Economic Constitution Research Articles

Studiosi Rationales Communicantes

Deliberation and Decision: Economics, Constitutional Theory and Deliberative Democracy. Edited by Anne van Aaken, Christian List, Christoph Luetge. Aldershot: Ashgate, 2004. 294 pp., $109.95 (ISBN: 0-7546-2358-0). Deliberation and Decision: Economics, Constitutional Theory and Deliberative Democracy , by Anne van Aaken, Christian List, and Christoph Luetge, is the first in an interdisciplinary series of books by Ashgate Publishing. The reference to “economics” in the title, however, is rather misleading because the book only touches upon it when exploring the theoretical construct of “constitutional economics.” Therefore, the intersection of the three elements in the title (economics, constitutional theory, and deliberative democracy) gets reduced to two main elements: deliberative democracy (Dryzek 1990; Fishkin 1991; Elster 1998) and constitutional economics (McKenzie 1984; Brennan and Buchanan 1985; Vanberg 1994). The aim of the book is to bridge the gap between these two approaches, which until now have been disjointed. Such an enterprise inevitably makes for a complex and highly specialized book, rendered even less accessible in this case because Deliberation and Decision is the result of a 2001 conference. Hence, the book does not present a linear argument. Rather, it consists of a zigzag dialogue reflecting the typical conference discussion. Arguably, this might be the necessary outcome of a pioneering work in which the authors do not synthesize existing scholarship but instead explore new territory. However, because der Verstand ist der machtigste Epitomator (understanding is the great epitomizer), had the editors kept what was essential …

Social Market Economy: origins, meanings and interpretations

This paper investigates various possible meanings of ‘Social Market Economy’—60 years after its political initiation in Germany. We focus on the variety of intellectual sources that influenced the formation and interpretation of the concept in Germany during the first half of the last century. Our particular attention is on Muller-Armack’s definition of a rather dualistic concept of ‘social’ versus ‘market economy’ and the subtle differences it has with an original (Freiburg School) view of ordo-liberalism that lends itself more easily to a constitutional economics perspective.

Buchanan’s constitutional political economy: exchange vs. choice in economics and in politics

This article discusses the methodological foundations of Buchanan’s constitutional political economy. We argue that Buchanan is a constitutional economist because he is an economist or a political economist. In other words, Buchanan is a constitutional economist—he insists on the necessity of focusing on constitutions and to analyze the “rules of the social game”—because he defines economics as a science of exchange. Buchanan’s definition of economics is not only specific, it is also opposed to the definition of economics that other economists retain and, above all, opposed to the definition of economics that many public choice theorists use. The latter have, in effect, adopted the Robbins 1932 definition of economics as a science of choice that Buchanan criticizes and rejects. Buchanan’s constitutional economics can be a branch of public choice only under certain conditions.

The origins and evolution of democracy: an exercise in history from a constitutional economics approach

In this article the conditions for the rise and fall of representative regimes are explored. High citizen mobility and unexploited opportunities for investment create the need of reassuring factor owners against the tax hunger of the State. This may lead to the emergence of representative institutions of government, a process that reverts when those conditions disappear. Factors that facilitate or restrain the mobility of citizenry are identified, mainly in the domain of military technology. Thus, a number of interrelations between production and war technologies, political development and economic performance are revealed, giving rise to an interpretation of historical evolution.

Compensatory Constitutionalisation: A Comparative Perspective

Legal scholars argue that there is an emerging global compensatory constitution. This denotes a set of compatible supranational and national institutions that fulfil functions hitherto fulfilled by national constitutions. Thus, de-constitutionalisation at the national level, which, as this strand of literature argues, has been brought about by forces such as globalisation, is compensated for. There are strong hints that such constitutionalisation takes place in a formal sense: there is an increasing number of norms which could be seen as elements of a new global constitutional order. But it is far from clear whether these norms make a difference. In this paper we ask whether states comply with this presumably new constitutional order. We distinguish between three types of rights which are granted by a constitution—political, economic and social rights. In this paper we focus on the economic and social components of the emerging global constitution, which have been neglected in previous research. We study compliance with International Labour Organization (ILO) and World Trade Organisation (WTO) norms. The ILO is the major source of a global social constitution; the WTO is the major source of a global economic constitution. We show that compliance is very uneven. Whilst formally a global constitution may be in the making, it makes little difference for citizens.

