Author: Federico Sosa Valle

Hayek, or the Recursive Model of the Rule of Law

Federico Sosa Valle History, Law , , , , , , ,

What Friedrich A. Hayek sought with his three volumes of Law, Legislation and Liberty was to propose a legal-political system in which the Rule of Law principle would not be de facto replaced by the rule of men through laws (Rule by Law).

To do this, he built a recursive model of a legal system whose initial conditions were the legal customs as the only source of law. Thus, in such a system, the rule of recognition  –in the sense of H.L.A. Hart’s concept– would initially regard the customary law as the only set of rules to be enforced by the government.

In the said model of legal system, the law is separated from the state, which enforces the former and legitimises itself by that enforcement. Sovereignty resides in the law and the state is its agent and executor – but, without the said enforcement, the customary law -the initial condition of the recursive model- would only be natural law.

From a genealogical point of view, in Middle Ages monarchs were entitled as rulers by a law of succession derived from customary norms and it is from that mediaeval period that the term “Rule of Law” comes: Since their prerogative of ruling had come from legal customs, the rulers had the moral duty of enforcing them – which, in turn, acted as a limit to the power of the rulers, or at least to their legitimacy.

Evolutionarily, the administration of public affairs -as related by Max Weber in his General Economic History– ceased to be in the hands of wise men and mandarins, advisers to the monarchs, to become a matter managed by jurists, who incorporated for the decision-making and its justification the procedures and figures of private law: the social contract, the commission, decisions based on evidence, etc.

Such evolutionary emergence of the public law set new boundaries to the legitimate use of power by the rulers, in many occasions needing a written document to warrant them, such as the Magna Carta, the Bills of Rights or the declarations inserted in the Modern constitutions.

Consequently, successive layers of legality were added to the initial conditions of Hayek’s model of political legal system: constitutional laws, declarations of rights, principles and guarantees, procedural laws and statutes. It was these same legal concepts of private law that allowed giving a legal foundation to the nascent republics of the Late Middle Ages, for example, the legal figures of association, representation, etc..

However, Hayek already complained in The Constitution of Liberty –and later in Law, Legislation and Liberty again- about the consequences of the sovereignty of parliaments, that is, the competence of the legislative chambers to enact laws, replacing legal customs. It was the principle of popular sovereignty that rendered obsolete the principle according to which customary law acted as a limit to the rulers separated from the people, since the people went on to govern themselves and make their own laws.

This emancipatory narrative -in terms of Jean Francois Lyotard- collides with the evidence that, on numerous occasions, we do not obtain in return the Rule of Law but rather the rule of men through laws emanating from political will. Consequently, the path is open for critics of the Rule of Law to denounce its inconsistencies: a government of laws created by the rulers themselves is a mere masking of the political will, which is not legitimated by law but by the pure imposition of the force.

That is why the ultimate message of Hayek’s legal and political works consists of a sort of return to initial conditions of his model of relations between law and politics: legal norms are ineffective without the enforcement provided by the public force, but the process of creating them can be disentangled from that enforcement.

Of course, the choice by the political system on which norms to enforce -that is, the enunciation of a rule of recognition- can mean in itself an act of creation of law; but if, on the other hand, a constitutional system foresees the separation of the legislative functions from the functions of government, obliging the latter to enforce the laws emanating from the former, the distinction between the Rule of Law over the rule of the men is restored.

As Hayek himself recognized in his work, his proposal to create two separate assemblies, one legislative and the other governmental, is not really a proposal intended to be put into practice, but rather an ideal model that exemplifies a concept that is as fundamental as it is abstract and elusive: the separation between law and political power.

Beyond the feasibility of Hayek´s model, it does provide a demarcation criterion between liberal democracy and authoritarianism: the one that indicates that the main duty of a government towards its citizens is to enforce the rules of peaceful coexistence that respect the so-called fundamental rights, such as life, personal liberty and property, and that any program of social transformation or economic development can never justify their abrogation. Thus, any rulers who do not take into account such institutional restrictions to their policies would be involved in a true road to serfdom.

Some Reflections on Liberal Democracy, Political Meritocracy, and Critical Rationalism

Federico Sosa Valle Politics , , , , , , , , ,

We live in times in which the liberal democracy is challenged by a sort of political meritocracy according to which a performance legitimacy — i.e., the utility that government management brings to the population – would be more important than the legitimacy of origin, based on the consent of the sovereign people. Thus, economic growth and its beneficial consequences for the governed are presented as substitutes for liberal values, which often also encounters difficulties in its governance. The next step would be to replace liberal democracy with a single-party meritocracy, legitimized in its ability to efficiently provide public goods to its population. In this context, is Contractualist Rationalism still a sufficient foundation for liberal democracy? We will seek to respond to this query with the answer to another question, related to the previous one: What position would the so-called anti-Contractualists or anti-Rationalist assume in the current context?

Both for David Hume and later for Edmund Burke, political power lacks legitimacy of origin. They stated that every government is born either by conquest or by usurpation, since for a social contract to even be conceived, it must be preceded by a system of legal norms in which to fit. Therefore, if there is a political obligation on the part of the governed, it has its source in the legitimacy of exercise that, day after day, the rulers gain. However, such source of legitimacy does not come exclusively from the force with which governments impose compliance with their laws, but in the common interest of the rulers and the ruled to maintain the validity of certain norms of coexistence or justice, whose discovery is born of the practice of interactions between different individuals, its fulfillment generates a long-term benefit for society and its application begets concern for the aforementioned common interest among all members of the social and political body.

Norms and human nature

David Hume distinguished, for this, between natural and artificial virtues, belonging those norms of justice to this last category, since the man in himself would not have a natural propensity to comply with them, but they depend on a critical reasoning capable of being able to see the convenience of the universalization of such standards. For this reason, the Scottish philosopher proposed a model of an agent who behaved in accordance with a principle of limited generosity: he was not exclusively selfish, but rather had an empathetic capacity capable of putting himself in the place of his fellow man. In turn, he was not entirely rational, but that same empathy moved him to act according to his passions, such as to prefer his own kind to strangers. Continuous interactions with other human beings following this behavioral model of limited generosity allowed the social fabric to be endowed with certain structuring regularities, by virtue of the habit born from the repetition of actions inspired by said principle of limited generosity -and the consequent expectations regarding the behavior of own and others arising from the aforementioned habits of conduct.

This plexus of habits and expectations allows agents to make decisions based on a given structure of human interactions that can be identified through a standard of expected behavior, distinguishing what should be from what is not expected to be. Such rules of conduct are called by David Hume as “of justice” and their compliance habit configures “artificial virtues,” since on certain occasions they may conflict with the natural virtues concerning the principles of limited generosity that make the agent prefer his own kind to the others.

In this way, David Hume stated that human interactions form a social structure that is built upon notions of justice that he identified as those of stability in possession, its peaceful transmission and the fulfillment of the promises. These consist of social institutions that arise spontaneously from human interaction and that, because on certain occasions they may conflict with private interests, are not universally accepted spontaneously, but rather, on the contrary, need the support of force for their fulfillment. It is by providing such enforced compliance with the norms of justice that governments gain their legitimacy of exercise.

Although, as we said, the observance of these practices and institutions constitutes a particular interest shared by all members of society, since they all share the natural virtues of looking after the interests of their own group and this is what make them peacefully prosper. Nevertheless, it would be useful to illustrate those instances in which the passions that make up the natural virtues conflict with the rules that maintain such a peaceful order of coexistence and exchange: such is the case, for example, of compliance with the promises.

If a person hires another for the manufacture of a certain work that will take a certain time to complete, pays him an advance on account of the payment of the total price at the end of the work, both will be faced with possible conflicts of interest when fulfilling their respective promises. Once the contractor receives the advance of the price, he will be faced with the dilemma of complying with the execution of the work and bringing it to completion or assuming the opportunistic behavior of allocating such a sum of money for another more desired interest: to buy toys to their children, for example. Suppose that the contractor complies with his commitment and delivers the work to his client in a timely manner. In this case, the latter will be faced with the dilemma of honoring his commitment and paying the balance of the price, receiving the work, or allocating that money to a more urgent and priority need at the moment, such as helping his parents to raise a debt. If social organization were structured exclusively around natural virtues, Hume reasoned, the fulfillment of promises would be highly unlikely. Thus, artificial virtues are born, such as justice.

The role of government, in Hume’s view, is to give mandatory force to the spontaneous norms of justice -such as the aforementioned stability in possession, the peaceful transmission of said possession and the fulfillment of promises- through the establishment of sanctions and compensations that discourage non-compliance. Thus, if the contractor in our example chooses to allocate the money from the advance of the work for which he had been hired to buy toys for his children – since, naturally, the happiness of his children is above the happiness of his client -, then he should pay his counterpart a compensation for damages that will far exceed the value of the said toys. In this way, the happiness of the children of the contractor will be better guarded if he fulfills his commitments. Correlatively, if at the end of the work the contractor hands it over to his client and the latter refuses to pay the balance of the price, given that he prefers to allocate the said amount of money to pay a debt from his parents, then he will have to face a compensation that probably would exceed the value of the debts, so the debtor in this case will have a strong incentive to fulfill his part of the contract.

However, there are cases in which the breach of a promise is still advantageous even when opportunistic conduct is threatened with the payment of its compensation. In those cases, the need to be met is so urgent that its value exceeds the standard set by the positive law for breach of contract. These are the cases in which the contractor in our example no longer must buy toys, but rather food or medicine for his children, or in which the parents of the buyer of the work will have to put their house up for auction if their son does not help them in due time. In both cases, what we have is a general and abstract rule: in the case of a breach of contract, the debtor owes the payment of principal and an interest rate. On certain occasions, it will be convenient for the debtor to make the payment, on others, to face the costs of the breach.

Every system of abstract norms is articulated around standards of conduct in accordance to which the agents make decisions that will have to be rational from an ecological point of view. For example: in American law system of torts, the Rule of Hand (in honor of Judge Learned Hand) establishes that a person, in order to avert a certain risk, cannot be asked to incur in costs greater than the value of the said risk (that is, the value of the protected asset multiplied by the probability that the loss will occur.) Thus, if to avoid losing an asset with a value of $1,000 and whose probability of the loss occurring is 1%, it is unjustifiable because it is unreasonable to require its guardian to incur costs greater than $10. Likewise, in this case, personal utility and social utility coincide, since higher expenditures would mean a decrease in aggregate wealth. Correlatively, in the legal world linked to the European Continental tradition, heir to Roman law, there are expected standards of conduct such as those of a good businessman and a good family man, which establish the upper and lower limits of the duty of care.

In all cases, the person who makes the final decision about whether or not to carry out a certain action and face the consequences, natural and legal, is the individual. Empathy towards someone who is considered as one’s own works as a natural limiting factor for action, as well as rules of courtesy and moral guidelines. They all act as empirical institutions. When these are insufficient for the purpose of maintaining a stable structure of peaceful exchanges, positive legal norms become relevant, establishing mechanisms of patrimonial compensation and repressive sanctions that have a dissuasive purpose with respect to a certain range of actions. However, a liberal legal system will never prevent the commission of certain actions, but will limit itself to discouraging them and, if carried out, to compensate them. In this way, each individual will have to decide their course of action according to their particular circumstances of time and place, refraining in some cases from carrying out certain actions and, in others, carrying them out knowing that their omission is more disadvantageous than the compensation or threatened sanction.

