Rule of law: neither thin nor thick

This is the second article on the criticism that Joseph Raz directed against F. A. Hayek. Link to the 1st article

A false dilemma

     One of the most common ways in which thinkers mislead other people (often without meaning to) consists in presenting false choices between alternatives. When both alternatives are wrong, confusion is guaranteed.

     In discussing the notion of the rule of law, law professors have managed to create one of those misleading dilemmas. They tell us that we have to choose between a thin and a fat (or thick) concept of the rule of law. I think that both gravely distort the concept.

     Professor Joseph Raz, a law scholar at Oxford, is the champion of the thin notion. Most of his colleagues defend the fat version –among these, the late Tom Bingham, Lord Chief Justice of Britain. One kills the rule of law by starvation, the other by overfeeding.

     To sum up the choices that I will analyze, one can say that Raz’s thin notion reduces the rule of law to some formal properties, most of them related to trials and the work of judges, but without much content. So for instance, Raz states that the rule of law means that laws and statutes are clear -not vague-, that judges are independent, that judges have review powers over parliamentary legislation, that courts should be easily accessible, and some other principles. But apart from that, the laws themselves may have any content. Raz includes “the principles of natural justice” such as fair hearing and absence of bias as essential for the correct application of the law (of whatever content). As said, his principles refer mostly to procedure and the work of judges.

     The thick notion requires much more. Its advocates enumerate rights that laws must recognize so that a legal system can be said to uphold the rule of law. The list of rights may be shorter or longer according to the writer.

     In Raz’s opinion, those who support the fat notion of the rule of law make the same mistake people make with the notion of democracy: they often ascribe to it all the good characteristics they want to see in a legal system. By doing that, the notion becomes useless. Raz argues that we should not confuse the rule of law with the rule of good law. As we saw in the first article about his criticism of Hayek, Raz says that the rule of law must not be confused with democracy, justice, equality before the law, human rights of any kind, or respect for persons or for the dignity of man (The Rule of law and its virtue, page 211, included in The Authority of Law, Oxford University Press, 1979, reprinted 2002).

     Rather than a thin notion, I think that Raz’s is an empty notion of the rule of law. We've seen in the first article that Raz does not controvert Hayek’s account of the rule of law. He disputes the value that Hayek sees in it. In rejecting the fat (or thick) notion, he asserts that he is “following in the footsteps of Hayek and many others who understood ‘the rule of law’ in similar ways” (p. 211). I do not think that is correct; I think Raz failed to understand Hayek. Link to my article: Misreading Hayek.

Rule of law: not a blueprint for a constitution

     Hayek wrote that what people understand by “law” when they refer to the government of the laws is not any law that the legislature approves. He wrote in The Road to Serfdom that “The idea that there is no limit to the powers of the legislator is in part a result of popular sovereignty and democratic government. It has been strengthened by the belief that, so long as all actions of the state are duly authorized by legislation, the Rule of Law will be preserved. But this is completely to misconceive the meaning of the Rule of Law. This rule has little to do with the question whether all actions of government are legal in the juridical sense. They may well be and yet not conform to the Rule of Law…It may well be that Hitler has obtained his unlimited powers in a strictly constitutional manner and that whatever he does is therefore legal in the juridical sense. But who would suggest for that reason that the Rule of Law still prevails in Germany?” (p. 91, 50^th edition).

     That was written in 1944. In the preface he wrote in 1976 Hayek says that when he asked whether anyone would say that nonsense about Hitler’s government, he considered it a rhetorical question, only to find that professors Hans Kelsen (a very influential law scholar before and after the war) and Harold Laski (a British Labour politician) had maintained precisely that.

     So, not just any law is compatible with the rule of law. Not the edicts against the press of some Politburo or the confiscations allowed by the many Latin American permanent emergency laws and sanctioned by their courts. But then, what rules and rights? Too few or too many? Should we choose a thin or a fat rule of law?

    The choice is misleading, and in itself reproduces a fundamental mistake against which Hayek warned us. The task does not consist in making a list, short or long, of the rights we would like to have. Those who discuss whether “the rule of law” should include a shorter or longer list of rights have in mind a constitution. Our way of thinking in terms of constitutions and declarations of rights leads us to apply the same scheme to “the rule of law” but that is alien to the idea.

What rights are covered? All of them

     We received that idea from a long tradition of Western thought and practice. To a large extent, it is an English concept. A.V. Dicey was one of the most renowned English law scholars at a time when the notion of rule of law was still understood by English scholars. Therefore Hayek often refers to Dicey’s The Law of the Constitution (link to the full text ).