The Unpatriotism of the Economic Constitution? Rights to Free Movement and their Impact on National and European Identity

Abstract: Instead of the political reading of the EU Constitution adopted by advocates of constitutional patriotism, this article examines the European economic constitution. The four single market freedoms can be used by the Court of Justice to strike down Member State laws which represent deeply held aspects of national cultural identity. The article examines whether the court does in fact act in this way and proceeds to argue that the issue of identity protection does not stop with the court. In those policy areas where the court is more interventionist, and its case‐law is perceived as an identity threat, one is likely to find binding Treaty‐based derogations. Where, in contrast, the effect of the court's case‐law poses less of a threat, one is more likely to see non‐binding declarations. The article examines a number of policy areas in which specific cultural derogations and declarations are to be found, including abortion, property acquisition, football and alcohol control.

How to Do Constitutional Law and Economics: A Methodological Proposal

How to Do Constitutional Law and Economics: A Methodological Proposal

ローマ条約50年

The European Union is today the most developed integration body in the world with the single market and the single currency. What effects did the Rome Treaty signed in 1957 have on this integration development?The Rome Treaty was based on free competition principles and oriented towards a common market. It had a structure with a systematic economic constitution. But, it was impossible to create a common market with four freedoms, since national independence was regarded as the most important objective in Western Europe. In the 1960's, the European Economic Community created only a customs union and an agricultural common market.When the European Community faced a true economic crisis in the 1980's, it could jump to the internal market integration, namely common market building. As the Rome Treaty was formulated along a common market building, the Treaty was easily reorganized with the simple Single European Act of 1986. Since the Rome Treaty included several clauses to abolish non-tariff barriers (NTBs), the EC could make preliminary practices in the 1970's and in the first half of the 1980's. As the Treaty was so systematic for abolitions of NTBs, the treaties after it could be formulated by adding new clauses to the Treaty or correcting old clauses. It made the development of the single market integration easier.After 50 years from the Rome Treaty, the EU economy looks very strong, even in comparison with the American economy. What are reasons? The present paper regards the three epoch-making economic integration after the 1980's as the most important: internal market building, monetary integration and the eastern enlargement, The three integrations revitalized the old European economy by a kind of creative destruction in the Schumpeterian sence. The western European companies and banks organized a pan-European production networks by marching into Eastern Europe, where they organized a production bases for the western European companies. There has been a reaction, which stimulated economic innovation in Western Europe and it made the whole European economy competitive in the world.In the 21st century, emerging market economies have been rising. They want their economies to be modernized, mechanized and equipped with better infrastructure. As the American economy was too developed towards service economy, the country cannot reply to the needs of the emerging economies. Europe can do, because it keeps its heavy and chemical industries strong. The present paper has a prospect that Europe will be able to compete in the world in the beginning of the 21st century.

50 Jahre Europäische Ordnungspolitik: ordnungs- und konstitutionenökonomische Anmerkungen / 50 years of European „Ordnungspolitik”, remarks from a constitutional economics perspective