Suppose a man wants to avenge the outrage and murder perpetrated against a daughter of his, who went unpunished due to difficulties in the evidence. The state cannot apply repressive sanctions against the suspect of the crime because he has procedural guarantees that are inviolable. However, nothing prevents the offended party from choosing to take revenge at the price of being criminally sanctioned. We can assume that the suspect of the crime achieves an interdiction against whoever is chasing him, prohibiting him from approaching him within a certain radius of meters. However, the vigilante will have to prefer to violate such a prohibition and kill the person who, according to his particular conviction, is the author of the crime against his daughter. In this last case, there is no room for doubt: the avenger is the author of the homicide against the suspect of the previous crime. The avenger ends up sentenced to serve some years in prison, plus the payment of a fine for having violated the interdiction and the payment of compensation to the relatives of his victim. Well then, the criminal being convinced of the justice of his decision, that conviction will seem like a convenient price to pay in order to avenge the outrage followed by the murder against his daughter.

Such a case does not represent a failure of the legal system as an incentive structure for decision-making. On the contrary, it is a typical case of how such a system works. Compensation and repressive sanctions are prices that structure a certain ecological rationality, since under a certain matrix of compensation and sanctions one decision will be rational, while it will not be under another. If, for example, simple homicide is punished with a sentence of deprivation of liberty from eight to fifteen years, which can be extended to twenty-five years for cases of aggravated homicide, then certain actions will be irrational and others will remain reasonable. It is unreasonable to risk receiving such a penalty in the face of a verbal insult and, as we have already seen, there are other circumstances in which an individual is willing to assume not only the risk but also the certainty of being punished.

As a result of this system of incentives represented by the norms of justice, the final distribution of resources will correspond to a greater social utility, even in cases of violation of the aforementioned norms of justice, since no one will be forced to sacrifice resources inefficiently, above its opportunity cost. In this way, we see how David Hume offers us a sort of pre-utilitarian foundation for the norms of justice. However, this utilitarian-like notion also makes it possible to comply with an ethical requirement: for the purposes of complying with the rules of justice, no one is taken as a mere means, since compliance with them must provide some type of utility for each subject and, in otherwise, he is free to break the law and voluntarily face the consequences of such non-compliance, which he judges more advantageous than obeying the law itself.

The antagonism of interests between rulers and ruled

However, although a legal-political system understood in this way preserves its morality – since it encourages each individual to act contributing to the general welfare without losing sight of the fact that each individual is an end in himself -, its raison d’etre is not in the immediate interest of each agent in general, but in the immediate interest of a particular agent, who has interests diametrically opposed to the generality of the rest of the agents: the ruler. This does not pursue the protection of the general interest in the long term by enjoying a special moral predisposition, but by the particular interest of increasing its tax collection by increasing general wealth. The ruler who has a long-run horizon does not find it convenient to consume capital, but rather to increase it. Consequently, the government -being understood as the state– is directly interested in enforcing the rules of justice, although this often implies contradicting the direct and short-term interests of the governed.

Of course, David Hume also admits that, under exceptional circumstances, it would also be convenient in the long-run to temporarily suspend the rules of justice. This would be the case, for example, of a foreign exchange or bank run, in which, respectively, the foreign exchange market is suspended or the return of deposits is rescheduled. Both a devaluation of the currency and a rescheduling of bank deposits mean a disappointment to the legitimate expectations of holders of local currency or depositors, but a bankruptcy of the currency board, the national treasury or the banking system would cause greater damage -for both the ruler and the ruled.

But, removing those exceptional cases, the general rule is that the interests of the government are the opposite complement of the interests of the governed. While the former maximizes the utility of its resources by promoting the norms of justice, the latter do so by assuming opportunistic behavior – it is worth remembering here the well-known phrase by John Maynard Keynes, insofar as “in the long run, all we are dead”. However, the long term arrives and the societies that have a high level of enforcement of the rules of justice experience higher capitalization indices than the societies do not. It remains, of course, to see who appropriates such a surplus, if everything belongs to the ruler, or if the ruled can capture some of the surplus wealth generated by the effective enforcement of the rules of justice.

In this aspect, the classic forms of government are of particular incidence: a monarchy will have the advantage of having a greater incentive to enforce the rules of justice, which in the long run increase and deepen the structure of capital and, consequently, the tax collection. At the other pole, direct democracies would tend to find numerous exceptions to the rules of justice, rendering them completely ineffective. A mixed form of government, such as a constitutional monarchy in which the king is the head of state and the leader of parliament the head of government, would balance the interests of the rulers and the ruled. Those who are interested in increasing tax collection and those who seek to reduce it. The best way to reconcile both interests would be to encourage the formation of capital through the reassurance of the rules of justice: stability in possession, the peaceful transmission of it and the fulfillment of promises. In this way, governments legitimize themselves through the exercise of power aimed at ensuring compliance with a spontaneous regulatory system, which works at the same time as a system of incentives. In this line of argument, we can find the previously named Edmund Burke and Benjamin Constant.

Not in vain are the national states the natural heirs of the absolutist monarchies. The state is an institution -or a fiction, as Quentin Skinner points out- with a vocation for permanence and perpetuity. For the state, there is no short-term calculation, although it does find -in return- opportunistic behavior by officials and magistrates. When a simple individual acts in a way contrary to the law, he assumes the risk of being discovered by the state, which watches over the long-term interest. However, when this same individual manages state assets, his willful conduct has more devices to go unpunished. Therefore, we find in all systems a special responsibility of state administrators and other officials. But, above all things, we find ourselves with a system of checks and balances, of officialdom against opposition based not on virtue, but most of the time on the desire and competition to seize power and displace under any pretext the competitors. Modern liberal democracy means not only an abstract legal system for the governed, but also a set of abstract rules and anonymous procedures that encourage competition between different aspirants to political power.

The problem of the legitimacy of power

David Hume’s empiricism allows us to conceive how the legitimacy of the government does not come from its conditions of origin but from the exercise of power for the profit of the rulers and of the ruled. Furthermore, the norms of justice are regarded as desirable or good because compliance with them increases wealth and guarantees an equitable distribution of the said income between the rulers and the ruled. However, there is no a priori content of such norms of justice, but it emerges from the nature of things and only after a critical study of such circumstances can we infer the enunciation of the abstract norms and patterns that compose it. Furthermore, the abstract normative system that precedes governments and legitimizes them through their exercise is also made up of empirical norms that are not enunciated or are impossible to enunciate -as Friedrich Hayek noted in his work “Law, Legislation and Liberty“. It is worth saying that the spontaneous normative order that we call under the category of “norms of justice” does not depend on a positive enunciation but on its observance in the facts. It is through the positivization of certain principles of justice that governments, lacking in themselves any legitimacy of origin, acquire legitimacy of exercise.

Denying that every government has legitimacy of origin implies denying that there is a moral obligation to obey positive law whatever its content. Positive law is accompanied by a moral obligation to be obeyed when its purpose is to give binding force to spontaneous norms of justice, which contribute to the general well-being of the members of society. However, this does not mean that each individual has the competence to decide for himself if a positive legal norm has moral legitimacy to be followed, but rather that this depends on a critical judgment that is made taking into account not only the particular interest of a given subject, but the general interest of the whole society. To be valid, the particular judgment of each individual regarding the legitimacy of a positive norm must meet a necessary but not sufficient requirement of impartiality -and, thus, universality.

At this point, then, it is appropriate to ask how the rulers can identify those norms of justice from others that have only the appearance of being so but actually only respond to a particular interest. It is in this instance that the characteristic of spontaneous, tacit, or express compliance with the norms that make up a spontaneous order takes on special importance. This is because, if there is a given order, in which individuals interact, form expectations around the actions and decisions of their peers and coordinate individual plans among themselves, the observed empirical norms at least fulfill the task of maintaining stable, albeit in a precarious and provisional way, the said order. Furthermore, our own personal constitution, as subjects who recognize themselves as identical to themselves over time, depends largely on a stable order of events from our environment. As Friedrich Hayek explained at the time, what we call spontaneous order can also be characterized as the structure of reality in its aspect concerning human interactions, both instantaneous and sustained over time.

In conclusion, the line of the so-called anti-Contractualists or Empiricist could in no way be affiliated with the current critique of liberal democracy by surrogate candidates, such as a single-party meritocracy, which is efficient in promoting the economic growth for the population, at the cost of their political rights and the subjugation of certain human rights, such as freedom of expression or the right of assembly. On the contrary, the way in which governments legitimize themselves, regardless of the legitimacy of their origin, is to give mandatory force to a set of norms and values that concern fundamental or natural rights and political freedoms.

On Persons, Individuals, and Humans

Federico Sosa Valle History, Law , , , , ,

It is only from a notion of the human, common to all men, that the concept of person can be dissolved into the idea of individual.

The relevance of the concept of person lies in its ability to describe functional relationships with its environment: sui juris or alieni juris, noble, patrician, commoner, serf or lord, father, minor, capable, incapable, etc. In pre-modern times, according to each function, a normative system exclusive to caste, position or estate, known as “privilege”, corresponded.

Rather, Modernity dissolves fixed personal relationships into an undifferentiated diagram of spheres of individual autonomy. Each human being ceases to be a person attached to a certain fixed function in the social fabric and, by the mere fact of being human, is the holder of his sphere of individual autonomy, equal to that of any other human being.

The legal system ceases to govern particular relationships between people to become a structure empty of intentions and purposes, which only determines procedures and delimits equal and predictable fields of interaction and clear methods for the resolution of disputes among the holders of the different spheres of individual autonomy.

The principle ceases to be that of difference to become that of equality. The difference becomes the exception, to be justified on a functional basis that results in a public benefit.

However, in the non-political sphere, that of civil society, the difference does not disappear, but is expressed in each of the individual exceptionalities, within each respective sphere of individual autonomy, while it is accidental and irrelevant to the legal-political system.

There are certain special situations framed within specific legal regimes, such as minority and intra-family relations, which enshrine assistance obligations, usufruct rights and a system of representation and guardianship.

Consequently, the role of the public sphere within civil society is defined by the procedure to be followed to settle the conflicts that could arise from the collision of the different spheres of individual autonomy.

From the moment in which each human being is an autonomous individual, the legitimate exercise of power in relation to the population does not consist in giving specific orders to subjects but in administering a set of procedures whose specific purpose is to serve as a means for different individuals settle their disputes peacefully.

Of course, in Modernity and in liberal democracies relations of command and political obedience subsist, but within the governmental structures themselves, which in turn incorporated procedural rules that limit discretion in the exercise of power and establish functions and hierarchies that define competencies and delimit individual responsibilities.

However, both modern government structures and the legal consecration of a social structure composed of equal individuals in dignity and respect are not the result of an invention but the consequence of a historical evolution whose becoming does not cease and whose hindrances persist in the field of the aforementioned civil society.

