Economic Constitution Research Articles

Interlinkages between public expenditures, non-tax government revenues and corruption in the transition economies

PurposeThis article examines potential impacts of increase in non-tax government revenues and public expenses on corruption for 11 transition economies in the Central and Eastern Europe.Design/methodology/approachThe empirical analysis uses yearly panel datasets and employs second-generation panel data models which take cross-sectional dependency and slope heterogeneity into account.FindingsThe empirical results reveal the fact that there is a strong linkage between public expenses and corruption and a weak linkage between non-tax revenue collection and corruption in the transition economies. We perform the same analysis by using data sets from G-7 countries but do not notice any linkages between those variables.Research limitations/implicationsThe research topic requires further discussion on constitutional political economy to digest the empirical findings. Thus, an extended version combined with political economic approach might be useful.Practical implicationsThrough economic transitions, there might be a linkage between public expenditures and corruption index. Thus, public spending might be controlled by using constitutional economics policies.Originality/valueThis paper is the first empirical work in the literature, which examines if there is a linkage between corruption and public expenditures and government tax income structure by using panel data sets. Moreover, it compares the results from transition countries with those of G-7 countries and provides certain policy suggestions in the context of constitutional economics.

‘Economic constitutionalism in a turbulent world’: a critical review

Abstract The article analyses the book Economic Constitutionalism in a Turbulent World edited by Skordas, Halmai and Mardikian, criticising the assumptions of societal constitutionalism and ordoliberalism on which it is based. The book concurs with the view that the current crisis of global legal institutions cannot be tackled going back to Nation States. Such an assumption seems to be inspired by societal constitutionalism à la Teubner. In contrast to traditional constitutionalism, which hinges on the dichotomy between constituent and constituted power, societal constitutionalism assigns a central role to independent institutions, whose main function is to avoid any hegemony of one social sub-system over another, in particular of politics over economics. The limit of societal constitutionalism lays in its assumption that the economic sub-system has its own rationality that the political–constitutional system can only irritate, taking for granted that the paradigm of that economic rationality is the one established after 1989, thus implicitly adhering to the neo-ordoliberal vision and legitimising its absolute immanentism. Coming to the materiality of the issues underlying the book, most of the contributions conceive globalisation as an engine for the increase of global prosperity. This confidence rests in the Ricardian theory of comparative advantage. However, the latter is valid only under condition of restrictions on the movement of capital. Another assumption made by several contributions is the theory of the varieties of capitalism, according to which individual models of capitalism tend to stabilise around certain production regimes whose key actors are large firms and business associations. According to an alternative, neo-Kaleckian paradigm, there is no natural convergence of the actors of the economic system towards a mutually beneficial institutional set-up, and it is quite unlikely that, without the external intervention of politics, the system can return to equilibrium.

Digital sovereignty: conceptual challenges and constitutional implications

This article examines how national states and integrative unions such as the European Union employ the concept of digital sovereignty in their policy discourse. It begins with the premise that contemporary digital policy of these entities is intricately linked to the idea of digital sovereignty. The study analyzes the factors that have led national states and the European Union to enter a new phase of modern constitutionalism - digital constitutionalism. Modern European constitutionalism has accumulated experience in various social spheres, as evidenced by developments such as economic constitutionalism. In the digital era, it raises and attempts to answer questions about how digital constitutionalism can overcome the limitations of traditional constitutional thinking, particularly its focus on state-legal and political phenomena. The article explores the extent to which the generalization of purely state constitutional principles can advance in the digital age. The paper emphasizes that digital constitutionalism is a convenient concept for explaining the phenomenon of constitutional resistance to challenges created by digital technologies. It notes that existing foreign, and especially Ukrainian, legal scholarship has not yet formed a clear and unified vision of this concept. This article provides a literature review on digital constitutionalism and offers an analysis of the theoretical frameworks surrounding the concept. It posits that digital constitutionalism is an ideology that adapts the values of modern constitutionalism to the demands of the digital age. Currently, digital constitutionalism does not provide normative answers to the challenges of digital technologies, but rather presents a set of principles and values that inform and guide them. The article argues that Internet governance is evolving towards fragmentation, polarization, and hybridization, which contribute to the development of an architecture of freedom and power in the digital environment. The study aims to identify constitutionally significant threats associated with digitalization and allows for the development of constitutional counterstrategies.