Zusammenfassung Die ordnungspolitischen Leistungen der Europäischen Integration der letzten 50 Jahre sind wechselhaft und widersprüchlich. Vor dem Hintergrund von Hayeks optimistischer Vision einer freiwilligen Integration unter dem Vorzeichen universalisierbarer Freiheitsgewährungen und Erhards Befürchtungen vor einem Europäischen Interventionsstaat diskutiere ich theoretische Gründe, die den gemischten empirischen Befund erklären können. Hayeks Optimismus läßt sich polit-ökonomisch vor allem unter Ver weis auf die Logik des Stimmentauschs und die Eigeninteressen Europäischer Organe relativieren. Erhards Pessimismus wiederum kann durch gewollte oder ungewollte Selbstbindung der Vertragsparteien sowie eine durchaus oft ordnungspolitisch weitreichende Interpretation der Verträge durch EuGH und Kommission in wichtigen Teilen widerlegt werden. Die weitere Entwicklung Europäischer Ordnungspolitik dürfte von den Reibungen zwischen Vertiefung (Harmonisierung, Zentralisierung) und Erweiterung der Union geprägt sein. Aus konstitutionenökonomischer Sicht empfiehlt sich ein Modell flexibler, freiwilliger Integration nach Politikbereichen in „clubs”.

La prise en considération de critères « extraconcurrentiels » dans le droit communautaire de la concurrence

Cet article explore les relations entre la politique de concurrence et les autres politiques communautaires. Il examine la manière dont le droit communautaire primaire (les traités) et secondaire (le règlement concentration) résout les conflits susceptibles de survenir entre les objectifs de la politique de concurrence et les autres politiques. La thèse principale de ce travail d’exégèse est que les règles communautaires n’excluent pas le rôle actif de considérations extraconcurrentielles dans l’application et la concrétisation de la politique de concurrence, mais que ce rôle est néanmoins limité. Manifestation du libéralisme économique modéré de la « Constitution économique européenne », la libre concurrence est en droit communautaire le principe et la prise en compte de critères extraconcurrentiels l’exception.

The exchange paradigm of constitutional economics: implications for understanding the third sector

This paper reconsiders the exchange paradigm of constitutional economics from the perspective of the theory of the division of labor. According to this theory, human wants can be satisfied by two basic mechanisms—exchange and self-sufficiency. The exchange paradigm of constitutional economics emphasizes the former mechanism while neglecting the latter. Building on major economic theories of the third sector, it is argued that the latter mechanism is more helpful than the former in explaining the existence of third sector organizations. The paper concludes by discussing implications of this argument for the further development of constitutional economics.

Constitutionalism and the Regulation of International Markets: How to Define the 'Development Objectives' of the World Trading System?

The latin adage 'ubi commercium, ibi jus' reflects the insight that the efficiency of markets and trade depend on legal guarantees of market freedoms (such as freedom of contract, property rights), legal security (e.g. as incentive for investments and division of labour) and on legal limitations of 'market failures' as well as of 'government failures'. Since Adam Smith, economists increasingly acknowledge these interdependencies between economic, legal and social order, for example between the economic objective of promoting consumer welfare through legal guarantees of consumer-driven competition and open markets, and the democratic objective of protecting individual self-government and peaceful cooperation among citizens through constitutional guarantees of equal freedoms and social justice. The lawyers, economists and politicians belonging to the post-war German schools of 'ordo-liberalism' (including German chancellor L. Erhard and his secretaries of state, W. Hallstein and A. Muller-Armack, who represented Germany in the EEC Treaty negotiations) succeeded in basing the German and EC 'economic constitution' on constitutional guarantees of market freedoms, competition rules and a 'social market economy' committed to respect for human rights. Yet, the EC initiatives for 'constitutionalizing' the world trading system - for example, by correcting 'international market failures' by means of new WTO competition, environmental, investment and development rules, and for limiting the WTO's 'governance failures' by democratic and judicial reforms - appear to have foundered after more than 5 years of negotiations in the 'Doha Development Round.' This contribution discusses 'constitutional problems' of national and intergovernmental economic governance from the perspective of constitutional theory and constitutional economics by using the example of the disagreement among the 151 WTO Members on defining the 'development objectives' of the WTO's 'Development Round.' Constitutional theory suggests to define development as individual freedom, consumerdriven competition and autonomous development of human capacities protected by constitutional rights that limit abuses of power at national, transnational and international levels of human interactions.