That the differences between people are exclusively functional and that such functions report a benefit to all the individuals involved, in such a way that none of them is used exclusively as a means, but is seen as an end in itself, is an imperative for the public sphere, but only a programmatic aspiration in the field of civil society.

In turn, that each person deserves equal consideration and respect is a discovery in the true sense of the word. Quentin Skinner in “The Foundations of Modern Political Thought” recounts the role played in the Late Middle Ages by the discussion that every person was endowed with an immortal soul, deserving of salvation, for the subsequent conceptualization that every human being is worthy also of legal protection regarding their fundamental interests, such as their life, their personal freedom, or their possessions.

Regarding the natural law doctrine of human rights, which states that human beings enjoy a certain set of guarantees and rights against the state and against other people, it is usually dismissed as metaphysical.

However, such statement can be understood more clearly if it is related to its historical evolution: the different freedoms already existed but assigned to different people according to their caste or status, who had an immediate and specific interest in their protection.

To cite an example, in the Partidas of Alfonso X of Castille, we find every detail of social life regulated: some had the right to bear arms but not to work, since they had to be available to the king in his court to eventually go to war; others had the right to exercise a certain trade or profession, excluding those who did not belong to their corporation, but they were not free to change their activity, neither in terms of their subject matter nor their geography. In the pre-modern world, the holders of freedoms had a specific interest in defending them, but their ownership depended on circumstances that, in the vast majority of cases, were out of their control and, in others, obsolete in terms of their functionality.

Given that this legal-political system had very little plasticity to adapt to changes in the surrounding circumstances, it was generally inefficient, stagnant, and unstable and, therefore, conflicts manifested themselves in recurrent revolts.

Modernity consisted in the universalization of liberties. This means that freedoms – or immunities against power – that already existed and whose entitlement was limited to reasons of belonging to certain castes or estates, to the exclusion in many cases of one another, began to be extended to all human beings by the mere fact of being such.

That is to say, there is nothing metaphysical in the natural law doctrine of human rights. It actually consists of the universalization of rights that already existed and were recognized.

The novelty that this brought is that each human being ceased to be considered as a person in relation to his family, his social status or his caste, to be considered as an autonomous individual and equal in rights to any other, holder of rights that he was actively interested in exercising as well as others whose content he hardly had any news or specific interest.

In turn, men exchanged differentiated rights that protected certain personal interests in exchange for new abstract freedoms, the same for each of the remaining individuals. As a result, each person gained potential spheres of action and saw specific regions of power restricted.

The nobleman gained a freedom to work and trade that he may or may not have an interest in exercising, but he lost the power he had over his serfs or was displaced by commoner bureaucrats in government functions. The shoemaker gained the freedom to emigrate to other cities or to change his trade to that of a blacksmith, in which he may or may not be interested, but he also received competition in his own town from other new shoemakers who emigrated from other latitudes, who effectively exercised such rights.

Such transformations and their discontents can be verified in the conservative authors of the beginnings of the Contemporary age, as is the case of Charles Dickens, among others.

That is why the universalization of fundamental rights -for the English tradition- or natural rights -for the American conception- constitutes both a discovery of intellectual research on historical evolution and a political program.

Whether such an extension is desirable and to what extent it should be continued or reversed largely defines political positioning from right to left. For this reason, historical evolution is not a legitimizing device in itself, but a process of discovery of various forms of social and political organization that is subject to a critical evaluation regarding which institutions and practices to incorporate, preserve, resist or modify.

On the open texture of conflicts

Federico Sosa Valle History, Law , ,

Just as language carries with it a phenomenon of open texture, according to which the reference and meaning of some of its terms are modified in response to changes in the environment — for example, saying that the head of state is commander in chief of the armed forces implies different denotations and connotations as war machines, communications, and command styles evolve -, conflicts that are prolonged over time also undergo changes in the terms that define them, as their surrounding context varies.

Thus, a dispute between individuals about the ownership of a certain asset, such as that of two heirs in dispute over the award of a property that is part of the hereditary heritage, will have to vary in intensity according to the changes in the market value of the said asset and according to the changes in the needs of those heirs as well.

Note, likewise, that the said transformation of the conditions in no way affects the conformation of the hereditary rights, but rather it is in the interest of each of the parties to enforce them.

Under certain circumstances, some of the said heirs will have to prefer to maintain the undivided inheritance and under others they will have to activate the dissolution of the hereditary community, generating a conflict in case of disparity among the heirs.

Although rights protect interests -such as life, personal liberty or stability upon possession-, not all interests deserve legal protection -such as the claim of an individual to hold a monopoly in the production of a certain good- and, among those interests which do enjoy legal protection, it will be relative and hierarchical.

Given that a legal system forms a set of consistent normative parameters, the changes in the decisions of individuals are motivated by variations in the relative value of the interests protected by said legal system, also assuming that such individuals are rational agents – i.e., they have transitive preferences.

As a corollary of the above, the normative system, while remaining identical to itself, will have to be neutral for the dynamics of the conflict, since the parties will have shaped their plans and expectations in accordance with their prescriptions.

That is why we often find analyses devoid of axiological and merely descriptive approaches. This does not mean that the rules, be they positive or natural, are not observed, but rather that a degree of compliance and constant enforcement is verified, which makes it possible to look for the reason for the changes in the decisions of the agents in other conditioning factors, such as the technology, the relative prices of goods, climatic phenomena, etc., etc..

Nor does this mean that the law does not evolve or undergo disruptive changes: there are legislative changes and judicial precedents that are modifying the content of the norms and, in turn, the norms themselves suffer the consequences of the open texture of the language in which they are expressed.

When these changes do not respond to a change in the value of the interests, but respond to a need of the legal system itself to maintain a stable and predictable order of events, the legal system maintains its neutrality, since it is transformed, jurisprudential or legislatively, when its formulations – even when they have a high degree of enforcement – are not sufficient to maintain a peaceful order of human interaction and, therefore, legal innovation has the function of reinforcing the maintenance of peace.

At this point in the discussion, it is appropriate to venture into the consequences of a legislative or jurisprudential change that had in view a different purpose than strengthening the function of law as a mechanism of social control aimed at maintaining peace between individuals who interact with each other.

If the change is jurisprudential, many times the law solves such a phenomenon endogenously: any jurisdictional pronouncement by a judge or court that departs from the content of the legal norms or that such departure is motivated by the transgression of its legal duty of impartiality with respect to of the parties to the conflict will render such pronouncement null and void and the judges will have incurred prevarication.

However, when a law is sanctioned by the legislature in contravention of its duty to dictate general and abstract norms and, instead, has the aim of favouring vested interests, little can be done beyond achieving a declaration of unconstitutionality, either by part of a constitutional court or by an ordinary court in the exercise of diffuse control of constitutionality.

This is for those cases in which the law in question also violates laws of a higher rank such as the Constitution.

Notwithstanding, when a norm is constitutional and, however, it was not enacted for the purpose of legislating in general and abstract terms, but instead sought with its sanction to favour certain vested interests to the detriment of others or public interests, little can be done for the legal system to correct itself according to an endogenous mechanism and the law, therefore, will have lost its neutral character.

It is this lack of neutrality of the legal system that delegitimizes it as a peaceful means of resolving disputes between individuals and, consequently, sharpens the intensity of conflicts, whether they consist of disputes between individuals or escalate into political questioning regarding the legitimacy of the legal-political system itself.

It was not for nothing that there were revolutions, such as the French one, which led to the enactment of civil codes, as a way of crystallising the reestablishment of a neutral normative order, generally described as fair. Note, likewise, that the Napoleonic Code did not contain any innovations, but rather consecrated –and synthesised- legislatively the jurisprudential evolution of the previous centuries.

Similarly, a territorial dispute between two countries could remain diplomatic for decades and, under a change of circumstances, escalate the conflict to a warlike stage.

This change in circumstances may be due to a redefinition of the interests of one or both countries, discoveries of wealth in the disputed territories, or technological innovations that modify the relationship of the respective countries with the geography of the disputed territory.

Note that in no way do these changes in the conditions surrounding the conflict affect a change in the titles of sovereignty over the disputed territory, but what changes is the intensity of the interest in it and the calculation of the chances of success in the event of a war escalation.

However, at the international level we find a plurality of normative sources -international custom, treaties, the norms of international organisations-, without courts of application in most cases and without a clear enforcement system to guarantee impartiality.

Despite arbitral awards can be found among small nations, which submit a territorial issue to the arbitration of a third power or institution that enjoys prestige between both countries, an issue that the parties involved do not consider of vital importance to them; but in most cases we are faced with conflicts or claims that will last over time, as long as the war alternative is disadvantageous for both parties.

Sustaining the principle that all agents who make decisions are rational, it is appropriate to ask under what conditions for such agents it is still reasonable to maintain a negotiation and under what others the most reasonable indicates escalation in the intensity of the conflict.

When the controversy occurs between two parties subject to the jurisdiction of a state and the object of the controversy has a certain relevance, the options of the parties follow one another between negotiating or going to trial.

On the other hand, among sovereign nations, although there is the alternative of submitting to an arbitration award, when the disputed issue interferes with a vital interest or makes the country’s own survival, the military confrontation constitutes the option to negotiation.

Paradoxically, when two individuals have a confrontation that is so insignificant as to be taken to court, the options also lie between negotiation or the deployment of violence -verbal or moderately physical, below the threshold of what the law would consider a crime. This occurs because both the international sphere and certain spheres of human interaction are naturally regulated.

From our point of view, this is one of the most relevant theoretical controversies: if such a natural system can be entirely deduced from reason -as maintained from Hugo Grotius onwards- and, therefore, can be stated and agreed upon by the consensus of the parties through a rational discussion, or if we can characterize natural law as an empirical normative system -as conceived by David Hume in the 18th century and later rescued by Friedrich A. Hayek- that grows spontaneously.

This last conception about the empirical character of the international rule-based order can be a convincing alternative to both realism and idealism. Even more so when the question of the neutrality of the liberal international order is questioned, both from realism and from critical currents. Since the empirical rule system emerges at the same time as the expectations of the agents, the neutrality of the resulting order will be highly probable.

Therefore, in accordance with this vision, the variation in the intensity of the conflicts will not have to be sought or justified in a modification of the rules of the game, but in a change in the relative weight of the interests in dispute, that is, in the open texture of the nature of conflicts.

A short reflection on the unintended political consequences of the right of due process

Federico Sosa Valle Current Events, Law , , , , , ,

Some days ago, The Economist published an article about the spread of the morality councils in the villages of China, whose members meet to praise the ones who they regard as well-behaved and humiliate the others who don’t. The publication used its characteristic sense of irony by pointing out that, finally, the highest ranks of the villagers found a way to exercise their “right to speak”.

Nevertheless, the said irony might lead us to a different kind of reflection on the political right to speak and the rights of due process, such as public hearings, an impartial tribunal, and an opportunity to be heard. Public hearings and impartiality are interrelated since it would be much harder for a tribunal to deliver an arbitrary adjudication if it is overseen by the society. But the public watch of the trials and the right to be heard are even more interrelated. Through these devices, the whole civil society wields the power to take notice of both the claims of the prosecution and of the ones of the prosecuted individuals, and, thus, form its judgment about the impartiality of the tribunal.