     When I say that the notion of the rule of law is no longer understood by many contemporary English law scholars I don’t mean to be disrespectful. I only mean that in their efforts to get a list of rights, judicial review, and possibly a written constitution, they have moved such a distance from English traditions that their way of reasoning is closer to that of German or American law scholars than to Dicey’s. Take for instance one of the most insightful and intriguing remarks made by him: he wrote that the British constitution is not the source but the consequence of the rights of individuals (The Law of the Constitution p. 121). That applies not only to John Smith’s right to his farm, but also to his right to vote at elections. Dicey says that in England the principles of private law have been so extended by the Courts and Parliament as to determine the position of the Crown and of its servants “thus the constitution is the result of the ordinary law of the land”.

     Law professors usually criticize English law because it lacks a list of constitutional rights. What they do not realize is that in the classic English understanding, all rights were equal, all had equal protection, all were constitutional. Or better, the distinction between constitutional and non-constitutional rights made no sense. If you had a right, a true right and not a wish or a privilege granted by some bureau, then it was part of the law of the land as much as the succession to the Crown.

Dicey tells us that “To say that the ‘constitution guaranteed’ one class of rights more than the other would be to an Englishman an unnatural or a senseless form of speech” (p. 119).

     It is also necessary to bear in mind that Dicey says that the principles of private law (contracts, torts, etc.) formed the basis of the constitution. In the continent, in the US, and probably in contemporary UK, the process is the reverse: we descend from public law to private law. In my country, Argentina, law scholars have been pushing public law principles into private law since the 30’s, and that is still considered “the modern trend”. Private law becomes less private each year, as it is mostly concerned with social goals, rights of minorities, and fair prices for consumers.

     So, what was covered by the rule of law in its original understanding? Everything; and the exceptions were viewed as such, as anomalies to be fixed or kept, but always suspected and distrusted. That laws ruled meant that all rights, be them contractual claims or the vote, were subject to general and abstract laws that described situations (buying a car, stealing a car) in which anyone could find himself at one moment or other. The question whether the list of rights should be short or long is nonsensical. Again, this is not meant to be disrespectful of the renowned thinkers who pose and decide that question in one way or the other. It merely shows that they refer to “the rule of law” in the same way in which they talk of a constitution or a human rights convention.

     The rule of law covers every right –the rights that I have, not the rights that I want to have. The house that I bought, not the one that I would have liked to buy. The right to apply for a job, not the right to force employers to hire me. As Edmund Burke said: we have equal rights, but not to the same things. That “the law rules and not men” means that these things belong to me by law, not because some official thought it best to adjudicate them to me. That right, and all the other rights that I have, and all the rights that people have, are the content of the rule of law.

     But then, what if we happen to live in a situation where for most people those rights are few, as were those of peasants in medieval England? What if some men have a right of life and death over some others? Is it not true then that –as Raz writes- the rule of law might in principle cover very little? Well, that is true in a most peculiar way: it is true if we think of a situation that is not true.

     Certainly, if we go back many centuries we find few and uncertain rights, but then we also find that there was little of what we know as the rule of law. Hayek's analysis does not refer to the Middle Ages, that is quite clear.

No historical coincidence

     By the time the ideal of the rule of law had developed, Englishmen enjoyed more rights (and more certain rights) than most other people, and no Englishman had a right of life and death over others. More importantly, that fact wasn’t mere historical coincidence. It wasn’t by chance that where law ruled, people had more rights –and more certain rights- than in other places. The system wasn’t perfect, but it was infinitely better than arbitrary rule. And it was perfecting itself all the time.

     Edmund Burke compared the English way of securing some rights and then advancing with a mortmain. You secure some capital of rights and then try to improve. The comparison is instructive, because it is the capital that you already have secured that allows you to acquire more.

     Of course, we can argue that it is possible to think of the rule of law in isolation, without referring to all the rights that grew with it, as free speech, habeas corpus, property rights, limited taxation, subjection of public officials to the law of the land, and many others. But our powers of abstraction are no ground for denying that in history, rights and the rule of law are born and die together.

Distorting the meaning of the rule of law

     As Hayek pointed out, we can’t have both the rule of law and government planning. When we advance on one direction, we retreat from the other. We can’t have both the rule of law and “positive discrimination”.

