The Strategic Constitution

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Overview

"This is a superb synthesis, application, and extension of four decades of research in economics and political science on the effects of formal political institutions on economics, law, and politics. Cooter is extraordinarily adept at crossing the disciplinary boundaries among economics, law, and politics. The book will be a wonderful textbook for advanced undergraduates and graduate students in the three disciplines. Moreover, many of Cooter's original arguments will generate considerable interest among leading social scientists as well. The scope of the book is simply breathtaking."—Geoffrey Garrett, Yale University

"I found this book to be incredibly stimulating. The field of law and economics is always a provocative source of ideas, forcing even the most reluctant consumer to rethink her own views and be more precise about articulating them as she works out a reply to the economic analysis on offer. Cooter's analyses of constitutional law problems are no exception to this, and any good student or sophisticated reader will develop ideas or arguments that are much better grounded for having thought his analyses through."—Bruce Chapman, University of Toronto

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Editorial Reviews

Law and Politics Book Review
For anyone looking for a textbook that provides a systematic introduction to the economic analysis of constitutional law in an accessible manner while covering a wide range of topics, it would . . . be hard to find a more suitable book. . . . [It] will encourage students to think about constitutional analysis from a new perspective in an engaging way.
— Georg Vanberg
Regulation
Cooter has written a very useful book. . . . It is important to identify the general principles—the engineering principles if you like—that underlie the structure of effective constitutions. And that is just what the author has done.
— Michael C. Munger
Political Science Quarterly
A clear and comprehensive introduction to modern work in political economy and rational choice as it applies to the strategic analysis of government structure. The book blends normative and positive concerns in an enlightening way. . . . The book has an admirable emphasis on constitutional structure and on the strategic opportunities created by alternative ways of organizing government.
— Susan Rose-Ackerman
American Law and Economics
The Strategic Constitution comprehensively analyzes constitutional issues. The result is impressive. Scholars seeking a stronger grasp of constitutional issues, and teachers seeking an economically sound theoretical foundation for teaching constitutional law, will find this book quite useful.
— Donald J. Boudreaux
Journal of Economics
A tour de force through a large number of fields of economic theory, ranging from social choice to fiscal federalism, written by one of the most distinguished fellows of the law-and-economics branch of professionalism. . . .
Democratization
Robert D. Cooter has written a marvelous book. The Strategic Constitution is truly a tour de force, applying economic analysis to virtually the full range of constitutional issues that arise in a democracy and doing so in a way that is both engaging and sprinkled with humor. . . . The book deserves to be standard reading for those with a serious interest in the fit between constitutions and democratic values.
— Stephen Brooks
Law and Politics Book Review - Georg Vanberg
For anyone looking for a textbook that provides a systematic introduction to the economic analysis of constitutional law in an accessible manner while covering a wide range of topics, it would . . . be hard to find a more suitable book. . . . [It] will encourage students to think about constitutional analysis from a new perspective in an engaging way.
Regulation - Michael C. Munger
Cooter has written a very useful book. . . . It is important to identify the general principles—the engineering principles if you like—that underlie the structure of effective constitutions. And that is just what the author has done.
Political Science Quarterly - Susan Rose-Ackerman
A clear and comprehensive introduction to modern work in political economy and rational choice as it applies to the strategic analysis of government structure. The book blends normative and positive concerns in an enlightening way. . . . The book has an admirable emphasis on constitutional structure and on the strategic opportunities created by alternative ways of organizing government.
American Law and Economics - Donald J. Boudreaux
The Strategic Constitution comprehensively analyzes constitutional issues. The result is impressive. Scholars seeking a stronger grasp of constitutional issues, and teachers seeking an economically sound theoretical foundation for teaching constitutional law, will find this book quite useful.
Democratization - Stephen Brooks
Robert D. Cooter has written a marvelous book. The Strategic Constitution is truly a tour de force, applying economic analysis to virtually the full range of constitutional issues that arise in a democracy and doing so in a way that is both engaging and sprinkled with humor. . . . The book deserves to be standard reading for those with a serious interest in the fit between constitutions and democratic values.
From the Publisher
"For anyone looking for a textbook that provides a systematic introduction to the economic analysis of constitutional law in an accessible manner while covering a wide range of topics, it would . . . be hard to find a more suitable book. . . . [It] will encourage students to think about constitutional analysis from a new perspective in an engaging way."—Georg Vanberg, Law and Politics Book Review

"Cooter has written a very useful book. . . . It is important to identify the general principles—the engineering principles if you like—that underlie the structure of effective constitutions. And that is just what the author has done."—Michael C. Munger, Regulation

"A clear and comprehensive introduction to modern work in political economy and rational choice as it applies to the strategic analysis of government structure. The book blends normative and positive concerns in an enlightening way. . . . The book has an admirable emphasis on constitutional structure and on the strategic opportunities created by alternative ways of organizing government."—Susan Rose-Ackerman, Political Science Quarterly