INDONESIAN FINANCIAL LAW: HISTORY AND RECENT DEVELOPMENT

The economic system and political regimes in most cases affect major changes in the financial laws of the state. Indonesia, the big country that gained its independence in 1945, had a long journey of financial struggles and challenges, particularly in the political regimes that divided into the Old Regime, the New Regime, and the Reformation Era. The objectives of this paper try to examine how Indonesia's economic system affects the state's financial policies described in legislation. Other objectives are the development of financial law in Indonesia based on the period divisions with historical perspectives. With normative legal research, this study will analyze several sources of laws and regulations on financial policies throughout the historical periods of Indonesia. In conclusion, Pancasila, and Article 33 of the Indonesian Constitution 1945 become economic constitutions that form the basis of financial policies of Indonesia. Moreover, the politics of the ruling regime strongly influenced financial law policies in Indonesia. The characteristics of monetary law changed based on the transfer of legal politics during the Old Order, New Order, and Reformation era

Asymmetrical, symmetrical and artifactual man: group size and cooperation in James Buchanan’s constitutional economics

Abstract Economics is frequently criticised for relying on a narrow and limited view of human beings. This may be particularly true of economic analyses of non-market decisions in which individuals often appear reduced to self-interested automata who maximise a given objective function. In this article, we show that the approach of one of the founders of public choice and constitutional political economy, James Buchanan, contradicts this view. Even though he assumed individuals were rational and self-interested, Buchanan nevertheless had a sophisticated view of human nature. He distinguished between a natural and artifactual man, but also between (what we term) symmetrical and asymmetrical man. This is not only important to demonstrate the richness of the ontology of an influential economist, but also because, we also show, Buchanan’s public choice and constitutional economics cannot be understood without a reference to this ontology.

The Economic Constitution of the United States

The United States has an Economic Constitution, governing federal regulation, and explaining how to conduct regulatory impact analysis, with reference to quantification and monetization of the costs and benefits of proposed and final regulations. Known as OMB Circular A-4, the Economic Constitution of the United States was thoroughly revised in 2023, with new directions on behavioral economics and nudging; on discount rates and effects on future generations; on distributional effects and how to account for them; and on benefits and costs that are hard or impossible to quantify. The revised document leaves numerous open questions, involving (for example) the valuation of human life, the valuation of morbidity effects, and the value of the lives of children.

A Formula to Save Us (From Ourselves): Continuity and Change in the Spanish Legal Domination System (1959–2024)

AbstractThis paper analyzes how a structure of Weberian rational domination has been built and consolidated in Spain since 1959, the year when the so‐called Economic Stabilization Plan was approved. This sort of economic constitution represents one of the most important foundations of a technocratic regime that survived the death of a dictator (General Francisco Franco), not only transcending the traditional differentiations between autocratic and democratic regimes but also offering a different perspective to the debate about the degree of continuity and rupture attained by the Spanish political transition in the 1970s. We analyze the institutions, leadership, most influential networks, political discourse, and historical myths through a theory of power and elites to examine the Spanish case. With this remarkable example of structural transformation and institutional resilience over decades, we also propose a more complex and multidimensional approach that could be fruitful to understanding some of the problems of political representation that current democracies are undergoing.

Scientific and legal support for the formation and development of the constitutional economy in the Republic of Belarus.

Еmphasizes the increasing role of the constitutional economy in regulating economic relations and ensuring the economic security of the state in the face of new challenges and threats. It is stated that the Constitutional Court of the Republic of Belarus in its decisions consistently focuses on the formation of a constitutional economy as the most important component of the social rule of law and the constitutional value that determines the economic development strategy. At the same time, the lack of development of this issue by Belarusian science, the lack of comprehensive research in the field of constitutional economics as an interdisciplinary scientific and legal and practical direction at the intersection of law and economics is noted. In this regard, the goal was set to justify the need and give theoretical and applied prospects for the scientific support of the formation and development of the constitutional economy in Belarus. Based on the use of dialectical, general scientific and private scientific methods, including the comparative legal method, the author considers the genesis and differences of the Western and Russian schools of constitutional economics, considers its essential characteristics, analyzes the decisions of the Constitutional Court of the Republic of Belarus and the opinion of scientists on its subject and content, delineates this direction with “economic analysis of law”. According to the results of the study, the refined concept of constitutional economy as a scientific and practical direction was formulated, the main components of its concept were disclosed, among which the opposition to monopolistic activities and the development of competition were highlighted. It was proposed in the draft updated Concept of National Security to classify the formation and development of a constitutional economy as one of the main directions for neutralizing internal sources of threats in the economic sphere. The conclusion is argued about the high level of demand for scientific and applied research in the field of constitutional economics. The problem field of such studies was outlined, a set of tasks and an approximate list of program issues were developed, for the solution of which it is proposed to create a scientific school of constitutional economics in Belarus and a number of measures are given to establish it.