Democracy and European Integration: A Legacy of Tensions, a Re-Conceptualisation and Recent True Conflicts?

This paper seeks to synthesise two concerns which are usually discussed separately. One concerns the much discussed democracy of the European polity. In this respect, it is considered that the democratic quality of the EU needs to be discussed in conjunction with Europe's potential to enable European citizens to see themselves as the sovereigns of the economic and order. The decoupling of Europe's economic constitution from the constitutions of Member States by the 1957 EEC Treaty has created a social deficit of the European construction which needs to be overcome if the EU is to gain full democratic legitimacy. The second concern is with the modes of governance that Europe has established in order to respond to irrefutable regulatory needs, including the quests for a European model. Here, Europe is, especially in areas of policy, resorting to soft law and non-legal governance techniques, which seem hardly reconcilable with Europe's commitment to the rule of law. Before paying the high price of de-legalisation, Europe should try out the alternative of re-conceptualising European law as new type of conflict of laws. This law would seek to attain what the Constitutional Treaty had called the motto of the Union, namely, a reconciliation of unity and diversity; it would not only help to rescue the rule of law but also serves to enhance Europe's chances of coping with the unresolved substantive tensions, including the deficits of the European polity.

Corporate social responsibility and the ‘game of catallaxy’: the perspective of constitutional economics

The paper examines the issue of corporate social responsibility (CSR) from the perspective of constitutional economics, focusing on the distinction between a political community’s constitutional choice of the rules of the “market game,” and the market players’ sub-constitutional choice of strategies within these rules. Three versions of CSR-demands are identified and discussed, a “soft,” a “hard”, and a “radical” version. The soft version is concerned with the issue of how “socially responsible” corporations ought to play the market game within existing rules. The hard version is about how the rules of the market ought to be changed in order to induce “socially responsible” corporate behavior. And the radical version questions the compatibility of CSR and the logic of the market game, calling in effect for adopting some alternative economic regime.

European and National Property Law: Osmosis or Growing Antagonism?

One of the pillars of the economic constitution of the European Union is what might be called freedom of property. Article 17 of the Charter of Fundamental Rights of the European Union and the corresponding article II-77 of the Treaty establishing a Constitution for Europe therefore declare that everyone has the right to own, use, dispose and bequeth his or her lawfully acquired possessions. It is, however, not really very clear what is meant by property and property rights in a private law sense. How can property rights or, to put it differently, rights against the world be defined at a European level? In the area of property law a search for common policies, principles, concepts and rules is badly needed. In this lecture a research map is drawn in which problem areas are presented as well as some suggestions are made as to where this search could lead to, taking the work on the Ius Commune Casebook Property Law as a starting-point. In this casebook an analysis will be made of the property laws of various Member-States to see which similarities and dissimilarities exist. To give but one example: the concept of ownership seems, at first sight, to be a typically civil law concept, whereas the trust with its fragmented ownership seems to be a typically common law concept. However, the common law freehold estate comes for all practical purposes very close to civilian ownership. At the same time civil law systems are more and more willing to accept trust relationships, with as a result a division between management and entitlement to benefits without however abandoning their traditionally unitary concept of ownership. This example, as well as other examples, show that under the surface of the differing rules, European property law systems share several leading policies and principles, although existing differences should also not be ignored.