Moreover, public hearings endow the prosecuted individuals with the opportunity to exert their political right to speak without any restraint. In a political context of heavy or increasing authoritarianism, any procedures -even the one of a morality council- could resound with the voice of the contrarian. Thus, the right of due process could have -although unintended- political consequences.

Daron Acemoglu and James A. Robinson relate a poor justice system with the causes of why nations fail, exemplified by government exerting their interference over the judiciary power. Thus, extractive political institutions encroach upon the economic institutions, turning them extractive as well. Nevertheless, defending the procedural rights of the due process could work as a way to contribute to restore both inclusive political and economic institutions.

Of course, a tight authoritarian regime, such as China’s, is aware of the political consequences of free speech, even in the realm of a judiciary process. However, this insight could be profited by the countries where democracies are feeble but still exist. Promoting oral and public judiciary procedures, even for the most insignificant matters, and the right of the prosecuted individual to be heard is not just an issue of lawyers, but acquire a political dimension. The rights of due process endow the civil society with powerful tools to get familiar with main strands of the Rule of Law and the dissidents with the opportunity to exercise their own right to speak.

The immunities of the due process have a long history of discovery and extension to all human beings, beginning with the Magna Carta Libertarum of 1215, that is not fulfilled to this day. It should be something to be pondered that they are historically previous to Modern democracy. Surely, they are a logical condition as well.

The meaning of Hayek’s main views on monetary theory

Federico Sosa Valle Economics , , , , , ,

The one who is set to determine what Friedrich Hayek’s monetary theory consisted of will discover that his was a labyrinthic exploration conducted to dead-ends, which taught him what paths not to follow.

In his first years of research, Hayek was focused on the business cycle theory and on the monetary effects on the business cycles, his main objective being the pursuit of a neutral currency. This means, a monetary system that does not interfere in the price system, i.e., that the variations in relative prices express only the variations in the relative scarcity of goods, without any monetary disturbances. In this first stage, Hayek concentrated on the study of what he called “Cantillon effects,” in which the variations in the money supply did not affect prices simultaneously but were transmitted from capital goods firstly to consumer goods later, generating thus an intertemporal distortion or falsification in relative prices.

This distortion in the intertemporal value of goods is expressed in the distortion in the interest rate. It is worth clarifying about this last aspect, that for the Austrian School of Economics, which was where Hayek came from, time preference is the predominant element in the interest rate and that the monetary element represents, precisely, a disturbance in said time preference scale.

The monetary disturbances on the interest rate had two main consequences for Hayek: the first, the generation of cycles of boom and recession; the second, a process of continuous decapitalization of the economy.

In turn, in this first stage of Hayekian economic thought, stability in the purchasing power of money would not necessarily mean a neutral monetary system: that the money supply accompanies an increase in money demand, for example, could lead to a cycle of boom and recession with an initial stage of stability in the general level of prices, since the increase in the money supply would first be channeled into the capital goods market, generating an effect similar to an initial drop in the interest rate, which would then rise when the increase in the money supply reached the market for consumer goods.

In this last stage, the demand for consumer goods would increase, but the supply of such would not be able to satisfy it, since the resources -induced by the initial drop in the interest rate- had previously been redirected to the production of capital goods.

For Hayek, therefore, crises were not generated by underconsumption, but quite the opposite, by pressure on the demand for consumer goods. If this additional demand for consumer goods was not validated by further increases in the money supply, adjustment and recession would ensue. It is what was called The Concertina Effect -which later received severe critics from Hayek’s former disciple and translator Nicholas Kaldor.

But if indeed the monetary authority validated the expectations of consumers permanently, in order to avoid the slump, this would induce a gradual substitution in the production of consumer goods for capital goods. A process of a sort that John Maynard Keynes had already mentioned in his “A Tract on Monetary Reform” -to which Hayek adhered: The phenomenon of capital consumption that caused high inflation. Such a process of erosion of the capital structure of an inflationary economy would be the central theme of Hayek’s studies on the Ricardo Effect, which John Hicks proposed to rename the Ricardo-Hayek effect. This theme of his youth will accompany him both in the works of his adulthood and in his old age, as exposed in his essays “The Ricardo Effect” (1942) and “Three Elucidations of the Ricardo Effect” (1969).

To summarize, Hayek’s initial concern on monetary theory was not focused on the stability of the price level but rather on the attainment of the neutrality of money. His most relevant conclusions on this subject could be found in his short note titled “On Neutral Money” (originally published as “Über ‘neutrale Geld’” in 1933), in which he stated what follows:

“Hence the relationship between the theoretical concept of neutrality of the money supply and the ideal of monetary policy is that the degree to which the latter approximates to the former provides one, probably the most important though not the sole, criterion for assessing the maxims of monetary policy. It is perfectly conceivable that monetary influences would always give rise to a ‘falsification’ of relative prices and a misdirection of production unless certain conditions were fulfilled, e.g., (1) the flow of money remained constant, and (2) all prices were perfectly flexible, and (3) in the conclusion of long-term contracts in terms of money, the future movement of prices was approximately correctly predicted. But the implication is, then, that if (2) and (3) are not given, the ideal cannot be attained by any kind of monetary policy at all.”

In turn, in 1943, he rehearses the proposal of “A Commodity Reserve Currency“, with the purpose of giving a functional meaning to the phenomenon of hoarding: an increase in the purchasing power of money caused by a monetary demand for a reserve of value would translate into in a greater demand for primary goods by the monetary authority, which would curb the fall in prices and the monetary disturbances on the level of activity. Correlatively, a rise in spending would be offset by the sale of raw materials by the monetary authority and the concomitant sterilization of means of payment, thereby decompressing inflationary pressures. The big problem with such a proposal was the instrumentation itself: having a reserve system for a basket of raw materials is laborious and costly; in the same way that the choice of goods that make up said basket of goods is not exempt from controversy.

That is way Hayek’s attitude towards the inevitability of monetary shocks to the real economy is one of apparent resignation. When it comes to describing the incidence of the money multiplier by the banking system, Hayek points out that not much can be done about it, other than to understand that this is how capitalist economies work.

However, in 1976 – 1977, Hayek returned to contribute to monetary theory from his proposal of competition of currencies in “Denationalisation of Money”, where he questioned whether the monopoly of money was a necessary attribute of the nation state -something that dates back to the times of Jean Bodin- and proposed that the different countries that made up the then European Economic Community, instead of issuing a common currency, compete with each other in a selection process of currencies by the public.

Although Hayek is credited with having outlined inflation targeting in that book and is regarded as an inspiration to the private and crypto currencies, his main contribution remains yet to be assessed: The competition of currencies is not the best monetary system but the best procedure to discover a better one.

Previously, in his essay of 1968, “Competition as a Discover Procedure”, Hayek had stated that: “Competition is a procedure for discovering facts, which, if the procedure did not exist, would remain unknown or would not be used.” Thus, we will never define by ourselves, speculatively, how it would work the perfect monetary system, but the competition of currencies would enable us with a more powerful tool to discover which monetary system would better adapt to the changing conditions of the economic environment. The denationalization of money is not a monetary system by itself, but a device to improve the existing ones.

A few words — and many quotations – about the influence of Ludwig Wittgenstein on Friedrich Hayek

Federico Sosa Valle Culture, History, Philosophy , , , , ,

In a brief autobiographical note, Friedrich Hayek refers to the influence he had received in his younger years from both his teacher Ernst Mach and his distant cousin Ludwig Wittgenstein:

“But I did, through these connexions, become probably one of the first readers of Tractatus when it appeared in 1922. Since, like most philosophically interested people of our generation I was, like Wittgenstein, much influenced by Ernst Mach, it made a great impression on me.”

F. A. Hayek – Remembering My Cousin, Ludwig Wittgenstein

This can be seen in the analytical rigor present in his essays published in the 1920s and in his book Monetary Theory and the Trade Cycle (Geldtheorie und Konjunkturtheorie) (1929), translated by N. Kaldor and H. M. Croome from the German. However, such influence was not exclusively limited to Hayek’s youth. He was also present in the conception and writing style of The Sensory Order, published in 1952, and Law, Legislation and Liberty, the first volume of which, Rules and Order, was published in 1973.

From my point of view, the following aphorism of the Tractatus Logico-Philosophicus is the one that best allows us to appreciate the reflection of said work in Hayek:

4.12 „Der Satz kann die gesamte Wirklichkeit darstellen, aber er kann nicht das darstellen, was er mit der Wirklichkeit gemein haben muß, um sie darstellen zu können -die logische Form.

Um die logische Form darstellen zu können, mußten wir uns mit dem Satze außerhalb der Logik aufstellen können, das heißt außerhalb der Welt.“

Which could be translated as follows:

4.12 “The proposition can represent the whole of reality, but it cannot represent what it must have in common with reality to be able to represent it – the logical form.

To represent the logical form, we should have to be able to station ourselves with the proposition somewhere outside the logic, i.e.: outside the world.”

This statement about the limits of representation later finds its correlation in the following aphorisms from Hayek’s The Sensory Order, about the limits of knowledge and of the transmission of information:

8.14. While there can thus be nothing in our mind which is not the result of past linkages (even though, perhaps, acquired not by the individual but by the species), the experience that the classification based on the past linkages does not always work, i.e., does not always lead to valid predictions, forces us to revise that classification (6.45-6.48). In the course of this process of reclassification we not only establish new relations between the data given within a fixed framework of reference, i.e., between the elements of given classes: but since the framework consists of the relations determining the classes, we are led to adjust that framework itself.

Note that if there is something that “does not always work,” then we are confronted with the limits to our representation. I think that the said “framework of reference” could play the role of the “logic form” and what Hayek is describing here is the dynamics of a negative feedback process.

…

8.18. The new experiences which are the occasion of, and which enter into, the new classifications or definitions of objects, is necessarily presupposed by anything which we can learn about these objects and cannot be contradicted by anything which we can say about the objects thus defined. There is, therefore, on every level, or in every universe of discourse, a part of our knowledge which, although it is the result of experience, cannot be controlled by experience, because it constitutes the ordering principle of that universe by which we distinguish the different kinds of objects of which it consists and to which our statements refer.

Here, the subject, instead of being outside the world is inside another universe of discourse.

…

8.67. Apart from these practical limits to explanation, – which we may hope continuously to push further back, there also exists, however, an absolute limit to what the human brain can ever accomplish by way of explanation—a limit which is determined by the nature of the instrument of explanation itself, and which is particularly relevant to any attempt to explain particular mental processes.

Nevertheless, there are certain universes of discourse that human beings can never access to -so, they are outside their world.

…

8.69. The proposition which we shall attempt to establish is that any apparatus of classification must possess a structure of a higher degree of complexity than is possessed by the objects which it classifies; and that, therefore, the capacity of any explaining agent must be limited to objects with a structure possessing a degree of complexity lower than its own. If this is correct, it means that no explaining agent can ever explain objects of its own kind, or of its own degree of complexity, and, therefore, that the human brain can never fully explain its own operations. This statement possesses, probably, a high degree of prima facie plausibility. It is, however, of such importance and far-reaching consequences, that we must attempt a stricter proof.

