Is There a Gate to a Reliable Post-Positivistic Law ?

Is there a gate to a reliable post-positivistic law ?

The crucial issue raised by a post-positivistic (or pluralistic) concept of law seems to be the finding of a concept of law which prevent legal solutions from being ultimately undecidable or object of inscrutable opinion. Optimistic answers for such a question do exist. For some, the so called cognitivists, there are intellectual procedures which can reveal us indubitable opinions on what is or what is not a just norm or solution1. Also those who profess a religious conception of law - like the followers of an Islamic Republic – belief that they can take advantage of divine standards to found a valid and certain law. However, being based on faith, the last position can be labeled as a soft cognitivism, as faith is neither a universal gift nor a forceful spiritual attitude. Another softer version of cognitivism is that of those who conceive morals (< lat. mores, usages) or fairness as a set of established rules, which can be observed and empirically described. Most of cognitivists would, however, rebate such position, which solely assures vigency, but not the core feature of validity. Wouldn’t be possible to identify intellectual processes – let us say, forms of calculus – which assure a methodic pursuit of true legal solutions? The attempt wouldn’t be historically unknown. Two hundred years ago, the Marquis of Beccaria (1738-1794) proposed a “felicific calculus”, a formula whose application would allow to mould a legal solution from where the most felicity for the most people would flow; afterwards, the motto would be the cornerstone of every utilitarianism, namely that of Jeremy Bentham (1778-1832). Formal or specific logics were also pointed out as reliable paths to a universal legal correctness. Not so much as a general and all-embracing tool2, but rather as a way of policing legal reasoning, avoiding fallacies and other logical faults. Although serious and sustained efforts have been made in logics – and specifically on logical modalities proper to reason in law -, all this work remained inconclusive. The better one can say currently is that logics can prevent some bad solutions in legal discourse3, but is far from being an ultimate remedy for substantially inadequate solutions in law. Also theory of legal argumentation falls short, unless it adopts a conception of intrinsically good or bad arguments, i.e., something neighboring an argumentative cognitivism4. Its most prudent developments – such as that of Ch. Perelman5 or Neil MacCormick6 tend to identify good arguments with received (or used) arguments within a specific argumentative context; but this is not the ideal gate to absolute certainty in law. Although, an argumentative guide to discuss legal decisions still is a very effective instrument to prevent bad legal reasoning.

1 Cf., v.g., R. Dworkin, “Objectivity and Truth: You'd Better Believe It”, Philosophy & Public Affairs, 25 (1996), 87–139. 2 Although, legal philosophers like J. G. v. Leibniz (1646-1716; Nova Methodus discendae docendaeque jurisprudentia, 1667) were not so far from this target. 3 Although also hindering some plausibly fair solutions. 4 R. Alexy is not so far from a similar point of view, namely when he conceives a logical/mathematical formula for solving problems of weighting (Abwägen) values (or principles). 5 http://en.wikipedia.org/wiki/Cha%C3%AFm_Perelman. 6 http://en.wikipedia.org/wiki/Neil_MacCormick. There, of course, other possibilities. Turning to felicific calculus, wouldn’t it be feasible to derive just decision from economically sound solutions ? This is precisely the via followed by the so-called Economic Analysis of Law (or Law and Economics).

1. Law and economic effiiency.

The economic analysis of law (especially as represented by Richard Posner7) proposes an analysis of the "efficiency" of the law from the perspective of maximization of utility (conceived in a certain way) of legal rules, or rather, judicial decisions and administrative decisions based on them. In other words, an analysis how law can be an an element in "rational" decision making of individuals, promoting a disposition to increase the utility they get from the solution law helped to be acted by them. This stream is rooted on the utilitarianism of the late 18th century. More recently, it is a by-product of the Chicago School (Milton Friedman, n.1912) and, correspondingly, a perspective of social transactions as directed only by the pursuit of individual utility. Subsequent currents – mostly, Ronald Coase e Guido Calabresi 8 - , introduced changes here: although placing the utility in the center of the assessment of legal solutions, they opened a space for the consideration of other perspectives of utility, namely not merely individual. In the current text, we deal with the original design, in order to emphasize more strongly the central points of view. Within the logic of this text, the question to be put to this type of analysis is: did it convey a rational basis to support a decision for legal decisions, when they have to make choices between several alternatives (several sources of law, several norms within the same source, several interpretations within the same norm) ?

