Back-alley banking: private entrepreneurs in China

Abstract

areas he identifies and offer a more detailed set of reform recommendations. Another point that could have benefited from more explication is the relationship between the rule of law and economic prosperity. By limiting undue interference from the state and curtailing the arbitrary exercise of discretion by government officials, the rule of law provides individuals with the breathing space they need to pursue their livelihoods and better themselves in the manner they see fit. Certainly, economic prosperity ultimately is dependent, for instance, upon the extent to which individuals remain free to own, use, and exchange property absent excessive government intrusion. The positive relationship between economic prosperity and a rule of law regime is one that developing countries especially need to heed. It is not surprising, then, that F. A. Hayek placed such emphasis on the rule of law in The Road to Serfdom. There, to come back around to definitional first principles, Hayek explained that the concept “means that the government in all its actions is bound by rules fixed and announced beforehand—rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s individual affairs on the basis of this knowledge.” All in all, Dean Cass has done well to remind that if we assert too often, without a sound basis, that judges in the United States act unconstrained by the rule of law, we may actually create a self-fulfilling prophecy. With expectations for adherence to neutral principles of law lowered, more and more judges may be tempted “to try a hand at creating the legal solutions they deem best suited to solve whatever problems they see.” If that were to happen, it would be a tragedy not only for us here at home, but for those abroad who look to the United States as an example of a constitutional republic in which the rule of law prevails.