Here, Wittgenstein’s logic form delimits the said structures of a higher degree of complexity which the subject given in a simpler universe of discourse could never trespass.

…

8.81. The impossibility of explaining the functioning of the human brain in sufficient detail to enable us to substitute a description in physical terms for a description in terms of mental qualities, applies thus only in so far as the human brain is itself to be used as the instrument of classification. It would not only not apply to a brain built on the same principle but possessing a higher order of complexity, but, paradoxical as this may sound, it also does not exclude the logical possibility that the knowledge of the principle on which the brain operates might enable us to build a machine fully reproducing the action of the brain and capable of predicting how the brain will act in different circumstances.

8.82. Such a machine, designed by the human mind yet capable of ‘explaining’ what the mind is incapable of explaining without its help, is not a self-contradictory conception in the sense in which the idea of the mind directly explaining its own operations involves a contradiction. The achievement of constructing such a machine would not differ in principle from that of constructing a calculating machine which enables us to solve problems which have not been solved before, and the results of whose operations we cannot, strictly speaking, predict beyond saying that they will be in accord with the principles built into the machine. In both instances our knowledge merely of the principle on which the machine operates will enable us to bring about results of which, before the machine produces them, we know only that they will satisfy certain conditions.

Thus, the knowledge of the principle enables us to build an abstract machine such as language, the price system, or the law, in order to form expectations of future human actions. Since such abstract machine would be built using the knowledge of the principle, it would not be deliberated designed but grown from the experience.

While Ludwig Wittgenstein confronted the subject of knowledge against the limits of the conceptual representation and threw him into the silence and into the realms of mysticism, Friedrich Hayek, on the other hand, chooses to place the said limit instance in an order of discourse more complex than the human mind, which could be the market, the language itself, or the extended society.

For Hayek, the social order works as an abstract machine, which continuously processes information and appears in the event horizon of the subjects to confirm or readjust their own classificatory systems. These classificatory systems that, in an abstract plane, each individual has and that are in a continuous process of readjustment based on the novelties that come from the spontaneous order, are abstract but, at the same time, empirical.

Among such abstract orders are the normative systems and the first volume of Law, Legislation and Liberty is devoted to their study.

‘Learning from experience’, among men no less than among animals, is a process not primarily of reasoning but of the observance, spreading, transmission and development of practices which have prevailed because they were successful-often not because they conferred any recognizable benefit on the acting individual but because they increased the chances of survival of the group to which he belonged. The result of this development will in the first instance not be articulated knowledge but a knowledge which, although it can be described in terms of rules, the individual cannot state in words but is merely able to honour in practice. The mind does not so much make rules as consist of rules of action, a complex of rules that is, which it has not made, but which have come to govern the actions of the individuals because actions in accordance with they have proved more successful than those of competing individuals or groups.”, Chap. 1, Reason and Evolution

Here we find a process of natural selection of rules of conduct, thus, provided not by representational reason, but from experience.

…

The first of these attributes which most rules of conduct originally possessed is that they are observed in action without being known to the acting person in articulated (‘verbalized’ or explicit) form. They will manifest themselves in a regularity of action which can be explicitly described, but this regularity of action is not the result of the acting persons being capable of thus stating them. The second is that such rules come to be observed because in fact they give the group in which they are practised superior strength, and not because this effect is known to those who are guided by then. Although such rules come to be generally accepted because their observation produces certain consequences, they are not observed with the intention of producing those consequences-consequences which the acting person need not know.  Chap. 1, Reason and Evolution

Here we find a concept that Hayek will use extensively along the rest of Law, Legislation and Liberty, the articulated and the unarticulated. In the terms previously used in The Sensory Order, the unarticulated is what belongs to another universe of discourse, of a more complex level.

…

The process of a gradual articulation in words of what had long been an established practice must have been a slow and complex once the first fumbling attempts to express in words what most obeyed in practice would usually not succeed in expressing only, or exhausting all of, what the individuals did in fact take into account in the determination of their actions. The unarticulated rules will therefore usually contain both more and less than what the verbal formula succeeds in expressing. On the other hand, articulation will often become necessary because the ‘intuitive’ knowledge may not give a clear answer to a particular question. The process of articulation will thus sometimes in effect, though not in intention, produce new rules. But the articulated rules will thereby not wholly replace the unarticulated ones, but will operate, and be intelligible, only within a framework of yet unarticulated rules. Chap. IV, The Changing Concept of Law

Thus, the process of articulation of new rules is not a labor of creation of new ones, but of discovering them through the limits of the universe of discourse of the individuals.

…

The contention that a law based on precedent is more rather than less abstract than one expressed in verbal rules is so contrary to a view widely held, perhaps more among continental than among Anglo-Saxon lawyers, that it needs fuller justification. The central point can probably not be better expressed than in a famous statement by the great eighteenth-century judge Lord Mansfield, who stressed that the common law ‘does not consist of particular cases, but of general principles, which are illustrated and explained by those cases’. What this means is that it is part of the technique of the common law judge that from the precedents which guide him he must be able to derive rules of universal significance which can be applied to new cases.

The chief concern of a common law judge must be the expectations which the parties in a transaction would have reasonably formed on the basis of the general practices that the ongoing order of actions rests on. In deciding what expectations were reasonable in this sense he can take account only of such practices (customs or rules) as in fact could determine the expectations of the parties and such facts as may be presumed to have been known to them.

And these parties would have been able to form common expectations, in a situation which in some respects must have been unique, only because they interpreted the situation in terms of what was thought to be appropriate conduct and which need not have been known to them in the form of an articulated rule. Chap. IV, The Changing Concept of Law

Here, “rules of universal significance” should be understood as knowledge of the principle. The general practices denote that the said order, despite of being abstract, is, nevertheless, empirical. The common expectations are readjusted through a process of articulation of rules which redefine the universe of discourse of the individuals of a given community or society.

This conception of rules allows us to a better comprehension of the notion of natural rights, since they are empirical, despite their enforcement:

Whether we ought to call ‘law’ the kind of rules that in these groups may be effectively enforced by opinion and by the exclusion from the group of those who break them, is a matter of terminology and therefore of convenience. For our present purposes we are interested in any rules which are honoured in action and not only in rules enforced by an organization created for that purpose.

It is the factual observance of the rules which is the condition for the formation of an order of actions; whether they need to be enforced or how they are enforced is of secondary interest. Factual observance of some rules no doubt preceded any deliberate enforcement. The reasons why the rules arose must therefore not be confused with the reasons which made it necessary to enforce them. Chapter V. Nomos: The Law of Liberty.

Finally, despite being the enforcement of natural rights a matter which depends upon a political decision, the authority is a subsystem inside of the same level of discourse of the individuals of the same political order. Thus, the political authority could not trespass the limits of the knowledge of the said empirical order without consequences concerning its stability. It should deal with the rules which act as the framework of individual interaction using just knowledge of the principles, articulated in general and abstract rules. As we succinctly have seen, the youth influence of Ludwig Wittgenstein on Friedrich Hayek endured until the last books of the latter. I dare not say that the Tractatus encloses the clues of interpretation of the most intricated works of F. A. Hayek, but its reader will find some common ground upon which to build a more prolific interpretation of his legacy.

Some derivations from the uses of the terms “knowledge” and “information” in F. A. Hayek’s works.

Federico Sosa Valle History, Law, Liberty , , , ,

In 1945, Friedrich A. Hayek published under the title “The Use of Knowledge in Society,” in The American Economic Review, one of his most celebrated essays -both at the time of its appearance and today- and probably, together with other studies also later compiled in the volume Individualism and Economic Order (1948), one of those that have earned him the award of the Nobel Prize in Economics, in 1974.

His interpretation generates certain perplexities about the meaning of the term “knowledge”, which the author himself would clear up years later, in the prologue to the third volume of Law, Legislation and Liberty (1979). Being his native language German, Hayek explains there that it would have been more appropriate to have used the term “information”, since such was the prevailing meaning of “knowledge” in the years in which such essays had been written. Incidentally, a similar clarification is also made regarding the confusions raised around the “spontaneous order” turn, which he later replaced by that of “abstract order”, with further subsequent replacements:

“Though I still like and occasionally use the term ‘spontaneous order’, I agree that ‘self-generating order’ or ‘self-organizing structures’ are sometimes more precise and unambiguous and therefore frequently use them instead of the former term. Similarly, instead of ‘order’, in conformity with today’s predominant usage, I occasionally now use ‘system’. Also ‘information’ is clearly often preferable to where I usually spoke of ‘knowledge’, since the former clearly refers to the knowledge of particular facts rather than theoretical knowledge to which plain ‘knowledge’ might be thought to prefer” . (Hayek, F.A., “Law, Legislation and Liberty”, Volume 3, Preface to “The Political Order of a Free People”.)

Although it is already impossible to substitute in current use the term “knowledge” for “information” and “spontaneous” for “abstract”;  it is worth always keeping in mind what ultimate meaning should be given to such concepts, at least in order to respect the original intention of the author and perform a consistent interpretation of his texts.

By “the use of knowledge in society”, we will have to refer, then, to the result of the use of information available to each individual who is inserted in a particular situation of time and place and who interacts directly or indirectly with countless of other individuals, whose special circumstances of time and place differ from each other and, therefore, also have fragments of information that are in some respects compatible and in others divergent. 

In the economic field, this is manifested by the variations in the relative scarcity of the different goods that are exchanged in the market, expressed in the variations of their relative prices. An increase in the market price of a good expresses an increase in its relative scarcity, although we do not know if this is due to a drop in supply, an increase in demand, or a combined effect of both phenomena, which vary joint or disparate. The same is true of a fall in the price of a given good. In turn, such variations in relative prices lead to a change in individual expectations and plans, since this may mean a change in the relationship between the prices of substitute or complementary goods, inputs or final products, factors of production, etc. In a feedback process, such changes in plans will in turn generate new variations in relative prices. Such bits of information available to each individual can be synthesized by the price system, which generates incentives at the individual level, but could never be concentrated by a central committee of planners. In the same essay, Hayek emphasizes that such a process of spontaneous coordination is also manifested in other aspects of social interactions, in addition to the exchange of economic goods. They are the spontaneous –or abstract- phenomena, such as language or behavioral norms, which structure the coordination of human interaction without the need for a central direction.

“The Use of Knowledge in Society” appears halfway through the life of Friedrich Hayek and in the middle of the dispute over economic calculation in socialism. His implicit assumptions will be revealed later in his book The Sensory Order (1952) and in the already mentioned Law, Legislation and Liberty (1973, 1976 and 1979). In the first of them, we can find the distinction between relative limits and absolute limits of information / knowledge. The relative ones are those concerning the instruments of measurement and exploration: better microscopes, better techniques or better statistics push forward the frontiers of knowledge, making it more specific. However, if we go up in classification levels, among which are the coordination phenomena between various individual plans, which are explained by increasingly abstract behavior patterns, we will have to find an insurmountable barrier when configuring a coherent and totalizer of the social order resulting from these interactions. This is what Hayek will later call the theory of complex phenomena.