     Joseph Raz claims that after all the rule of law is not so important, that it has no moral value in itself. As I said in the first article in which I criticized his criticism, he failed to understand Hayek’s main arguments. But he also removes from the notion a great deal of its content. Even more confusingly, Raz adds content that do not belong to it.

     As to the latter, Raz tells us in his enumeration of what the rule of law requires that “The courts should have review powers over the implementation of the other principles. This includes review of both subordinate and parliamentary legislation and of administrative action, but in itself it is a very limited review –merely to ensure conformity to the rule of law” (6^th point in the enumeration, p. 217). It seems that Raz thinks that one of the requisites of the rule of law is that judges have review powers, and that he includes parliamentary legislation in those powers. That is odd because it would mean that England, the land where the notion developed, was at the same time the land were people failed to see one of its requisites. The issue cannot be treated here at length, but clearly judicial review of parliamentary decisions is no requisite of the rule of law. Some may consider that it is a better safeguard against parliamentary arbitrariness, but of course judicial review provides no remedy against judicial arbitrariness –it may even encourage it. The rule of law is not –and has never been- an answer to the question: Who has the last word on constitutional issues? As Hayek writes: "Whether, as in some countries, the main applications of the Rule of Law are laid down in a bill of rights or in a constitutional code, or whether the principle is merely a firmly established tradition, matters comparatively little" (The Road to Serfdom, 93).

     Raz also removes from the notion content that truly belongs to it. He writes that retroactive laws do not conflict with the rule of law if “it is known for certain that a retroactive law will the enacted” (p. 214). The assertion is very questionable. If all that is known is that some law will be enacted but not its content, then all we know is that the lawgiver will act in some way or other –and that is clearly in conflict with the rule of law. If on the other hand we know that a law will be enacted and we know for certain what its content will be, then that law is retroactive only in name or form –but that is an unreal situation and certainty is almost impossible to be real before the law is actually enacted.

     In any case, I don’t think it advisable to try to reconcile the rule of law and retroactive laws –not with such a vague formula as that provided by Raz. After all, the principle against retroactive rules has always been one of the most definite elements in the idea of the rule of law.

     It is alarming to see that the American law scholar Ronald Dworkin agrees with Raz when he writes that it might be enough to warn the population that moral standards will be applied in judging particular behavior (see his book Justice in Robes, 176). Raz’s exception in favor of retroactive legislation is ambiguous; Dworkin’s is vague –which is worse because more difficult to disentangle.

     Raz also writes that the rule of law does not mean equality, and he adds “before the law or otherwise” (p. 211). But it is certain that equality before the law is one of the central elements of the idea of the rule of law as it has been understood for generations, and that cannot be dismissed by simply telling us that it is not. Of course, I do not know what Raz includes in his otherwise but if he means equality of income or fortune, then it is clearly not part of the meaning of the rule of law. As Hayek explained, it is against it.

The rule of law is not a law

     Of course, there are exceptions to a perfect equality before the law. Minors are treated differently, and in the past women too. But even then we must not base general conclusions on exceptions. The rule of law is not a law, it is an ideal; it is a conception about law, about government, and about liberty. Besides, the inequality of minors has definite limits –and the same applies to the situation of women in the past. The right of a minor to his inheritance is protected by the law as much as that of an adult –the limitations apply to the exercise that a minor can make of that right over his possessions. Women were protected in their persons and property no less than men. Certainly, there were some differences as to the way of disposing of their property, the right to vote, etc. But we must keep a sense of proportion: even in Victorian times, English women enjoyed more certain rights than most other women in Europe –not to mention the rest of the world.

Judges are not the main players

     Another way in which Raz’s explanation misleads us about the content of the idea of the rule of law is that he exaggerates the importance of the work of judges. Most of his principles apply to what he describes as the machinery of enforcing the law (p. 218). That is a common error of law scholars (or rather a lack of perspective) against which Hayek warned us.

     Hayek says about the certainty of the law: “It has become the fashion to belittle the extent to which such certainty can be achieved, and there are understandable reasons why lawyers, concerned mainly with litigation, are apt to do so. They have normally to deal with cases in which the outcome is uncertain. But the degree of certainty of the law must be judged by the disputes which do not lead to litigation because the outcome is practically certain as soon as the legal position is examined. It is the cases that never come before the courts, not those that do, that are the measure of the certainty of the law. The modern tendency to exaggerate this uncertainty is part of the campaign against the rule of law…” (The Constitution of Liberty, p. 208).