2. The rationality of the market. For this school, human transactions would be the product of a rational choice based on an assumed freedom of individual choice, which would also be a fact of human nature which could not be ignored. This set of individual are deemed to institute and continuously feed the market. Accordingly, the free market would always produces benefits, because the parties, if they decide to negotiate (“willingness to pay”, as they express it), both usually win with this, at least from their respective points of view and according to their expectations. This starting point leads to an analysis of the efficiency of law, where this is assessed by the appropriateness of legal solutions to the preservation and development of the market, by the aptitude legal rules, judicial and administrative to be useful to the maximization, as it is conceived by market participants.

7 Richard A. Posner, Economic Analysis of Law, Boston, Little Brown (1st ed.: 1973; last ed., heavily revised 2004). Sites: Lewis Kornhauser, “Economic analysis of law”, in Stanford Encyclopedia of Philosophy http://plato.stanford.edu/entries/legal-econanalysis/; Law and Economic Resources (maintained by FindLaw.com, in Mountain View, CA); American Law and Economics Association; Encyclopedia of Law and Economics, edited by Boudewijn Bouckaert (University of Ghent) and Gerrit De Geest (University of Ghent and Utrecht University). Peter Newman, ed., The New Dictionary Of The Economic And The Law, London, Macmillan, 1998. See also the seminal articles of the modern EAL: Ronald Coase "The Problem of Social Cost" (Journal of Law & Economics Vol.3, No.1, 1960 [actually, 1961] ) e Guido Calabresi, "Some Thoughts on Risk Distribution and the Law of Torts" (Yale Law Journal, Vol.70 (1961)). Nevertheless, Posner’s formulations are still the canonical ones. 8 Cf., antes n. Error: Reference source not found. The market model assumes consumers’ sovereignty. This means that their choices should be accepted. Interference with the guidelines, desires and economic power of individuals must be discarded. The rationality of the market model still requires other ingredients: all subjects intervening in the market are fully informed of the facts and of the law; they are fully free in their choices, not being subject to any regulatory constraints (such as those law tends to impose, by virtue of the general/public interests, community welfare, social justice or the collective progress).

3. The law and the market. The consequence of this assumption to the law is that, unless there is damage to a third party:  trading in the market should be fostered by the law (and not prevented, restricted or impeded, made expensive);  state regulation, by law, should not weigh on the market, introducing non- economic costs; accordingly, the state must become "lean", the right of economical intervention should be minimal and, even in this minimum,, conform to the norms of the market. Posner argues that legal rules should be "efficient", giving this term a very specific meaning: they should seek to maximize the will of parties to attend (to stay in) the market ("willingness to pay"), to maximize their satisfaction with the results produced by it; implicitly, it is therefore assumed that the market development contributes:  from an anthropological point of view, to achieving the free and active nature (communicative, hoc sensu) of human;  from a practical standpoint, to the generalization of general happiness, providing a wide range of goods and services capable of satisfying individual desires. The policy of creating legal market implies:  abolishing barriers to free trade,  privatizing business and enterprises,  put an end to any form of public intervention in the economy (subsidies, selective bonuses of rate, low taxes [tending to 0 ...]),  ultimately causing the de-capitalization of the state, also with the aim of making it powerless or helpless, performing in outsourcing its traditional functions [including defense, tax collection, education, prison administration, and, eventually, justice].  warranting and protecting free competition (?).