The latter was collected in Law, Legislation and Liberty, in which he will have to apply the same principles enunciated incipiently in “The Use of Knowledge in Society” regarding the phenomena of spontaneous coordination of individual life plans in the plane of the norms of conduct and of the political organization. Whether in the economic, legal and political spheres, the issue of the impossibility of centralized planning and the need to trust the results of free interaction between individuals is found again.

In this regard, the Marxist philosopher and economist Adolph Löwe argued that Hayek, John Maynard Keynes, and himself, considered that such interaction between individuals generated a feedback process by itself: the data obtained from the environment by the agents generated a readjustment of individual plans, which in turn meant new data that would readjust those plans again. Löwe stressed that both he and Keynes understood that they were facing a positive feedback phenomenon (one deviation led to another amplified deviation, which required state intervention), while Hayek argued that the dynamics of society, structured around values such like respect for property rights, it involved a negative feedback process, in which continuous endogenous readjustments maintained a stable order of events. Hayek’s own express references to such negative feedback processes and to the value of cybernetics confirm Lowe’s assessment.

Today, the dispute over the possibility or impossibility of centralized planning returns to the public debate with the recent developments in the field of Artificial Intelligence, Internet of Things and genetic engineering, in which the previous committee of experts would be replaced by programmers, biologists and other scientists. Surely the notions of spontaneous coordination, abstract orders, complex phenomena and relative and absolute limits for information / knowledge will allow fruitful contributions to be made in such aspects.

It is appropriate to ask then how Hayek would have considered the phenomenon of Artificial Intelligence (A.I.), or rather: how he would have valued the estimates that we make today about its possible consequences. But to adequately answer such a question, we must not only agree on what we understand by Artificial Intelligence, but it is also interesting and essential to discuss, prior to that, how Hayek conceptualized the faculty of understanding.

Friedrich Hayek had been strongly influenced in his youth by the Empirical Criticism of his teacher Ernst Mach. Although in The Sensory Order he considers that his own philosophical version called “pure empiricism” overcomes the difficulties of the former as well as David Hume’s empiricism, it must be recognized that the critique of Cartesian Dualism inherited from his former teacher was maintained by Hayek -even in his older works- in a central role. Hayek characterizes Cartesian Dualism as the radical separation between the subject of knowledge and the object of knowledge, in such a way that the former has the full capabilities to formulate a total and coherent representation of reality external to said subject, but at the same time consists of the whole world. This is because the representational synthesis carried out by the subject acts as a kind of mirror of reality: the res intensa expresses the content of the res extensa, in a kind of transcendent duplication, in parallel.

On the contrary, Hayek considers that the subject is an inseparable part of the experience. The subject of knowledge is also experience, integrating what is given. Hayek, thus, also relates his conception of the impossibility for a given mind to account for the totality of experience, since it itself integrates it, with Gödel’s Theorem, which concludes that it is impossible for a system of knowledge to be complete and consistent in terms of its representation of reality, thus demolishing the Leibznian project of the mechanization of thought.

It is in the essays “Degrees of Explanation” and “The Theory of Complex Phenomena” –later collected in the volume of Studies in Philosophy, Politics, and Economics, 1967- in which Hayek expressly recognizes in that Gödel’s Theorem and also in Ludwig Wittgenstein’s paradoxes about the impossibility of forming a “set of all sets” his foundation about the impossibility for a human mind to know and control the totality of human events at the social, political and legal levels.

In short, what Hayek was doing with this was to re-edit the arguments of his past debate on the impossibility of socialism in order to apply them, in a more sophisticated and refined way, to the problem of the deliberate construction and direction of a social order by part of a political body devoid of rules and endowed with a pure political will.

However, such impossibility of mechanization of thought does not in itself imply chaos, but on the contrary the Kosmos. Hayek rescues the old Greek notion of an uncreated and stable order, which relentlessly punishes the hybris of those who seek to emulate and replace the cosmic order, such as the myth of Oedipus the King, who killed his father and married his mother, as a way of creating himself likewise and whose arrogance caused the plague in Thebes. Like every negative feedback system, the old Greek Kosmos was an order which restored its lost inner equilibrium by itself, whose complexities humiliated human reason and urged to replace calculus with virtue. Nevertheless, what we should understand for that “virtue” would be a subject to be discussed many centuries later from the old Greeks and Romans, in the Northern Italy of the Renaissance.

A Note on “Hayekian” Empirical Normative Systems

Federico Sosa Valle Liberty, Law , , , ,

In the first volume of Law, Legislation and Liberty (1973), we will find the most daring theses of Friedrich Hayek regarding the problem between law and politics. Just as his economic work of the 1930s and 1940s had been, in his opinion, misunderstood by his colleagues; just as he was surprised to hear the fervent readers of The Road to Serfdom (1945) attribute positions to him that he had not exposed there; also his legal-political work triggered simplifying interpretations that conceal the main contributions, still relevant for this time.

In Norms and order –that is the title of that first volume- the author does not propose to abandon legislation and return to customary law, nor to replace the political decisions of the administration of state affairs by a government of judges. On the contrary, it is stated there with a clarity that leaves no room for doubt that the powers of the state must be organised and operate in accordance with the rules and procedures of public law, made up of legislative bodies endowed with rules with a clear teleological content.

On the other hand, the genuinely innovative thesis that Hayek exposes in the aforementioned volume consists in affirming that the interactions between individuals in the scope of their exchanges destined to cooperate freely and voluntarily in the coordination of their respective life plans are structured around a set of abstract rules –that is, lacking a specific purpose- and general rules whose observance could occur in practice without the need for a positive enunciation. It is for this reason that Hayek affirms that the law is not created, but discovered, and that it is not legislated, but rather evolves.

On this last point, John Gray at his time, many years after Hayek’s death, lamented that his former mentor had spent the last years of his life discussing pseudoscientific ideas around alleged evolutionary theories. However, such suspicion cannot fall in any way on the triptych of “Law, Legislation and Liberty” (1973; 1976 and 1979).

What is found in the said work is an express taking sides with a tradition of thought that extends from the Late Middle Ages, the Renaissance and the beginnings of Modernity: the school of natural law understood as something different from an ideal, derived from reason, about what should be, but to a set of normative beliefs effectively extended in a given population, which condition their behaviour, contribute to the formulation of a critical judgement about the value of actions and allow the formation of expectations about the expected behaviour of peers and, therefore, facilitate the ideation and coordination of individual plans.

For Hayek’s own epistemological conceptions, this tradition of thought acts as a kind of discovery mechanism on certain aspects of the legal phenomenon and the structural characteristics present in all human interaction and therefore his constant appeal to the history of ideas.

Hayek, in a peaceful and incontrovertible way for any specialist in the matter, syndicates Hugo Grotius as the initiator of the rationalist and idealist school of natural law, although holding him responsible, as he did, for the evolution of the identification of legislation as the only and exclusive source of law could be considered as an overly emphatic statement, which would abandon the very premises of cultural evolutionism to which Hayek himself adhered: if Grotius’ theses were so successful, it was largely due to the subsequent advent of the national states.

Although the truth is, however, that the characterization of Natural Law as a derivative of reason later allowed, in the 20th century, to receive from legal positivism the rejection of all Natural Law as “metaphysical”, thus leaving the formulation of the Law at the mercy of politics and, with it, in a serious crisis the very notion of “Rule of Law”.

It is for this reason that Hayek set out to rehabilitate the empiricist current of Natural Law, which seeks normative statements not in the derivations of reason, but in the discovery of notions about what could be considered right behaviour towards others through the investigation of patterns of behaviour actually observed in a given community that is structured around peaceful exchanges repeated over time.

The archetypal example of such kinds of normative structures given in practice, independently of their enunciation by any type of legislator, is represented by the communities of merchants: a repeated series of regular exchanges generates certain expectations about the conduct to be observed by the members of said group of merchants, which also allow to conceive and coordinate other business plans. For this reason, many times, conflicts between merchants are resolved through friendly settlers, or arbitrations, and judges resort to the opinion of specialised experts in a certain commercial area to dictate their decisions.

Such examples do not constitute proof that all law is spontaneous, but rather a powerful counterexample to the theses that hold, on the one hand, that legislation is the only possible source of law and those that, on the other, affirm that all law must be derived from reason.

Although both antithetical visions are synthesised in the figure of the rational legislator, whose legislative enunciations are derivatives of public reason, this in turn receives -in the first half of the 20th century and today- challenges from Realistic doctrines, which state that legislative activity is not a product of public reason, but of the exercise of political will.

It is in relation to this contest that Hayek plays the card of cultural evolutionism and of the legal system as a spontaneous order. In this sense “Law, Legislation and Liberty” is a new elaboration of “The Road to Serfdom”.

This theoretical controversy maintains its full validity to date: the confrontation that the predominant species of Liberalism, of an idealistic and rationalist nature, seems to be losing against Political Realism, which places political will above a system of human coexistence based on rules and not on discretionary decisions. In Hayek’s case, he sides with a rule-based political system, but what sets him apart from prevailing Liberalism is that such rules are not derived from reason, but rather emerge from experience.

This experience not only produces norms of just conduct to be discovered by the courts and enunciated by legislators, but it is also responsible for structuring the very apparatus for understanding such norms. It is for this reason that Hayek himself, in his book The Sensory Order (1952), called his particular philosophical vision “pure empiricism.”

Of course, an empiricist conception of Natural or Fundamental Rights – based on Adam Ferguson, David Hume and Edmund Burke, among others – is not exempt from difficulties, the main one being the task of identifying those empirical norms that effectively contribute to maintain a peaceful order of coexistence and provide them with the corresponding enforcement.

However, despite such difficulties, affirming that the existence of Natural Rights emerges from the experience that structure a peaceful order of coexistence and that they are the ones that legitimise the exercise of power and not vice versa, already constitutes in itself an affirmation worthy of being considered and, eventually, defended.

Liberal Democracies and Authoritarian Regimes: The Case for Law Enforcement. (Part 12 of 12)

Federico Sosa Valle Law, Liberty , , , ,

Conclusions

To a large extent, the deficiencies in the application of legal norms were usually attributed to cultural issues related to a low level of regulatory compliance by the population because the first of the concepts – that of normative application – is extremely elusive when it comes to categorize it as a matter of law or politics. As has been pointed out, the law enforcement fulfills a function similar to that of the logical figure described by Ludwig Wittgenstein in his Tractatus Logico-Philosophicus: it does not fully belong to one or the other discipline, but rather marks the contours that they limit each other. The law enforcement depends on a political decision, but such a political decision makes up the defining characteristics of a political regime: Rule of Law or Rule by Law. Systems that have a low regulatory application give governments too wide a margin of excessive discretion to selectively apply the law, without respecting the principle of equality of the law and with the purpose of persecuting dissidents and opponents, which results characteristic of authoritarian and totalitarian regimes.

On the other hand, although it concerns an eminently legal field of action, the dynamics of the incentives generated by a low regulatory application prevent it from being increased by intra-legal mechanisms. This is because, in general, a low level of regulatory application is accompanied by relatively high penalties, so that the activation of judicial mechanisms aimed at achieving a higher level of law enforcements by officials leads to the generalization of sanctions disproportionate to the protected legal assets.

