Monday, June 30, 2008

What Is The "Rule of Law"?

Wikipedia: 2006 World Map of the Rule of Law Index, which measures the extent to which agents have confidence in and abide by the rules of society. Colors range from green (top quartile), to yellow (middle high), orange (middle low) and red (bottom quartile).

The rule of law has become a big idea in economics. But it has had its difficulties...

“AM I the only economist guilty of using the term [rule of law] without having a good fix on what it really means?” asks Dani Rodrik of Harvard University. “Well, maybe the first one to confess to it.”

The rule of law is usually thought of as a political or legal matter. The world's newest country, Kosovo, says its priority is to improve the rule of law in order to reduce corruption and build up the state. But in the past ten years the rule of law has become important in economics too. Indeed, it has become the motherhood and apple pie of development economics—which makes Mr Rodrik's confession the more striking. The rule of law is held to be not only good in itself, because it embodies and encourages a just society, but also a cause of other good things, notably growth. “No other single political ideal has ever achieved global endorsement,” says Brian Tamanaha, a legal scholar at St John's University, New York.

So it came as an unwelcome surprise when, in 2003, one of the world's acknowledged experts on governance wondered aloud whether the emperor had any clothes. Thomas Carothers of the Carnegie Endowment for International Peace, a think-tank in Washington, DC, wrote a paper politely entitled “Promoting the Rule of Law Abroad: The Problem of Knowledge”. According to Mr Carothers, the problem was, as William Goldman said of Hollywood, that nobody knows anything.

Mr Carothers argued that the intrinsic difficulty of defining the rule of law, combined with the problems of knowing how specific laws work in practice, meant that “the rapidly growing field of rule-of-law assistance is operating from a disturbingly thin base of knowledge at every level.” Many of the difficulties are inherent, he said. But not all: aid organisations always look forward to the next project, rather than back to the lessons of experience; lawyers who carry out the work are not much interested in development; university professors are not gripped by applied policy research. As a result, according to one rule-of-law promoter, “deep down, we don't really know what we are doing.”

The shock of Mr Carothers's argument was salutary. In response, there has been a flurry of rule-of-law studies. A new body of work has appeared, which could be called the economics of the rule of law. It shows the rule of law can indeed be improved. It has made clearer what economists and others mean when they talk about the rule of law. It has laid down some guidelines about reforms, helping show what works when, say, training judges or policemen. What it has not yet shown beyond doubt is that the rule of law is a precondition for economic growth everywhere. In the process, the subject of law as an economic matter has begun to grow up. It has passed from vigorous childhood into more troubled adolescence.

Read the whole thing.

"Rule of law" isn't the only thing hard to define. "Law" is too. A couple of my favorite attempts include "The Path of Law" by Oliver Wendell Holmes, Jr. and "The Law" by Frederic Bastiat. (Here is a PDF version of Bastiat's work and an introduction to it by Walter Williams.)

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