Wealth maximization theory, its critique and transformation

Victor Dorokhin

Chapter 2 in Law, Morality and Economics, 2026, pp 75-135 from Edward Elgar Publishing

Abstract: This chapter provides a comprehensive analysis of Richard Posner's theory of wealth maximization as a normative foundation for legal decision-making. It reconstructs the development of Posner's argument, beginning with his early utilitarian influences and culminating in his effort to distinguish wealth maximization from both classical utilitarianism and Kantian ethics. Central to this framework is the concept of hypothetical markets and the notion of consent—particularly ex ante compensation—as the basis for legitimizing coercion within legal institutions. The chapter then critically examines the ethical and theoretical weaknesses of this position, focusing on the inability of wealth maximization to address distributive justice, the problem of “moral monstrousness,” and the role of non-market values such as friendship and altruism. Drawing on critiques by Ronald Dworkin, Jules Coleman, Ernest Weinrib, and Cento Veljanovski, the chapter explores the conceptual ambiguity surrounding Posner's definition of wealth and questions its suitability as a universal moral and legal standard. It concludes by suggesting that Posner's model ultimately represents a constrained form of utilitarianism, prioritizing economic rationality over moral depth and relying heavily on formal market mechanisms to achieve social goals.

Keywords: Economic analysis of law; Richard Posner; Ronald Dworkin; Transaction costs; Utilitarianism; Wealth maximization (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035379491
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