     Without denying that people may apply rules by themselves, lawyers and law professors tend to focus on the application of rules by judges. When that is coupled with a misleading way of referring to judicial and administrative decisions by the name of “particular laws” (thus creating a false analogy between them and true laws) we are almost bound to misunderstand what is crucial for the rule of law.

     Raz tells us that “what the doctrine requires is the subjection of particular laws to general, open, and stable ones. It is one of the important principles of the doctrine that the making of particular laws should be guided by open and relatively stable general rules” (p. 213). That is not wrong, but it puts the stress on the wrong place.

     There is yet another false analogy lurking when we say that general rules “guide” both judges and ordinary people. The latter pay attention to laws in order to pursue their own plans. To use Hayek’s image, they use road signposts to guide them in following the path they have chosen according to their preferences. Judges aren’t guided by laws in that way when they decide a case –or rather, they should not.

Rhetorical devices in The Myth of Ownership

This is the third article on the theories defended by Murphy and Nagel in their book The Myth of Ownership


It is a common complaint of philosophers that political debate is dominated by rhetoric. Murphy and Nagel agree with that view: they write that voters react to catchphrases and do not pay attention to more substantial arguments. Politics would improve by introducing into it higher standards for judging the reasons that are provided for different plans.

Certainly, philosophers might help in this respect, but then they should cease to write as if Bastiat, Bohm-Bawerk, Mises, Hayek, Friedman, and Hazlitt had never existed.[1] Moreover, we must not assume that philosophers would always be free from the same mistakes they want to correct in others.

There is a particular rhetorical device much in use through The Myth of Ownership. Again and again, when arguing for more distribution of goods by government's decision, the authors say that “the market generates economic inequalities”,[2] and discuss the allocation of the “entire social product”.[3] They tell us that “capitalism at its most successful will inevitably generate large upward inequalities”.[4] It seems only natural therefore, that they suggest ways to correct the problem. The market and capitalism are viewed like defective machines that must be fixed so that the result is the desired one.

The key word here is “generate”. Now, it is clear that the differences are caused by better products pushing bad ones out of the market, by good or bad decisions about the use of money, by the judicious or injudicious combination of raw materials, etc. People buying and selling goods take these differences into account. A new engine gives more power for less fuel, and it puts the makers of older models in deep trouble. Certainly, we may say that these are results generated by the market. But that is the same way in which we may say that exams generate differences among students. By using the expression we lose sight of the real causes. Certainly, Murphy and Nagel are not so unguarded as not to include, in passing, some words that indicate that differences “generated” by capitalism are in fact “generated” by other things.[5] But after erecting this protection for the rearguard, they go on ascribing the generation of differences to capitalism and the market, which puts the focus where it is rhetorically useful.

If we think that the changes refer to a mechanism, it is easier to accept plans to fix it. It does not seem to concern any person's liberty and rights. And we forget for a fatal moment that we are talking about people’s plans, efforts, mistakes, and achievements –not just about a mechanism or a system. That this is the truth is clear: otherwise it would be impossible to say why, out of nothing, the system generates differences.

Dismissing personal achievement and the money that result from personal effort, Murphy and Nagel write: “You may say, I am entitled to it because it was my effort and talent that produced it or because people whose money it was decide to give it to me. But what I or they earn from given expenditure of effort and talent or from any investment luck depends entirely (??) on the political settlement in force when we earned it, so it wholly begs the question to say that I am entitled to a particular political settlement to one that reduces my taxes, for instance because it better protects what I have earned or been given. If we changed the political settlement in some important way, I would earn or inherit less or more”.[6]

So, we have learned that the way to avoid begging the question is to say that governments can make taxes higher without taking money that belongs to us because governments could have made taxes higher and then that money would have not belonged to us.

Jeremy Waldron, a professor of law and philosophy at the universities of New York and Oxford, writes in a similar way that “There is no sense to the idea that talents can simply be exercised by those who own them apart from any social framework whatsoever. And there is no sense to the idea that there is a natural phenomenon called ‘reaping the benefits of one’s talents’ which is understood apart from the social arrangements and institutions that define one’s relationships to other people”.[7]

Ronald Dworkin’s attempt to sweep the real causes of wealth under the carpet is based on a different rhetorical device. He writes that “the usual arguments that supposedly demonstrate that pretax income is ‘my’ money are incoherent. The only coherent such argument supposes that the accident of first possession gives rise to a moral entitlement”.[8] So, I have my salary because –somehow– it first landed in my hands. I was the first to take it, that is all. The fact that someone freely decided to hire my services and pay for them is of no relevance. So is irrelevant the fact that I actually worked to earn it. In a similar way, Edison just put his hands on some light bulbs that were laying there. And without the philosophical insight we now enjoy, he might have thought that by grabbing them first he had some moral right to the fortune he made with them.