"The Strategic Constitution comprehensively analyzes constitutional issues. The result is impressive. Scholars seeking a stronger grasp of constitutional issues, and teachers seeking an economically sound theoretical foundation for teaching constitutional law, will find this book quite useful."—Donald J. Boudreaux, American Law and Economics

"A tour de force through a large number of fields of economic theory, ranging from social choice to fiscal federalism, written by one of the most distinguished fellows of the law-and-economics branch of professionalism. . . ."—Journal of Economics

"Robert D. Cooter has written a marvelous book. The Strategic Constitution is truly a tour de force, applying economic analysis to virtually the full range of constitutional issues that arise in a democracy and doing so in a way that is both engaging and sprinkled with humor. . . . The book deserves to be standard reading for those with a serious interest in the fit between constitutions and democratic values."—Stephen Brooks, Democratization

American Law and Economics
The Strategic Constitution comprehensively analyzes constitutional issues. The result is impressive. Scholars seeking a stronger grasp of constitutional issues, and teachers seeking an economically sound theoretical foundation for teaching constitutional law, will find this book quite useful.
— Donald J. Boudreaux
Democratization
Robert D. Cooter has written a marvelous book. The Strategic Constitution is truly a tour de force, applying economic analysis to virtually the full range of constitutional issues that arise in a democracy and doing so in a way that is both engaging and sprinkled with humor. . . . The book deserves to be standard reading for those with a serious interest in the fit between constitutions and democratic values.
— Stephen Brooks
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Product Details

  • ISBN-13: 9780691096209
  • Publisher: Princeton University Press
  • Publication date: 3/18/2002
  • Pages: 440
  • Product dimensions: 6.10 (w) x 9.10 (h) x 1.10 (d)

Read an Excerpt

The Strategic Constitution


By Robert D. Cooter

Princeton University Press

Copyright © 2000 Princeton University Press
All right reserved.

ISBN: 0-691-05864-4


Chapter One

Taking Consequences Seriously: Introduction

Nothing is clear-cut around here except the forest. -Don Costello, tribal court judge in Oregon Just as the bishop is the highest authority in a cathedral, so the constitution is the highest law of the state. Below it lie statutes and below statutes lie regulations, policies, orders, and decisions, as depicted in figure 1-1.

The constitution is the state's highest law in several respects. First, the constitution is more general than most other laws. Constitutions allocate basic powers to officials and recognize fundamental rights of citizens, whereas most legislation regulates behavior or implements policies. Second, the constitution trumps other laws in the sense that the constitution prevails whenever it contradicts another state law. Third, the constitution is usually more entrenched than other laws in the sense of being harder to change.

The first two traits of constitutions relate to the third trait. As a law becomes more general and powerful, changes in it cause greater disruption. To avoid disruptions, general laws should change more slowly than specific laws. Consequently, changing a constitution usually requires more burdensome procedures than enacting a statute or making a regulation. Figure 1-2 depicts the typical relationships between the generality of laws and the transaction costs of changing them.

A recent book surveying constitutional theory begins by saying, "The trouble with constitutional law is that nobody knows what counts as an argument." As the highest law, the constitution is the logical beginning of the state's legal power. Law posts enough road signs for a knowledgeable traveler to find his way. Above the constitution, however, law runs out and the traveler enters "a place where the eyes of man have never set foot." Being highest, constitutional law evokes the best efforts of scholars and political commentators. Being located where law runs out, constitutional arguments are subtle and evasive. History, philosophy, religion, politics, sociology, and economics hover above the constitution as depicted in figure 1-1. Scholars and officials disagree over how to use these sources for making and interpreting constitutions.

In spite of these disagreements, some kinds of arguments should prove compelling to everyone. Political constitutions can cause suffering on a vast scale or lay the foundation for a nation's liberty and prosperity; thus, making, amending, and interpreting constitutions is a political game with high stakes. To help people win this game, theory should explain the constitutional causes of liberty and prosperity. By predicting the consequences of fundamental laws, constitutional theory can inform the public, guide politicians, and improve the decisions of courts. Predictions about the consequences for human welfare of alternative understandings of the constitution should count as arguments for everyone.

As currently practiced, constitutional theory mostly concerns the history and philosophy of constitutional texts. Some legal scholars, who find the sources of constitutional law in history, interpret a constitution by scrutinizing the original understanding of its makers. Other scholars insist on interpreting all laws according to their plain meaning. Still others examine the philosophical, moral, or religious inspiration for a constitution. These approaches clarify a constitution's normative commitments, such as the vision of individual autonomy inspiring constitutional rights.