Aligning State-Owned Enterprises with Constitutional Values

This study examines the relationship between Indonesia's economic constitution and the legal framework governing State-Owned Enterprises (BUMN) holding companies. The research analyzes the alignment of BUMN operations with constitutional ideals of welfare and social justice, based on the principles of the 1945 Constitution and the Limited Liability Company Law. The text highlights the discrepancies between theoretical principles and practical implementations, specifically in the areas of corporate governance, ethical conduct, and fair economic distribution. The investigation focuses on how these discrepancies manifest in BUMN operations, their impact on stakeholders, and the wider socio-economic implications for Indonesia. The study emphasizes the need for specific regulations that are tailored to the unique structural and operational characteristics of BUMN holding companies. Recommendations include improving oversight, increasing transparency, and strengthening accountability mechanisms. These measures are essential for aligning BUMN practices with constitutional mandates, ensuring operational efficiency and competitiveness, and making significant contributions to national socio-economic progress.

The economic constitution and the political constitution: seeking the common good in the post‐national setting

AbstractIn the post‐national setting, the concept of the ‘economic constitution’ has been seen as design template and saviour; whether based on transactional certitude or founded on ordoliberal precepts, the economic constitution is assumed to legitimate economic integration across national borders in the absence of comprehensive political settlement. Nevertheless, recent tensions – not only within the European Union (EU) but also, more strikingly, within the World Trade Organization context – indicate the limits of economic constitutionalism. This article seeks to identify the roots of recent dysfunction within the history and theory of economic constitutionalism. It traces the evolution of an adjudicational economic constitutionalism and its place within the EU legal order, including the new EU Charter of Fundamental Rights, and contrasts this vision with the more comprehensive and/or socialized models of economic constitutionalism found not only within the Weimar Republic but also within the post‐revolutionary/post‐conflict constitutional context. The article also places a major emphasis on theorizing around the apex of economic‐constitutional thought, ordoliberalism, but concludes that no concept of the economic constitution can be seen in isolation from its social‐political context, or from notions of the common good. To this exact degree, failures in modern economic constitutionalism may derive from a misplaced universalism – a technocratic absolutism that abdicates political responsibility for the common good, locating it instead in an ‘idolatry of the factual’ or a new naturalism of market inevitability.

Transnational constitutionalism – conflicts‐law constitutionalism – economic constitutionalism: the exemplary case of the European Union

AbstractTransnational constitutionalism is both a sociological given and a legal challenge. We observe the emergence of ever more legally framed transnational arrangements with ever more power and impact. Do such arrangements deserve to be called legitimate rule in Habermasian terms? Is it at all conceivable that the proprium of law can be defended against the rise of its informal competitors? This article opts for a third way that listens to neither the siren songs on law beyond the state nor to the defences of nation‐state constitutionalism as the monopolist of legitimate rule. The proposed alternative suggests that transnational legal ordering of the European Union should build on its reconceptualization as a ‘three‐dimensional conflicts law’ with a democracy‐enhancing potential. This reconceptualization operationalizes the ‘united in diversity’ motto of the Draft Constitutional Treaty of 2004, preserves the essential accomplishments of Europe's constitutional democracies, provides for co‐operative problem solving of transnational regulatory tasks, and retains supervisory powers over national and transnational arrangements of private governance.