4. Key concepts of economic analysis (of law). • "Efficiency means [...] to exploit the economic resources so that human satisfaction as measured by the aggregated availability of the individuals to pay for goods and services is maximized" 9. • "Willingness to pay “ is the willingness to enter into the transaction, to be in the market, as far as it is understood that the creation of resources caused by the transaction has higher a value than the expenditure of resources caused by the same transaction. The 'willingness to pay', however, is a function of the 9 R. Posner, Economic analysis [...], p. 4. distribution of income and wealth that exists in society. That is, the availability to trade, exchanging our resources by those of others, is greater when our resources are larger and therefore have, for us, a lower subjective value, and therefore are cheaper price for what we are buying10. • The value of a product corresponds to its most efficient use, which is linked to the willingness to pay" in order to get the disposal of its use (note the social bias of the concepts, promoting the willingness to pay of the wealthiest and the opposite of the poorest; so that market ultimately invites the first and expels the later)11. As one Posner's commentator explains "the intuitive idea that underlies these definitions related to the market model is quite simple. In a free trade relationship, both parties are to perform better after than before - the "value" has increased. In a monetary transaction, while a buyer wants and is able to pay the amount that a seller wants to accept, the [global] value increases with the deal – i.e., by its conduct each party gives indication that he thinks that his situation improved" 12. Implications for the law. • the law shall grant the right to the party for whom this right is more valuable (Posner, op. cit., 18, 24); • the rules on property shall favor its transfer to anyone who makes a most valuable use of it (Posner, op. cit., p. 10-13); • contract law must "minimize the disturbance of the exchange process" and reduce contractual costs (Posner, op. cit., p. 42, 44); • The best policies are those that increase, in general, the availability for the transactions, in order to develop the market. An interesting discussion regarding this non-normative ("amoral") of the EAL regards the R. Posner’s proposal that contracts could breached if such failure resulted efficient for one faulty party and not harmful to the other (the so-called "efficient breach of contracts"). This would, inter alia, allow a seller to breach an earlier contract of sale in order to sell later in better conditions, thus realizing a greater profit, even if he had to compensate the first contractor for the non-compliance (corresponding to their possible losses)13. However, writes D. Friedman, "the analysis [supporting the doctrine of efficient breach] wrongly converts the compensation for non-compliance in a kind of indulgence that the ‘sinner’ can always buy, according to a unilateral decision. As it happens with any general idea, [this] proposition is difficult to limit to the cases of contract, to which it was originally applied. Why can not the proposition be generalized, so that any person would have an "option" of violating the rights of others or breaking the law, since he wanted wants to bear the consequences? The legal

10 Id. Ibid. 11 Id., Ibid.. 12 C. E. Baker, “The ideology of the economic analysis of law”, cit., 5 13 This would lead to the typical situation: “[I] f a seller (S) owns a widget that S values at $90, that one buyer (B1) values at $110, and that another buyer (B2) values at $130, an efficient legal rule is one that will induce the parties to behave in such a way that B2 will get the widget at a cost of no more than $130 and S will get at least $90. A rule under which S would keep the widget would not be efficient. Nor would a rule under which B1 ended up with the widget. (However, a rule under which S sold the widget to B1 and B1 then sold the widget to B2 would be efficient.)" (Farnsworth and Young, Contracts: Cases and Materials at 20 (5th ed. 1995), ). system could only be perceived as setting prices, some higher, some lowers, which therefore would serve as the only constraint to promote la awful behavior" 14.