Wittgenstein wrote, "Philosophical problems can be compared to locks on safes, which can be opened by dialing a certain word or number, so that no force can open the door until just this word has been hit upon, and once hit upon any child can open it." Much of moral and political philosophy proceeds by searching for the right words for ideas. Like philosophy, constitutional theory devotes much of its energy to setting concepts straight. The right word can unlock conflation and set thought free.

The meaning of the words and the philosophy of its makers, however, cannot predict the response of people to a law. From the viewpoint of a person who takes consequences seriously, constitutional theorists look too hard for the right words and not hard enough for the real causes. Constitutional theory needs more models and less meaning. After preaching his Sunday sermon in nineteenth-century Boston, a liberal minister overheard a conservative congregant remark, "Beans in a bladder. No food today for hungry souls." Similarly, consequentialists leave the banquet of constitutional scholarship while still hungry for predictions.

Philosophers and economists sometimes feel an affinity for each other based on their mutual commitment to rationality. More often, however, they feel antipathy over different conceptions of rationality. By confusing economics and utilitarianism, philosophers sometimes imagine that they can identify fatal flaws in economic reasoning without troubling to learn the subject. Conversely, by confusing moral commitments with preferences, economists sometimes imagine that they can dismiss philosophical traditions far older than economics without troubling to learn the arguments for and against relativism. Although I admire moral and political theory, I also think that constitutional theory is too preoccupied with philosophical arguments and methods.

Instead of examining history or clarifying normative commitments, this book takes another tack. An individual sometimes gains an advantage in social life by making a commitment. An individual commits by arranging his affairs so that he cannot benefit from violating the commitment. To illustrate, a person commits to keeping a promise by signing a legal contract so that breach costs him more than performance. Similarly, citizens can gain an advantage when the state commits to a constitution. A state commits to a constitution by arranging institutions so that each official or political faction expects to lose from violating the constitution. As depicted in figure 1-2, the constitution usually represents a society's strongest legal commitments. Once established, a constitution creates incentives for officials and citizens to do things or refrain from doing them. Although the tumult of politics and the particularities of history obscure these incentive effects, I try to uncover them by using economics and political science.

The modern state possesses many monopoly powers, including the power to make laws and collect taxes. In a democracy, popular elections direct state powers, either directly through referenda or indirectly through elected officials. Democracy is thus a system of popular competition for directing the state's monopoly powers. The scope and breadth of political competition distinguishes democracy from other forms of government.

Competitive elections make government respond to citizens much like competitive markets make the economy respond to consumers. I believe that electoral competition provides the best guarantee that the state will give citizens the laws and public goods that they prefer. This belief, plus the definition of democracy as popular competition for directing the state's monopoly powers, implies that democracy is the best form of government for satisfying the political preferences of citizens.

Unlike democracy, a ruling family (monarchy), a powerful individual (dictatorship), a priestly caste (theocracy), a vanguard party (communism), a dominant social class (aristocracy), or a self-perpetuating bureaucracy insulates itself from popular competition. Following the language of economics, these noncompetitive forms of government can be described as different types of monopoly. Democracy is competitive government, and the alternatives to democracy are monopoly government. Monopolies typically provide their owners with exceptional profits at the expense of other people. As the most encompassing power within its domain, the state is potentially the most profitable monopoly for anyone who can control it and the most dangerous for everyone else. Regardless of its form, political monopoly is the enemy of democracy.

In general, the public benefits from organizing competition for control of a monopoly (Demsetz 1968). Constitutions can organize political competition in different ways, as illustrated by the contrast between direct and indirect democracy, federal and unitary states, unicameral and bicameral legislatures, and president and prime minister. According to opinion polls, citizens rate the performance of their political systems differently from one country to another. This book concerns alternative democracies, not alternatives to democracy. While I assume that democracy is the best form of government for satisfying the preferences of citizens, I show that some organizational forms dominate others in particular circumstances. By "dominate" I mean "provides more satisfaction to the citizens."

To compete in politics, a person should decide what to do by anticipating how others will respond. For this reason, political competition is strategic. Economics provides the best models for predicting strategic behavior. This book analyzes democratic constitutions by using models of strategic behavior developed for markets and adapted to politics. I will use strategic theory and the available data to address such questions as these:

Example 1: A constitution can provide one or many elected governments. For example, Japan has a unitary state and Australia has federalism. How does the number of elected governments affect the supply of public goods? How many elected governments is optimal?

Example 2: The British prime minister can order members of her party in Parliament to enact legislation, whereas the U.S. president must bargain with the House and Senate over a bill. Does this difference explain why British courts and ministries are less daring than U.S. courts and agencies? How much judicial and administrative daring is best for the citizens?