Therefore, the solution to such problems of normative application does not depend on the judicial system, but on its political processing through the legislative branch, since, to get out of the trap in which the political system is involved, in addition to increasing the provision of resources destined to ensure compliance with the law, the penalties provided should be reduced in order to function with a lower degree of application.

A good example of this could be the reduction of taxes in a framework of high tax evasion, which can be proposed by virtue of principles of equity and which can also be aimed at achieving higher tax collection. This last aspect is of particular relevance when considering the political incentives to proceed with the aforementioned reform. This is because, as has been stated, any increase in the law enforcement implies a reduction in the level of discretionary exercise of power, that is, a greater limitation of the power of governments.

In this last aspect, the political action to be deployed in the legislative chambers once again takes on importance, since such reductions in the levels of discretion can only be obtained thanks to the exchange of laws that characterizes all legislative work.

Finally, it should be noted that, if what is sought is a higher level of law enforcement in order to limit the discretion of the executive branch, then the most effective strategy will be to demand a reduction in the levels of taxes, penalties and fines, since this will serve as an incentive so that, in order to maintain the previous level of social control, to proceed, in view of the reduction of penalties, to raise the levels of law enforcement, thus generating a virtuous circle according to which the rates of spontaneous regulatory compliance by the population.

Such a political strategy is entirely consistent with the notion of every constitutionally limited government and every free society, according to which each citizen must enjoy the widest sphere of individual autonomy. Likewise, the results to be obtained in this way contribute to materialize the ideal of individual freedom understood as the absence of arbitrary coercion, since this depends in a singular measure on the characteristics of the legal system and its enforcement by public authorities.

However, as was duly stated, when a political legal regime has deficient levels of law enforcement, it is positively fed back adding a low rate of regulatory compliance by the population, thus worsening in a process of incessant deterioration. Consequently, those objectives of institutional improvement can rarely be achieved without political determination on the part of citizens committed to defending their freedoms.

[Editor’s note: this is Part 12 in a 12-part essay; you can read Part 11 here or read the essay in its entirety here.]

Liberal Democracies and Authoritarian Regimes: The Case for Law Enforcement. (Part 11 of 12)

Federico Sosa Valle Law, Liberty , , ,

In the case of judicial decisions based on reasons of justice and equity, it must be taken into account that, although the substantive law in these cases is set aside, the other procedures informed by the principles of due process are respected: the law to be heard, to offer evidence and supervise its production and to access an impartial tribunal, among others. Likewise, so that the judicial resolution based on equity is not arbitrary, it must also configure a judicial precedent and it must not be contradictory with other judicial precedents, since, if the courts depart from the substantive law in order to attend to the special circumstances of the case, they should resolve in the same way before similar cases in which the same circumstances that motivated a resolution for equity have been or were presented.

With respect to the cases in which the law itself grants a public administration official a certain scope of discretion on a given matter, it should be noted that said powers do not violate higher-ranking norms, such as constitutional rights and guarantees. A public official has an indisputable margin of discretion to decide what color to paint the building of the body under his direction and, if he does it with too strident color, in any case he will incur not a legal responsibility but another of strict order. political, according to which a higher-ranking official shall proceed to exercise his respective discretionary powers to remove him from his functions.

Outside of these specific cases, it is expected that in the Rule of Law system all decisions, both governmental and judicial, will be taken based on rules that are intended to limit the arbitrariness of those. This limitation allows individuals to conform their expectations regarding the expected behavior of other individuals and of the powers of the state themselves and, in such a way, to devise their life plan and coordinate it with the plans of their fellow human beings. Such a legal system demarcates the spheres of individual autonomy, within which each person should not be accountable to anyone, except to their conscience, and provides for a conflict resolution system for the eventuality that a dispute arises between individuals or between individuals. and the state. Such controversy does not necessarily have to consist of a violation of the norm, but it can also come from an interpretative disagreement between the parties who are convinced that they are acting according to the law but who, nevertheless, reach conflicting decisions.

In such a system of dispute resolution, based on legal norms known to all, be they written or customary, arbitrariness is reduced to cases of judicial error – generating natural obligations, that is, of mere moral compliance. Consequently, a system of administrative and judicial decisions based on rules contributes to materializing the ideal of respect for individual freedom, understood as the absence of arbitrary coercion.

Therefore, it is understood how the low law enforcement by the public powers, which generates incentives for systematic legal non-compliance by individuals and, likewise, grants a wide margin of discretion to those public powers to carry out a whimsical law enforcement, implies a real change of political regime.

[Editor’s note: this is Part 11 in a 12-part essay; you can read Part 10 here or read the essay in its entirety here.]

Liberal Democracies and Authoritarian Regimes: The Case for Law Enforcement. (Part 10 of 12)

Federico Sosa Valle Law, Liberty , , , , ,

However, theorizing about law enforcement takes on vital importance when it comes to considering whether a low level of law enforcement denatures the Rule of Law in such a way that it implies, de facto, a change of regime. That is, when it happens that, under the shell of a constitutional system, an increasingly authoritarian system begins to develop, which successively curtails freedoms and deteriorates the viability of individual life plans, denigrating the dignity of people, through the file to weaken the application of the legal norms destined to protect said rights, guarantees, and freedoms.

For this reason, a liberal political regime requires a substantive content that involves the express recognition of individual freedoms and rights, but also requires in a vital way the respect and enforcement of those procedures that make their effective exercise possible. This is, through a high degree of law enforcement, previously inspired by those political principles typical of liberal democracies.

When we are in the presence of a constitutional system that is designed to guarantee the existence of a government limited by the law itself and to protect the freedoms and rights of individuals, a low level of application of legal norms implies a true denaturalization of such a regime. political and a de facto transition to an authoritarian system of government. As has been pointed out, given that the low law enforcement imposes high opportunity costs on those who spontaneously choose to comply with the law and places them at a severe disadvantage compared to their competitors, the reduced law enforcement works as an incentive to generate low regulatory compliance by the population. In turn, assigning such low regulatory compliance by citizens to cultural or ethnic characteristics works as a pseudo-sociological foundation to increase punishments and continue the aforementioned de facto transition towards an authoritarian or totalitarian system.

A similar mechanism had been noted at the time by Friedrich Hayek in his well-known book The Road to Serfdom, although he did not focus so much on the low law enforcement as on the pretexts and excuses used to justify such a transition towards an authoritarian system. Generally, in a mistaken way, the “road to serfdom” is characterized as a process of increasing state interventions, but such assertion does not constitute the core of either the aforementioned book or about what should be understood by a road of servitude. As Hayek stated on that occasion, we are not faced with a political process of this type when governments intend to carry out a plan of social and economic transformation in accordance with a model of society whose characteristics are rarely stated expressly and which is placed above the procedures and constitutional safeguards designed to legally limit the power of governments and defend the rights and guarantees of individuals. Thus, the system of constitutional safeguards is seen as too onerous an obstacle for the transformation process set in motion and, consequently, it begins to be de facto repealed through a low level of regulatory application and the gradual replacement of a political decision-making system. based on rules by another of decisions taken based on the opportunity, merit and convenience related to the aforementioned model of society to which it is aspired to achieve.

Both in the case of the path of servitude, as of a smooth and flat deterioration of the levels of law enforcement, we find ourselves in the presence of a transition of political regime: from the Rule of Law towards an increasingly authoritarian system: the government of the pure will of men, free from legal and constitutional ties. In both cases, the validity of the notion of individual freedom as the absence of arbitrary coercion is under serious threat.

As it will have to be repeated every time it is necessary to do so, it does not depend on cultural, historical or ethnic traits. Such processes of political regime change respond to an incentive system that perverts the functional dynamics of the Rule of Law. In the case under study here, the low application of legal norms.

But to describe with a greater degree of precision what the aforementioned process of de facto change of the political regime, from liberal democracy and the Rule of Law to authoritarian or totalitarian systems consists of, it is necessary to delve into the distinction between decisions based on rules and those that are They are motivated by reasons of opportunity, merit or convenience, that is, in the exercise of discretionary power.

As previously admitted in this writing, every government official, whether he belongs to the administration or is a judicial magistrate, enjoys a certain margin of discretion in the exercise of his functions and within the framework of competences that the Constitution and the laws give him. grant. Thus, a judge can say the right for a specific case that is subject to his jurisdiction within a range of alternative solutions that the law and judicial precedents impose on him. Thus, we are not faced with a mechanical law enforcement -which is reminiscent of the modern aspiration of “mechanization of thought” – but rather in a judgment of the adequacy of the rules to the specific case that the courts carry out taking into account the special circumstances of people, time, and place that the law, being expressed in abstract and general terms, cannot foresee. However, such adaptation of the law to the specific case should not in any way distort the meaning, scope and purpose of the law. Something similar occurs with administration officials, who enjoy certain powers granted by law and who have a margin of discretion to operate within it, which is subject to control by other hierarchical state bodies, superior or judicial.

Likewise, there are situations in which both judges and public officials deviate exceptionally from the abstract and general guidelines of the laws without them configuring any illicit, that is, exceptions that are within the legal system itself. Thus, we find ourselves in the judicial sphere with judgments that are based on notions of justice and equity and in the administration sphere with discretionary powers expressly granted to officials by law.

[Editor’s note: this is Part 10 in a 12-part essay; you can read Part 9 here or read the essay in its entirety here.]

Liberal Democracies and Authoritarian Regimes: The Case for Law Enforcement. (Part 9 of 12)

Federico Sosa Valle Law, Liberty , , , , ,

If individual freedom is defined as the absence of arbitrary coercion – as F. A. Hayek did in his The Constitution of Liberty (1960) – it is clear that a government that bases most of its decisions on rules known to all will have to be less arbitrary than the one who makes decisions according to his own criteria of opportunity. Of course, this also requires an effective notion of the principle of equality before the law, since decisions based on norms that prescribe privileges according to definitions of races, estates or social classes will also be arbitrary. The same occurs with the other characteristics of what some authors have called a free government: division of powers, system of cross-checks between them, declarations of rights and guarantees, principles such as that of closure, the notion of representativeness of public offices and the requirement of their suitability to exercise them and other elements that make up the Rule of Law. The protection of individual liberty as the absence of arbitrary coercion comprises a whole set of political institutions and judicial procedures that make the limits to the free will of citizens and rulers legitimate. However, the level of law enforcement has generally been considered sidelong for both political and legal theory, relegating it to a purely sociological and even anthropological level. The law enforcement thus appears as a kind of “logical form” of law and politics, since it does not fully belong to either of the two territories, but rather delimits them.

This meant that the level of normative application has been seen as a social phenomenon, which in any case could be studied by an intersection between sociology and economics, as can be seen in the studies carried out by Gary Becker at the time; the same as the approach practiced centuries ago by Cesare Beccaría (who Joseph Schumpeter would label “the Italian Adam Smith”).