Dworkin attributes the delusion of ownership –which so many people suffer– to the fact that taxes appear in their pay slips as a deduction of their salaries.[9] Even more confusion is created in his opinion by the fact that the rich –by which he must mean those who do not receive salaries, e.g. grocers, barbers, and Bill Gates– are allowed a delay between the time they receive their income and pay their taxes. Dworkin tells us that  “these are mere accidents of efficient tax accounting”.

But there is a more fundamental delay that is not accidental: the delay between the creation of wealth and the payment of taxes with a portion of it. There is a delay between the harvest has been collected and the government receives a portion of it in the form of taxes. There is a necessary delay involved when the doctor treats his client, receives his pay, and pays his tax. If we dismiss that as accidental, if try to bury it under a mass of truly conventional details (Dworkin mentions the fact that payment of some taxes is done in quarterly installments, or that the final payment is on April 15), we would not have helped to reduce the number of rhetorical traps from which philosophers complain. We would have contributed with another one.

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[1] Of course, the enumeration is imperfect and does not suggest that these authors share a single view. Nevertheless there is one thing in common among them: their arguments are seldom or never answered by those who argue for bigger government.

[2] P. 67.

[3] P. 79.

[4] P. 186. Similar words on page 181.

[5] P. 17 and 67.

[6] Ps. 124-125.

[7] The Right to Private Property, Clarendon Press, Oxford 1988, p. 404.

[8] Is Democracy Possible Here? p. 125.

[9] Same page.

Murphy, Nagel, Sunstein, and Dworkin on property rights

This is the first in a series of articles that I will post about the attacks, mostly made by American philosophers and law professors, against the notion of ownership, which now they dismiss as if it were a myth

Two celebrated philosophers, Liam Murphy and Thomas Nagel, have dedicated a book to debunking The myth of ownership.[1] Their view is shared by Cass Sunstein, a law scholar and regulation Tsar under the Obama administration, who writes in his book The Second Bill of Rights that “it is comically implausible to find so many people complaining that taxes take some portion of ‘their’ money”.[2] As they see it, taxes do not take anything from people, and to claim the contrary is not simply wrong, but nonsensical. Ronald Dworkin, an influential law scholar, is of the same opinion: he writes, “the usual arguments that supposedly demonstrate that pretax income is ‘my’ money are incoherent”.[3]

It is surprising that these thinkers assume that their verdict about the myth is obvious, and that people’s convictions about private property and taxation can be so easily debunked. More surprisingly still, these American philosophers do not find it necessary to confront their ideas with those that sparked the American revolution. In contrast, at the time of the revolution, even their enemies –the British– made the connection with their own historical struggles for liberty. Speaking in Parliament, Lord Camden declared that in Britain “there is not a blade of grass, which when taxed, was not taxed by the consent of the proprietor”.[4]

Today Americans are taught that the noble Lord was talking nonsense. Not a distant King but their own philosophers and law scholars tell Americans that the link between taxes and ownership is wrong, a crass delusion. Murphy and Nagel write that taxes, even high taxes, do not take anything from our property. Ownership is merely a convention to be defined by law, and it comes into being only by means of laws. Why is that? Answer: because without the protection of the laws, property would soon disappear, or remain precarious. We must be clear: the claim is not simply that governments contribute to the production of goods by building roads and bridges, or keeping courts of justice, police and armed forces. The novelty of the view does not consist merely in the omission of the usual caveat that governments often make the production of goods more difficult, and sometimes impossible (after all, when we discuss government’s contributions to production, are we talking about F.D. Roosevelt, Margaret Thatcher, or Idi Amin?). Leaving the caveat aside, we must understand that the main goal of the theory is to convince us that ownership, what we know as “private property”, is merely a legal convention. We only have a right to what taxes leave to us. How glad would have been the King of England if he could have defeated the American revolutionaries with such simple argument!

As Murphy and Nagel’s book is entirely devoted to debunking the myth of ownership, I will deal mostly with the arguments they present. I will add some reflections about the contributions made by other followers of the same ideas. They are speedily gaining popularity among scholars, and many treat the issue as already settled.