Trends in the development of constitutional law and problems of the transformation of the Constitution of Ukraine in the dimension of constitutional economy

The problems of the transformation of the Constitution of Ukraine in the context of the theory and practice of constitutional economics are considered. The problem of constitutionalization of economic relations is studied. The analysis of foreign experience shows that the successful development of the economy depends on the perfection of the mechanism of constitutional and legal regulation of economic and budget-financial relations, as well as the determination of the place and role of the state in the management of economic processes. The role of direct constitutional regulation of economic relations is particularly important. These and other factors determine the need for a conceptual analysis of the economic dimension of constitutional law and the Constitution of Ukraine. It was established that the process of constitutionalization of public property, public finances and other economic relations is connected with a significant expansion of the influence of constitutions on the processes of socioeconomic development of society. It is proved that property, finances, taxes, the budget, the banking system are categories of constitutional law in view of the degree of freedom of the individual and the limits of the powers of institutions of public power in the sphere of economy. The need to allocate separate sections «Public Property» and «Public Finances» in the Constitution of Ukraine is substantiated. According to the author, this will indicate not only the special constitutional significance of the relevant institutions, but also their axiological, synergistic, functional-teleological connection with the principles of the constitutional order. The foreign experience of constitutional economics shows that most constitutions initially regulated financial and economic relations quite fragmentarily. As constitutionalism developed, the constitutionalization of institutions of public property and public finance intensified. Constitutional regulation in this area became over time more and more detailed and branched, and therefore voluminous and functional. In this regard, we draw attention to the need to deepen the detailing of the constitutional regulation of public property and public finances. At the current stage of the development of constitutionalism, this is explained by the effect of the trends of economization and internationalization of constitutional law, which leads to the growth of both the importance and complexity of financial and economic relations and their legal regulation. In this context, the allocation of separate chapters on public property and public finances in the structure of the Constitution of Ukraine will largely reflect the development trends of modern constitutionalism. Key words: constitutional economy, economic constitutionalism, constitutionalization, constitution, public property, public finances, state, human rights, constitutional order, economic functions of the state, fiscal constitutionalism, constitutional regulation, constitutional values, democracy, public power, transformation of legislation.

Certain problems of ensuring the constitutional principle of the rule of law within control over anticompetitive concerted practices

The article examines certain problems of ensuring the constitutional principle of the rule of law in the process of control by the bodies of Antimonopoly Committee of Ukraine (the AMCU) over undertakings’ compliance with Ukrainian competition legislation in the area of prohibition of anticompetitive concerted practices. Analysis of current competition legislation regulating anticompetitive concerted practices and the practice of its application indicates existence of a number of problematic aspects of ensuring the rule of law in the researched area, in particular, in part of legal certainty and predictability of application of provisions of relevant competition legislation. In general, the above problems are generated by (a) broad wording of relevant competition legislation, wide use of evaluative concepts in it, which may result in different interpretations by various subjects, (b) lack of established practice regarding numerous basic issues of application of relevant legislation; (c) wide discretionary powers of the AMCU’s bodies in terms of establishing, proving and qualifying certain behaviour as violation of competition legislation and limited scope for review of the AMCU’s bodies’ decisions by courts. One of the most notable practical problems is distinguishing individual competitive behavior of an undertaking from the one coordinated with another undertakings. This problem is clearly manifested within enforcement of Article 6(3) of the Law of Ukraine «On the Protection of Economic Competition» (the Law) setting grounds for qualifying similar (parallel) behavior of undertakings as anticompetitive concerted practices. The existing practice of application of Article 6(3) of the Law is criticized by law practitioners as the one creating legal uncertainty regarding boundaries of what is permitted and what is prohibited for undertakings, and the necessity of its preservation in the Law is questioned. One of possible ways to resolve existing problems of legal uncertainty and unpredictability in distinguishing individual competitive behavior from coordinated one in the presence of similar behavior of different undertakings on the market could be to remove Article 6(3) from the Law. At the same time, such legislative changes may not have the expected positive effect without solving the issue of the above distinguishing at the methodical level. This, in turn, could be achieved via adoption by the AMCU of relevant methodical recommendations/recommendatory clarifications to be developed with due account to the best world practices in similar cases, first of all, approaches applied within the EU, and their actual observance by the AMCU’s bodies themselves in practice. Key words: Constitution, rule of law, constitutional rights, human rights, constitutional principles, constitutional economics, entrepreneurship, competition, state protection of competition, Antimonopoly Committee of Ukraine, control over compliance with legislation, concerted practices, anticompetitive concerted practices, legal certainty, predictability of law enforcement.

Trade and Commerce: Canada's Economic Constitution, Malcolm Lavoie (Montreal: McGill-Queen's University Press, 2023)

Book review of Trade and Commerce: Canada's Economic Constitution, by Malcolm Lavoie.