However, the high or low level of application of legal norms does not in itself constitute a sociological or anthropological phenomenon, since the commitment to the effective law enforcement depends directly on a political decision. This political decision activates a series of feedback mechanisms in society that allows it to be described as an autonomous and automatic system, as is any incentive system, but such uses and social practices are not the cause of regulatory compliance or non-compliance, but rather its adaptive response to the aforementioned political decision that underlies at all times.

Therefore, an approach that characterizes low regulatory compliance as the social response to the political decision to implement a low level of law enforcement requires a behavioral model consisting of individual utility-maximizing agents in their decisions, both at the level of citizens as well as government officials and magistrates. According to this behavioral model, it is government agents who seek to maximize their power by reducing the level of law enforcement, in order to gain discretion in its exercise; while ordinary citizens seek to minimize the costs of such discretion on the part of the rulers trying to evade compliance with a law that in a relatively low number of cases is actually applied.

Putting an end to such a state of affairs depends on a political decision: that of enforcing the law for the majority of cases and limiting exceptions to it to the minimum possible. However, since this will bind the rulers to the law and reduce their discretionary power, it should not be expected that such a decision will be taken spontaneously by the governing bodies, but under pressure from the branches of the state whose function consists of the control of government acts, such as the congress and the judicial system.

However, as already mentioned, the political system itself is in a trap, since raising the levels of law enforcement right off the bat would mean making effective punishments and sanctions pressed for a lower level of enforcement. For this reason, an improvement in the levels of law enforcement requires, previously or at least simultaneously, a reduction in the volumes of repressive sanctions, fines and compensation. A similar reasoning must be done for tax collection cases, since many times the tax levels discount a certain evasion rate. Reducing the tax evasion rate requires a prior or simultaneous tax reduction.

Law enforcement and political regime

As has been stated, the degree of compliance with legal norms by a population does not depend on cultural issues (far from it, ethnic), but is a variable on which governments can influence in a decisive way. The main instrument that governments have when it comes to encouraging (or discouraging) citizens’ compliance with the right is to regulate the degree of law enforcement. Once it has been decided what degree of regulatory compliance by the population the government intends to achieve, it remains to implement an efficient use of the budget item in order to achieve said objective while sacrificing the least amount of resources possible.

Thus, if a government decides that regulatory compliance should be close to 100%, then it will have to provide its supervisory system, security forces, and its judiciary with the necessary resources to obtain such a degree of law enforcement that show a clear signal to the population that the sanctions, repressive or pecuniary, that the law provides, will have to be applied. This will mean that whoever complies with the law will not incur any opportunity cost in terms of waiving possible advantages derived from its non-compliance, since such non-compliance by its competitors and other third parties is highly unlikely.

Of course these considerations belong to the field of “instrumental reason.” Before discussing the necessary mechanisms to achieve a high degree of compliance with the law by the population, it is imperative to discuss what type of law such a political regime will have. A democratic, modern, and liberal regime requires that the laws respect and ensure the validity of certain values, such as recognition and respect for human dignity, the right of each individual to have their own life plan, or as at the time It had been listed by the Scottish philosopher David Hume, ensuring stability in possession, his peaceful transfer of property, and the fulfillment of promises. It is useless to theorize about techniques to achieve a high degree of compliance with the law, if they are to be used by a regime that is dedicated to curtailing freedoms.

[Editor’s note: this is Part 9 in a 12-part essay; you can read Part 8 here or read the essay in its entirety here.]

Liberal Democracies and Authoritarian Regimes: The Case for Law Enforcement. (Part 8 of 12)

Federico Sosa Valle Law, Liberty , , , ,

Another aspect of the discretionary law enforcement consists of its selective application to opponents and social groups that fulfill the function of “scapegoats.” The history of humanity, fundamentally of the 20th century, offers unfortunately plenty of examples of such types of practices: application of norms that apparently had fallen into disrepair on certain sectors of society, investigations and meticulous follow-ups of opponents and their families concerning compliance with regulations rarely required of the rest of the citizens, are news that are familiar to the inhabitants of countries with undemocratic governments.

On the other hand, countries in which compliance with the rules is relatively low, generally sanction and enact extremely severe laws, without greater social or political resistance, since, considering its low compliance, few grant it the seriousness that they truly have. However, bearing in mind that the primary and exclusive function of every government consists of enforcing legal norms, the lower the degree of application of them, the greater the degree of discretion that such government will have if it decides to raise the degree of regulatory compliance, either in general terms for the entire legal system, or for a certain set of rules and either for the entire population as a whole or for a selectively identified part of it.

Of course, the selective application of the rules, when it is practiced without distinguishing individuals or social groups, works as a “fine-tuned” mechanism that makes the legal system more efficient. What is sought here are those anomalies that imply an authentic dissolution of the Rule of Law and the outright persecution of individuals or social or ethnic groups. It goes without saying that a legal system with a very high degree of law enforcement gives governments a very restricted margin of maneuver, so it could also be said that the high regulatory application works as a safeguard aimed at guaranteeing equality before the law and to avoid the aforementioned persecutions.

Culturalist explanations vs. systemic ones

The opinion that adherence to the norm is a cultural characteristic that varies from people to people is widely extended, to the point of becoming commonplace. There would be countries or regions that have a higher level of compliance and respect for the law, while kilometers further east or south, the behavior of individuals would change drastically. Theories about climates, religions, the role of civic education, and so on attempt to explain why certain countries abide by the laws they give themselves while others use them as “fa trap for fools”

This writing tries to defend the opposite thesis: it is the level of application of the norms that determines the cultural characteristics of the peoples and not the other way around. Culture is an adaptive response to the institutional determinants in force in each country.

To illustrate this last assertion with a hypothetical example: In a country where regulations are 50% enforced -that is, the citizen interprets it as a coin that turns in the air- no one will want to be within the group of inhabitants whose decisions they are constrained by the rules, since that would place them at a strong disadvantage compared to their peers who do not receive equal limitations, even more so if they are their competitors. Furthermore, regulatory transgression – such as tax evasion, in a context in which competitors do not pay their taxes – can often mean commercial survival for the individual. If, for example, if the municipal authorities impose a series of charges on restaurants in terms of hygiene conditions, number of tables per square meter and labor regulations, but also does not control compliance with such provisions, the merchant who complies with them it will be at a severe disadvantage compared to its competitors, who will be in a position to offer better prices or reinvest the profits from the savings generated by the non-compliance with the regulations in a better quality of service in other aspects of the restaurant.

Of course, inspections by the control body represent a costly expense to finance and, therefore, governments deploy “exemplary actions.” That is, for our example, they inspect a small number of establishments, but enough so that all the rest of the non-inspected businesses still comply with the standard in the event of receiving a random inspection. In these cases, the selective law enforcement is highly efficient: since it achieves high compliance with the law at a relatively lower cost.

However, cases that are dysfunctional have other characteristics. The first of these is that the level of law enforcement by the public powers is really low. The second is that the penalties – imprisonment, fine or compensation – are extremely high, since their main function is to counterbalance the relatively low degree of regulatory application. The third is that the rulers have such a high margin of maneuver, attentive to the low habitual application of the norms, that their application has the same effects as a norm created at the time by the government for a special situation. In other words, in practice the Rule of Law has been dissolved.

This leads us to the distinction between a government that makes decisions based on rules and principles versus another that motivates its decisions on matters of opportunity, merit or convenience, that is, pure discretion. Of course, here we are also faced with two polar definitions, one and the other model of government are ideal types in the Weberian style. Every rule-based government needs to carry out its action with a certain level of discretion. At the same time, even a tyrant, who wields power despotically, needs a minimum of predictable structure, at least to maintain his own identity as a ruling subject. However, it is relevant to establish the distinction between government decisions based on norms and principles and those that are guided exclusively by reasons of opportunity, for the purpose of making a judgment on the level of individual freedom that predominates in a certain political regime.

[Editor’s note: this is Part 8 in a 12-part essay; you can read Part 7 here or read the essay in its entirety here.]

Liberal Democracies and Authoritarian Regimes: The Case for Law Enforcement. (Part 7 of 12)

Federico Sosa Valle Law, Liberty , , , , , ,

Of course, for this hypothetical example to have an acceptable degree of relevance, a distinction must be made between highly probable consequences and merely contingent consequences. It is highly probable that a greater application of the norm will generate a change of behavior on the part of the public and that this will translate into fewer infractions. However, the fact that this lower number of infringements produces a relatively negative tax collection result is a matter of fact on which no nexus of necessity or probability can be predicated. An increase in the levels of regulatory application may result in an increase, in a reduction or neutral to the collection purposes, the final result depending on a multiplicity of circumstances. Notwithstanding this, the mere possibility of having a collection failure already represents a negative incentive for the government that is considering investing resources in increasing the degree of application of the regulations.

Another means of increasing the deterrent power of traffic regulations without incurring the costs of greater supervision of the streets and enforcement of fines is the expeditious solution of maintaining the level of regulatory enforcement but increasing the face value of the penalty. If with an application level of 1%, a fine of $1,000 – generates the same conditioning of conduct as a fine of $10, – with a 100% probability of application, then it is expected that the same fine will be increased to $80,000 obtain the same deterrent result as a fine of $1,000 – with 80% application. Thus, the government would obtain the same behavioral results of raising the level of regulatory enforcement without investing any additional resources, beyond the announcement of the new fines. Furthermore: if in fact the behavior modification were not so successful, since the level of infractions did not drop as expected, then the government would obtain a collection award, since they would mean an increase in its income from fines.

Thus, we see how, in terms of collection costs and benefits, faced with the dilemma between increasing the level of application of the rules or increasing the value of punishments (years in prison, fines or compensation in favor of third parties), incentives operate so that the governments decide for the latter type of solutions. Moreover, a low level of normative application generates the social unrest typical of any system of coexistence rules that does not work, which leads, in a kind of positive feedback mechanism, to a demand for an increase in the severity of the punishments. It is for this reason that, when there is evidence of a low level of regulatory compliance, governments find themselves in a trap, since the very dynamics of incentives induce them to increase the severity of sanctions instead of increasing the level of enforcement of the law.

However, although the behavioral effects of both models (low punishments with high application vs. high punishments with low application) could be quantitatively similar, they are not similar in terms of long-term social and political dynamics: societies with a High law enforcement tends to be democratic and liberal while low law enforcement societies tend to be opaque and authoritarian. The biggest trap that both governments and civil society can fall into is to attribute the consequences of low regulatory enforcement to cultural factors. Such a culturalist explanation definitively closes off any possibility of finding a reasonable solution and avoiding the trap of systematically increasing levels of authoritarianism.

This tendency to increase authoritarianism on the part of governments and societies manifests itself at various levels. One of them is the aforementioned increase in prohibitions and punishments. But another factor of authoritarianism is also represented by the wide margin of discretion that a low level of law enforcement grants to governments, since they are empowered to raise said levels of application at their own will.

To continue with the example with which the exhibition has been illustrated, although a fine for passing a red light of $80,000 that has an application of 1% is experienced by the population as a fine of $800 – with 100% application, nothing prevents the government from deciding to activate a mechanism for the control of infractions that raise the application to 50%, for putting a case, which means having fines of $40,000 in practice.

[Editor’s note: this is Part 7 in a 12-part essay; you can read Part 6 here or read the essay in its entirety here.]