5. Critique. However, the logic of the market model is far from being indisputable. (a) The consumer’s sovereignty in a society in which neither wealth nor the knowledge15 is equally distributed, does not increase the overall human satisfaction; a uneven market generates an also uneven ”willingness to pay”, an uneven value for the same good (depending of the situation of the party) and an uneven distribution. To pretend the opposite sounds like a sarcastic joke. (b) The market offers more sparsely certain values (i.e, social values). That is, not all the values are or can be in the market": simplifying, social values or altruistic values – i.e, those which do not satisfy the interests or desires of an individual consumer - cannot (or can more rarely be) transformed into goods. Hence, the "will to be in the market" is measured in relation to a market that best meets individual interests than public interests. (c) the market interferes, itself, with the individual wishes and thus with the satisfaction of each consumer, to that extent, consumers are not sovereign, but determined by the market (advertising, arrangement of commercial spaces, manipulation of prices). Just think on the tyrannical molding role played by advertising on our tastes and feelings. All this should be enough to question the neutrality of the market regarding the ranking of individual values and the idea of dignifying the market as "the place of human freedom," especially when we know "as advertising, availability of goods and acquired consumption habits affect (enslave) decisively people's wishes" 16. (d) "In a commercial transaction, what is bought and what is sold must be an object, a commodity. The buyer or the seller (the subject) relates to only one object [...], everything being treated like a "private value" [...]. How can this model deal with cases whose value lies not in the satisfaction of individual wishes, but in making connections between "wishes", "aspirations" or "desires" of several differentiated people? " 17. (e) "The willingness to pay [...] is a function of the distribution of income and wealth that exists in a society" (Posner, op cit., p. 4). So, if this distribution is unfair, to maximize human satisfaction on the basis of willingness to pay exacerbates the injustice.

Nonetheless, economic analysis of law is a powerful tool to compensate for the purely formal and abstract nature of traditional legal studies. Therefore, it has contributed to visible progress in fields such as the decision to legislate, the making of laws, public policy analysis, analysis of the judicial decisions.

14 Daniel Friedmann, “The Efficient Breach Fallacy”, The Journal of Legal Studies, Vol. 18, No. 1. (Jan., 1989), pp. 1-24 (p. 1); cf. also Steven Shavell, “Is Breach of Contract Immoral?, em Harvard John M. Olin Center For Law, Economics, And Business. Discussion Paper No. 531; (11/2005.http://www.law.harvard.edu/programs/olin_center). 15 Including knowledge of what is on the market - look at the origins of the current crisis! 16 C. E. Baker, “The ideology of the economic analysis of law”, cit., 37-38. 17 C. E. Baker, “The ideology of the economic analysis of law”, cit., 36. f., in the sense that it is highly difficult to apply the market model to collective or diffuse interests, Mary Ann Glendon, Rights Talk: The Impoverishment of Political Discourse, Harvard Univ. Press, 1991, cit. 112 ss.. 6. Doctrinal impact of the financial crisis of 2008. The financial and economic crisis of 2008 led to an even more acute perception of a good part of the criticisms that have just been outlined. Indeed, it is difficult to reduce the source of the crisis to speculative greed, incompetence and the increasing complexity of markets, although this also is substantially real. The crisis is above all the proof that the autonomous regulation of the market does not respond to many of the interests in society, precisely because efficiency cannot be measured only by the satisfaction of individual players. If only those are considered, it is the very logic of the market who is to promoting the selfish maximization of profit, legitimizing the externalization of the social costs of transactions and even undermining traditional key rules of operation of markets - such as transparency, the equality, free and fair competition, the ethics of business (good faith, transparency, accountability). The testimony of the most authoritative economists18 - some confirming earlier views, others making surprising self-criticisms19 - and even of once financial promoters20 to which now it has called "casino economy" - are converging towards a deep revision of the tenets of liberal economics, introducing more regulation, more transparence in the markets, more state interventionist, policies of income distribution to develop intern markets, etc. All this would have a very strong influence on law and policies relating to the social function of state and law.

18 V.g., Joseph Stiglitz (cf. http://pt.wikipedia.org/wiki/Joseph_Stiglitz); Paul Krugman (http://pt.wikipedia.org/wiki/Paul_krugman); Amartya Sen (http://pt.wikipedia.org/wiki/Amartya_sen). 19 Pathetic, Alan Greenspan - http://www.youtube.com/watch?v=8oLHfKjiQew; http://www.youtube.com/watch?v=R5lZPWNFizQ&feature=related. 20 V.g., George Soros (http://en.wikipedia.org/wiki/George_Soros) - http://www.youtube.com/watch? v=SgCFRGGQVXM&feature=related.