Weekly Topic: The Reality of Legal Rules

One of realism's main preoccupations is with the social effects of legal rules and decisions. Oliver Wendell Holmes offers this example:

Our law of torts comes from the old days of isolated, ungeneralized wrongs, assaults, slanders and the like, where the damages might be taken to lie where they fell by legal judgment. But the torts to which our courts are kept busy to-day are mainly the incidents of certain well known businesses. They are injuries to person or property by railroads, factories, and the like. The liability for them is estimated, and sooner or later goes into the price paid by the public. The public really pays the damages, and the question of liability, if pressed far enough, is really the question of how far it is desirable that the public should insure the saftey of those whose work it uses.

This example raises several questions:

1. What difficulties does Holmes's example pose for natural law and positivist approaches to legal interpretation?
2. What are some examples where the law is inconsistent with social reality?
3. Why should the law be adjusted to address these realities? How could this adjustment be accomplished?
   
4. What dangers and what benefits would result from adopting the realist position that law is not only based upon questions of social advantage, but should be evaluated according to the social effects it produces?