The renaissance of ordoliberalism in the 1970s and 1980s*

AbstractThe economic tradition of ordoliberalism, understood as the theoretical and policy ideas of the Freiburg School, emerged in 1930s and 1940s Germany. In the years thereafter, it was quickly superseded by Keynesianism and other theories imported from the English-speaking world. The crisis in Keynesian economics in the mid-1970s led to what has been described as a “renaissance of ordoliberal reasoning” (Gebhard Kirchgässner) during the late 1970s and the 1980s. The present paper describes this development in detail and shows how it affected the academic discourse and, more indirectly, policymaking. In academic economics, ordoliberal concepts were used to inform debates about pressing issues of the day such as unemployment, social security reform, competition policy, the provision of public goods, and European integration. There was, however, no consensus on the methodological question of whether ordoliberalism could be fully integrated into international research programs such as the new institutional economics or constitutional economics. The paper argues that the renaissance of ordoliberalism failed to have a lasting impact on German academic economics and discusses possible implications of this finding for the future of the ordoliberal research agenda.

Conditions, Challenges and Prospects of State-owned Enterprises in Indonesia: The Governance Perspective Based on Economic Constitution

Conditions, Challenges and Prospects of State-owned Enterprises in Indonesia: The Governance Perspective Based on Economic Constitution

Leader characteristics and constitutional compliance

While research in constitutional economics has made important progress in recent decades, the factors determining whether a constitution is complied with have only received scant attention. We contribute to that narrow literature by studying how personal traits of political leaders are associated with constitutional compliance. Compliance levels of 943 political leaders between 1950 and 2010 can be explained by their education, entry into office, political experience, military background, and whether they are members of extreme left-wing parties. Specifically, under former military officers and Communist leaders, constitutional compliance is significantly lower. The combined effect of these two traits corresponds to the difference between democracy and nondemocracy. This implies a difficult normative question, which we discuss in our conclusion: Should constitutions set entry barriers for high political offices that are based on leader characteristics?

The welfare state between juridification and commodification: how the Frankfurt School gave up on economic democracy

AbstractThe aim of this contribution is to critically introduce and assess the Frankfurt School’s theory of late capitalism as it emerged in the 1970s, when a combined crisis of inflation and stagnation began to unravel the Keynesian orthodoxies of state-organised capitalism. In the process, Frankfurt theorists such as Jürgen Habermas and Claus Offe developed powerful critiques of commodification and juridification. The origins of their theory of late capitalism are first traced to the interwar debates on the Weimar Constitution – Germany’s first experiment in both constitutional and economic democracy. The rest of the Article takes a closer look at the Frankfurt School’s changing posture towards economic democracy in the 1970s. Accordingly, I first reiterate how the theory of late capitalism converged with that of the other major crisis theory of the time – the neo-conservative theory of ‘ungovernability’. In diagnosing the ‘governability crisis’ as a crisis of democracy, the Frankfurt School’s increasing pessimism about democracy’s economic reach becomes apparent. Secondly, by looking at the way the Frankfurt School perceived the emergence of the ‘neoliberal’ alternative in the early 1980s, I also argue that the theory of late capitalism had, and did, little to resist the de-democratisation of the economy through the rise of economic constitutionalism in the 1980s. As the welfare state was caught between the two logics of commodification and juridification, economic democracy was its unwitting victim.

Standing on the shoulders of giants or science? Lessons from ordoliberalism

James Buchanan would have celebrated his 100th birthday in 2019. This serves as an inspiration to look at the future of public choice and the question of how much normativity public choice can bear. In our analysis we draw parallels between public choice and German ordoliberalism (and its source in the Freiburg School of Economics). We argue that the reception of ordoliberalism exemplifies easy-to-grasp pitfalls that should be taken seriously. We anchor the future agenda of public choice in a solid individualist perspective. Similar to ordoliberalism, public choice will have to clarify its relation to normative economics. The effects of rules and institutions and their working properties should be thoroughly analyzed empirically. The role of ideas is important for the normative foundation of both public choice/ constitutional economics and ordoliberalism, and is rooted in normative individualism. It provides a benchmark by which rules and institutions can be judged as favorable.

The Concept of Constitutional Economics and the Necessity of Updating the Constitution of Ukraine in Terms of Regulating Financial and Economic Relations

The Concept of Constitutional Economics and the Necessity of Updating the Constitution of Ukraine in Terms of Regulating Financial and Economic Relations