 From the start, we must take notice that Murphy and Nagel often pass freely from the assertion that pre-tax ownership is a myth, to the more direct one that ownership –not just a portion of it– is a myth. And there is much logic in doing so: if governments are free to define and redefine our property rights and tell us that we never really had what they take from us in the form of taxes, then ownership as a whole becomes a myth. The philosophers’ aim is not merely to justify higher taxes but to suggest a new design for property rights.[5]

Of course, with the exception of anarchists, nobody denies that we have to take some dollars from what we have earned in order to pay taxes, as we have to take some dollars to pay for services provided to us, or bread sold to us. But this is not the point. What Murphy, Nagel, and others argue is that we simply have not earned that money. It is in our pockets by mere chance.

Murphy and Nagel have very strong words for the views about taxes and property that prevail in the US. What they decry is not merely (or mainly) the stand of politicians concerning taxes, but the common views among Americans. They write that “When it comes to taxes, at least in the United States, there seems to be a premium on appeals to the selfishness and greed of the voter”.[6] In the same paragraph they tell us that the appeal to the “better angels of our nature –the ones motivated by fairness and impartiality” is risky in the US. They do not mince words when examining the tax policies of Bush’s administration: they do not know whether the arguments against double taxation came from “demagoguery or actual confusion”.[7] A plea for tax-cuts is “disingenuous”.[8]

On the other hand, as we see reading the book’s back cover, The Myth of Ownership has been hailed by law scholars and book reviewers as a fundamental philosophical contribution to the debate about taxes that has been going on for some time in the United States.

According to Murphy and Nagel, ownership is an old illusion, and they want to free their fellow Americans from it. Certainly, they would be ready to grant, but without entering into details, that there is a minimum of personal belongings that individuals have a right to retain. They call it “a Hegelian minimum”, agreeing with the German philosopher that some form of personal property is indeed linked with individual freedom.[9] They acknowledge that “a minimal form of economic freedom is essential to a liberal system: the freedom to do what one wants with it”. However, in their opinion this does not cover “a much larger freedom...to engage with minimal hindrance or conditions in significant economic activity of the sort that drives a market economy”.[10]

Before going further into the authors’ arguments we must remember that the legal limits of property rights are independent of the size and value of the goods involved. We do not have rules for a minimum –Hegelian or any other– , and different rules for bigger possessions. In spite of minor and irrelevant exceptions to the principle, I am as free to spend my modest income as I would be to spend a fortune. Traffic rules are the same for cheap cars and for luxury cars. The owner of a big factory must not dump garbage on his neighbor’s property, and the same applies to the owner of a small apartment. This is the meaning of “equal justice under the law”.

In contrast, it is one of the main tenets of Marxism that those goods that are considered means of production should be treated differently. Though Murphy and Nagel tell us that “significant economic activity of the sort that drives a market economy” is not part of the freedom they would grant to people, they do not seem to suggest that governments should take actual possession of the means of production. They just mention “hindrances” and “conditions” and indicate that they might be more than minimal without any special justification. Even then, in their opinion there would be no conflict with freedom. We must remember that John Rawls –who taught philosophy to Nagel, as well as to a good number of modern philosophers– wrote that government’s ownership of the means of production was compatible with a free market. He never cared to justify that assertion.[11]

Beyond the portion of their goods that the philosophers would leave to people as essential for their freedom, everything else is conventional –“conventional” being a refined way of saying that legal institutions “define who owns what”[12]. That is why Murphy and Nagel find it absurd that so many people think that laws must respect property. Laws define what property is, and who owns it. A figure in plaster cannot contradict its maker, and wish another shape. Then there can be no conflict, only submission. Murphy and Nagel write: “Our own view, as will emerge, is that property rights are conventional, but that there is room in their design and justification for the consideration of other rights and deontological values. While the protection of some form of private property is an essential part of human freedom, the overall structure of the system of property rights should be determined largely on other grounds”.[13]

Incentives for work, not for business

Apart from a Hegelian minimum –left undefined–, Murphy and Nagel would keep some incentives for work. But for that purpose there is no need to let rich people pocket large amounts of money. In fact –they argue– higher taxes for the rich would have two effects, and not just one. Of course, some people would work less if the return is small; but others would try to make up for the loss by working more.[14] Murphy and Nagel cite the opinion of experts who tell us that “nearly all research concludes that male participation and hours worked respond hardly at all to changes in after-tax wages and therefore to marginal tax rates”.[15]

We must realize that the whole question about incentives is misleading. It is a common error –or rather lack of perspective– to think that capitalism is just about material incentives for workers and CEOs. The error underlies a good part of the discussions about capitalism. Nevertheless, we must not forget that taxes often reduce capital itself. Moreover, high and low profits direct capital (not only work) to different pursuits.