Example 3: Imagine that a property owner applies for a building permit and, as a condition for receiving the permit, the planning authority demands the donation of ground for a public walkway. The property owner sues in court alleging an unconstitutional taking of private property. How will the court's decision influence future bargaining between developers and town planners? How much protection of private property is best for the supply of private and public goods?

In answering such questions, social science aspires to replace intuitive judgments with proofs. Unlike explicating the meaning, history, and philosophy of texts, scientific proofs require data. Relatively few social scientists do empirical research on constitutional law, however, and the legal issues mutate quickly. When theories and events outrun data, arguments fall short of the standards of proof desired in social science.

When social scientists draw legal conclusions from limited data, many lawyers get uncomfortable. These same lawyers, however, are perfectly comfortable when traditional legal scholars draw conclusions from no data at all. Lawmakers would do better to use imperfect empirical analysis than perfect nonempirical analysis. It is better to cut bread with a dull knife than a perfect spoon. By using available data to make predictions about constitutions, I cannot offer conclusive proofs, but I can improve the quality of argument.

Strategic behavior presupposes individual rationality. Unlike economists, psychologists often deny that individuals are rational, and sociologists often deny that groups aggregate the behavior of individuals. The rational, individualistic methodology used in this book remains controversial among some psychologists and sociologists. I also evaluate the state by its ability to satisfy the preferences of its citizens. Unlike economists or utilitarians, many political theorists deny that preference satisfaction measures the performance of a state. Regardless of whether the reader ultimately accepts or denies the positive methodology of individual rationality and the normative standard of preference satisfaction, I hope that the reader will appreciate my attempt to work these ideas pure as applied to constitutional democracy.

In the days of sailing ships, the crew on a long voyage included a carpenter, who sometimes repaired the hull while the ship was still at sea. Most boards could be removed one at a time and replaced, even though removing all of them at once would sink the ship. Like the ship's carpenter, economists can analyze laws one at a time and propose improvement. This approach puts every law within reach, even fundamental laws like the constitution. Eventually the economic approach can contemplate wholly new legal structures. This book analyzes constitutions one provision at a time and also contemplates wholly new legal structures.

In this introductory chapter, I will discuss the origins of strategic theory, describe some techniques of analysis, explain the policy values underlying these techniques, and finally describe the structure and contribution of this book.

Origins

Several intellectual traditions inspire the strategic approach to constitutions. First, political theorists who write in the contractarian tradition typically view the constitution as a bargain among political interests, much like a business contract is a bargain among economic interests. In terms of figure 1-1, contractarian choice occurs at the level located above the constitution ("preconstitutional choice"). Contractarians typically assume the absence of any particular constitution and then explain how to choose one. This style of argument flourished in the eighteenth century when revolutions in America and France transformed politics, and it eventually became moribund by the early twentieth century. James Buchanan and Gordon Tullock revived contractarianism in their classic book, The Calculus of Consent: Logical Foundations of Constitutional Democracy (1962), which was followed by John Rawls's magisterial A Theory of Justice (1971) and Robert Nozick's incisive Anarchy, State, and Utopia (1974).

The second tradition inspiring this book is the economic analysis of law. Joseph Schumpeter distinguished between economic analysis based on formal theory and economic thought based on informal reasoning. As applied to law, economic thought is old, whereas economic analysis is new. Ronald Coase's 1960 article on nuisance law, "The Problem of Social Cost," marks the conventional beginning of the economic analysis of law.

Continues...


Excerpted from The Strategic Constitution by Robert D. Cooter Copyright © 2000 by Princeton University Press. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

DETAILED CONTENTS ix
LIST OF ILLUSTRATIONS xv
LIST OF TABLES xvii
PREFACE AND ACKNOWLEDGMENTS xix
CHAPTER 1. Taking Consequences Seriously: Introduction 1
PART I: PROCESSES OF GOVERNMENT: VOTING, BARGAINING, ADMINISTERING 15
CHAPTER 2. Voting 17
CHAPTER 3. Bargaimng 51
CHAPTER 4. Administering 79
PART II: THE OPTIMAL NUMBER OF GOVERNMENTS 101
CHAPTER 5. Intergovernmental Relations
CHAPTER 6. Government Competition 127
CHAPTER 7. Ministries and Agencies
PART III: OPTIMAL DIVISION OF POWERS
CHAPTER 8. Specialization 173
CHAPTER 9. Separation of Powers 211
PART IV: OPTIMAL RIGHTS 241
CHAPTER 10. The Value of Rights 243
CHAPTER 11. Philosophies of Rights: Liberty and Redistribution 261
CHAPTER 12. Property Rights 279
CHAPTER 13. Free Speech 309
CHAPTER 14. Civil Rights 333
CHAPTER 15. Summary and Conclusion 359
BIBLIOGRAPHY 381
GENERAL INDEX 399
INDEX OF NAMES 409

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