Old wine, new wine

One of the fundamental developments in modern public choice theory is Constitutional Eco nomics. This area of research concerns how rules affect economic performance, and how the choice of rules to govern the political sector (as opposed to the working of in-period politics) is an important area of economic and political analysis. The founders and developers of this approach are economists, sociologists, and political scientists, such as Duncan Black, James M. Buchanan, Gordon Tullock, Mancur Olson, William Riker, Charles Rowley, Geoffrey Brennan, James Coleman, Kenneth Shepsle, Robert Tollison and others.1 Of late, a new wave of scholars has taken an interest in this area. For example, Persson and Tabellini (2003) wrote a well-received book on the political economy of constitutions and constitutional rules, which Daron Acemoglu (2005) discusses in a recent review article. So interest in constitutions is growing as modern political economists revisit ground that others, most prominently, James Buchanan, have plowed many times over dating back to the 1960's. It is all to the good that first-class scholars are attracted to the subject of Consti tutional Economics. It is disappointing, however, that these authors do not appear to know much about this earlier work. There are cursory references to Buchanan and Tullock (1962) and Brennan and Buchanan (1980) in Persson and Tabellini, and none at all in Acemoglu. I cannot think of a parallel example of such treatment. For example, would you write a book about macroeconomic theory without fully acknowledging the contributions of John May nard Keynes, or about the evolution of neoclassical economics without mentioning Alfred Marshall, or about the origins of political economy without mentioning Adam Smith? So there is no doubt some unacknowledged old wine in this new literature on constitu tions, as well as some strongly self-acknowledged new wine focused on empirical research

Institutional changes and shifting ideas: a constitutional analysis of the Euro

This paper uses the logical tools of Constitutional Economics to analyze the creation of the Euro, considering the entire process as the outcome of a conflict between different rules or, if you will, between different monetary systems, moving from the system of flexible exchange rates to a system of fixed exchange rates and ultimately to the single currency. The conflict between monetary systems has been acted out according to the single states’ collective preference functions, with both full employment and price stability figuring among the weights of said preference functions. The “solution” of the single currency was conceived when the body of information available to the policymakers was “simplified” by the new classical macro-economy taking a hegemonic role.

The Errors in Korea's Constitution and Liberal Constitutionalism

The subject of this paper is to explain errors in the economic constitution of Korea. Generally speaking, a constitution consists of two kinds of rules: organizational rules and the limiting rules. However, the economic constitution of our country attaches too much importance to the former while neglecting the latter that defines the limits of governmental authority. The reason for such a neglect is that the constitution starts from the false premise that government is omnipotent and moralistic, namely from the romantic Platonic-Hegelian view of the State. The economic constitution can be considered as one for an unlimited democracy, and our government is limitless in its political power; so the constitution suffers from “fatal conceit” (Hayek 1988). In order to limit the political power and to protect personal freedom effectively, limiting rules have to be introduced into the constitution. The Rule of Law, or the political ideal of liberalism, can be proposed as the rule that effectively constrains the arbitrary power of government. It makes it possible for human beings to live together in prosperity, freedom, and peace.

Privatization in economic theory

In reality privatization has never occurred according to the handbook rules of ordinary market transactions. Not even in advanced market economies can privatization transactions be described by the Walrasian or Arrowian, or Leontiefian equilibrium models, or by the equilibrium models of the game theory. In these economies transactions of privatization take place in a fairly organic way ? which means that those are driven by the dominance of private property rights and in a market economy. But despite this fact Western privatization also some peculiar features as compared to ordinary company takeovers, since the state as the seller may pursue non ? economic goals. Changes in the dominant form of property change positions and status of many individuals and groups in the society. That?s why privatization can even less be explained by ordinary market mechanisms in transition countries where privatizing state-owned property have happened in a mass scale and where markets and private property rights weren't established at the time process of privatization began. In this paper I?ll discuss and analyze the phenomenon of privatization in context of different economic theories arguing that empirical results go in favor of the public choice theory (Buchanan, 1978), theory of "economic constitution" (Brennan and Buchanan 1985), (Buchanan and Tullock, 1989), and theory of "collective action" (Olson, 1982). These theories argues that transition from one economic system into another, for example transition from collectivistic, socialistic system into capitalism and free market economy with dominant private property, will not happen through isolated changes of only few economic institutions, no matter how deep that changes would be. In other words privatization can not give results if it's not followed by comprehensive change of economic system because privatized companied wouldn't be able to operate in old environment.

Constituição econômica e dignidade da pessoa humana

The purpose of this article is to examine some issues concerning the relationship between human dignity and economic constitution, specially the central issue of economic and social democracy.