The key error is this: capitalism is not a system of carrots and sticks used to encourage work, marginally different from the system of socialism, of sticks and more sticks. Not surprisingly, capitalism is about capital. It means that individuals take decisions about what to produce, where, using what materials, in association with what partners, at what time. It is often pointed out that CEOs would keep working even if their salaries were substantially reduced and if they had no other alternative in the market. Probably they would work harder to compensate, as Murphy and Nagel suggest. That is true: a CEO can be reduced to something very similar to a functionary in a collectivist country –in fact, they have been reduced to that in a number of mixed economies, in the past and in the present. Some of them may feel comfortable in such situation.

However, as Ludwig von Mises has explained, capitalism is not a managerial system, it is an entrepreneurial system.[16] The argument about the effects of higher taxes on work (even as managers) forgets this basic truth. It leaves aside the decisions people (and especially entrepreneurs) make about the goods they own –not merely about the goods they manage for others. Capitalism is about capital and its return, not about bonuses .

CEOs, managers –even workers– can receive bonuses. But unless they also share the losses, pay themselves the expenses, decide what to sell, and when to invest their own capital, they cannot replace entrepreneurs. Of course, if those conditions are met, they would not replace entrepreneurs; they would be entrepreneurs. But bonuses alone do not turn managers into businessmen. On the contrary, they can make managers foolhardy and ready to take unreasonable risks.

 Incentives for work are not the distinguishing mark of capitalism. Actually, mere incentives for work exist even in places where the control of the means of production by the government has been taken to its highest stage. We read that in the prison camps of North Korea, people are kept in semi-starvation conditions, and that the main incentive for work –apart from sticks and other means– is food (the carrot).[17] That is enough for such higher stages of collectivism, but not for capitalism.

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[1] Oxford University Press, 2002. Unless otherwise stated, citations will refer to that book.

[2] The Second Bill of Rights. Basic Books 2004, 201. The subtitle of the book is “FDR’s unfinished revolution and why we need it more than ever”.

[3] Is Democracy Possible Here? Princeton University, Press 2006; p. 125.

[4] Campbell, John: Lives of the Lord Chancellors and Keepers of the Great Seal of England. Vol. 6:  http://www.constitution.org/bcp/camden143.htm

[5] As proof that the goal is larger, see the text cited at the end of the present section.

[6] P. 72.

[7] P. 143.

[8] P. 178.

[9] P. 145.

[10] P. 64.

[11] A Theory of Justice, pages 57 and 137. Harvard University Press. Revised Edition 1999. Also in Distributive Justice: Some Addenda, in Collected Papers, page 159. Harvard University Press. Paperback edition 2001.

[12] P. 189.

[13] P. 45.

[14] P. 69.

[15] P. 137.

[16] Human Action, Vol. 3, pages 303 and 708. Liberty Fund 2007.

[17] David Hawk, The Hidden Gulag. US Committee for Human Rights in North Korea, 2003.

George Orwell and the Rule of Law: you don't shoot at a man who is running with his trousers down

Almost all countries claim to be democracies; some back up that claim with free elections, others with public parades in praise of the beloved leader of the nation. The rule of law, by contrast, is an advantage that only a few countries can even claim to enjoy. It is definitely a good in short supply. 

In a former article, I have tried to show that George Orwell is still the best in explaining why it is so. Any country can hire a number of law scholars and ask them to produce a good copy of the most advanced laws and constitutions they find in the world. In Argentina, we have tried American constitutional clauses, articles from the French civil code, Italian forms of trial, and German penal theories, but all this relates more to intellectual fashions than to people’s lives. The rule of law has nothing to do with those changing fashions; instead it requires a certain frame of mind in the whole population.

In his book 1984, Orwell described how hell on Earth might look like; unfortunately people forget that he also described the attitudes that would prevent it from becoming true. He did that in the articles he wrote about the people he knew best: the English people. One of the things English people lack is a world-view, Orwell said. Instead, they have (or had: being a foreigner, I am not sure) a code of behaviour. Respect for that code forms the only possible ground where the rule of law may survive and prosper.

As we read in 1984, there are no well-defined crimes against world-views, only actions that advance or hinder the final victory of the party and its leader; and that is why intentions do not count. This is no fiction: we can see that taking place today, for a natural result of this twisted way of reasoning is that a child may be objectively guilty, and so it may be right to plant a bomb in a school. All actions are seen as objectively good and objectively bad –‘objectivity’ meaning here: useful in order to win. 

