful. Assume that this theory is linked to the notion of a welfare state based on utilitarianism's teachings. In such instance, efficiency may be defined as an attempt to produce welfare or prosperity for as many persons as feasible at the expense of minor individual interests. Posner's viewpoint portrayed an economic view of the law that gave rise to a behavioural law or economy. The two habits were subsequently synthesized till they fused into the law and economic behaviors. Transaction costs are then incorporated into legal contracts. Transaction costs began as economic concepts and evolved into legal norms. This behavioral theory is used in a plural society when transaction costs cannot be avoided. As a result, the rule of law is essential for maintaining legal clarity and a feeling of social fairness in society. These laws might take the shape of contracts or legislation governing ownership and property rights. Of course, all of this is aimed at improving social welfare.