It is easier to explain an innovation after it occurs than before it occurs. With economic innovation as with progress in science, mystery drapes the future. A theme of this book is that the analysis of law can dispel part of the mystery of growth. Economic innovation usually requires combining new ideas and capital. They naturally resist each other. We will explain this resistance in terms of the double trust dilemma — the problem of inducing the innovator to trust the investor with his ideas, and also inducing the investor to trust the innovator with her money. The solution to this problem depends on law, especially the law of property, contracts, corporations, finance, and bankruptcy. Law and growth economics will dispel part of the mystery of growth by explaining law's contribution to solving the double trust dilemma.

Like contemporary China and the USA, economics has exported much to law and imported little. Law and efficiency economics mostly consists in the economic analysis of law, not the legal analysis of the economy. By explaining the double trust dilemma, law and growth economics will improve the balance of trade in ideas between economics and law.

Original Version: 1.0 posted June 2013
Current Version: 1.4 posted August 2014
Previous versions available on request.