For the same reason, there is no objective decency, no pride in generosity and uprightness, and you may well sneer at them. Comfortingly, this is called ‘realism’. ‘Its growth’ –wrote Orwell in Raffles and Miss Blandish– ‘has been the great feature of the intellectual history of our own age’. Against realism, most English people remained attached to their outmoded codes of behaviour. The crucial words, said Orwell, were ‘not done’: there are a number of things one will not do, some limits one will respect. And I may add that this was not based on any socio-economic-psychological-semiotic theory. One simply adhered to the rules because that was the right thing to do.

Orwell said that English people followed a moral code as if they were sleep-walking, and more by instinct than anything else. In The English People, he wrote, ‘The masses still more or less assume that “against the law” is a synonym for “wrong”. It is known that the criminal law is harsh and full of anomalies and that litigation is so expensive as always to favour the rich against the poor: but there is a general feeling that the law, such as it is, will be scrupulously administered...An Englishman does not believe in his bones, as a Spanish or Italian peasant does, that the law is simply a racket’. I am not sure what Spanish and Italian peasants would say today, but I know that most Argentines would think that an unfair legal system should not be scrupulously administered. Disloyalty to the existing law may mean loyalty to a new and better one that is yet to come. Certainly, the trouble with this lofty approach is that the better law is not actually a law, or a code of behaviour, but a world-view. Circumvention of existing laws is then justified, even made commendable, on the grounds of vague and contradictory wishes, which could never really become a new and better law.

In Raffles and Miss Blandish, Orwell contrasted Raffles, the old-fashioned thief, with the gangsters in J.H. Chase’s novel No Orchids for Miss Blandish. We see that Orwell prefers Raffles for his attachment to his country and his respect for a code of honour. Instead, the characters in J.H. Chase’s novel are all equally brutal, even sadistic. Both the gangsters and the police are there just for the money; no nonsense about patriotism and inviolable codes. Orwell remarks: ‘The Raffles stories, written from the angle of the criminal, are much less anti-social than many modern stories written from the angle of the detective’. I must add that, with a few exceptions, this has remained a characteristic of the genre ever since. Nevertheless, Orwell admits that the line Raffles draws ‘between good and evil is as senseless as a Polynesian taboo, but at least, like the taboo, it has the advantage that everyone accepts it.’ I would not go as far as Orwell, and would rather say that most of Raffles’s code makes sense. Not abusing hospitality, a rule that Orwell describes as part of Raffles’s code, does indeed make sense in Polynesia as well as in England.

Orwell’s remark, however, points to something important. It is always easy to spot incongruities in any existing code of behaviour. Every existing legal system owes much to history and even to chance. Moreover, anyone can easily imagine a situation -however unlikely- in which the most sensible of rules would seem unfair. Modern philosophers are very fond of doing it, and so they discuss –as professor Ronald Dworkin does- what sort of insurance one would try to get before one is born if insurance were available against the possibility of being born a reckless person, or clumsy, or stupid. When one gets used to those intellectual exercises, it is easy to feel that one can pass swift judgement on existing rules, as a saint would do while looking from the summit of Mount Everest to the world beneath. 

Many people in Argentina adopt that view and say: all codes of behaviour are equally wrong, all have flaws –the rest is vanity. Certainly, one loses a considerable part of that varnish of sainthood if one descends from high regions of hot air and goes into details, acknowledging that some codes are worse than others, and that most codes are better than none. 

Orwell provides us with an anecdote that shows how a code that is followed by instinct may seem absurd. In Looking back on the Spanish war he writes that one day he and another Republican soldier went to snipe at their enemies, who had their trenches at some distance from them. When they were close enough to fire, they saw that the enemy was being attacked by Republican planes. The enemy was in confusion, and suddenly Orwell saw a soldier running along the top of the parapet, half dressed and holding up his trousers with both hands. Orwell refrained from shooting at him. 

Both before and after describing the incident, he says that he thought that there was not much meaning in his scruples against shooting the man. Perhaps –I would add– he though that the rules he was instinctively following did not make more sense than a taboo. You will be ready to kill the man in the next battle, so why not shoot at him while he is running with his hands on his trousers? This sounds logical, but awful, and it is a line of argument that can be used against every moral scruple. This boy will be a soldier in a few years, and then you will be trying to kill him; so, why not kill him now? Scruples are always open to attack, and one often tends to deny that they make any difference –that is, till scruples are lost because then one sees the difference.