by Lourdes A. Sereno
Associate Professor, University of the Philippines College of Law
Law-making,
as practiced by both by the legislature and the judiciary carries implicit
beliefs about human existence and the nature of society. Each resolution of a
conflict, presupposes a theory about the nature of law. While there are
predominant schools of thought on the matter, the exercise of the judicial
function requires a judicious choice of a legal theory, in accordance with what
the judge believes to be true and represents the essence of the legal system.
Some theories believe that law springs from a source higher than human desire
and choices. Some believe that law is nothing more than the-external and
objective manifestation of societal choices and is therefore value-free. Since
it is indisputable that a judicial decision affects the behavior of society,
whether the behavior of direct litigants in the case, those incidentally
affected, and future actors, the fact that decisions mold lives and societies
inevitably impress the necessity of choosing a theory which compels
intellectual assent, and “inner” fit. In other words, it must be a choice which
will prove to be correct in the light of the experience and inner convictions
of the law-maker or the judge who interprets the law.
Legal
theory, at bottom, is a theory about the state and nature of man and human
society. It is concerned about social organization, and the concepts of powers
and rights are defined in the context of allocation of finite resources, and
the less definable concepts of dignity, equality and entitlements. Both
political and social theory, therefore, provide the foundational underpinnings
for both legal and economic theory. Law and economics, on the other hand,
according to some authors, is not a neutral and objective science, but assumes
“values” which are embedded in one’s social theory. It is therefore important
to obtain a background on the most popular legal theories and what they
represent before a transition to law and economics can be made.
In turn, a
good lawyer must understand the philosophical bias behind a position, whether
it be that of the Constitution, a particular judge, or a piece of legislation,
so that a more effective case can be made for his client’s cause. A good lawyer
can make use of the economic tools available in order to present his point. A
judge, in the same manner, will benefit from the same analytical tools to
unlock the rock-bottom position of litigants before her court.
a. Natural
Law
Natural
law may be defined as the universal discipline of virtue impressed in the heart
and mind of human beings to guide them in the exercise of their rights, in the
performance of their obligations, in the observance of rules, and in the
preservation of order and unity. The precepts of natural law are righteousness,
justice, equality, and fairness.
Plato and
Aristotle regarded natural law as a discipline to which human conduct must
conform in order to realize both the individual and the common good. To St.
Paul and St. Augustine, the concept of natural law produced an enlightened
conscience, rooted in the heart and mind of man. The Christian philosophers
concluded that no one can really pIead ignorance of the natural law because his
innate good faith and moral nature are never silenced.
Even
today, many of the social debates raging especially on allowable relationships,
are anchored not on objectively-verifiable rules but on appeals to a higher
law.
b. Positive
Law
The
positivists made a dramatic departure from the moral necessity concept of law.
Law need not be a manifestation of an internal or eternal imperative that must
be obeyed, flowing as it does from metaphysical or philosophical urgencies and
essences.
The first
foundation of legal positivism holds that law is a social fact, and not
necessarily a moral concept. John Austin, in particular, advocated the
separation of law and morals, and the principal thrust of the positivists is to
keep the legal order apart from the perplexities of ethics.
The second
important argument of the positivists is “freedom from metaphysical
speculations.” Positivists approach the problem of the nature of law by viewing
the issue by way of the empirical sphere of reality - the is - rather than the
transcendental sphere of the ideal - the ought. Suprapositive law as the
standard of validity of positive law is “transcendental nonsense,” because
precepts of natural law are arguably vague, unshared as they are as values.
Positive
law has its own criteria, and that is, the philosophy of legal positivism,
which rests on the three preconditions of sovereignty, command and sanction.
This simply means that any violation of the command issued by the supreme
political superior is an infraction thereof and authorizes sanction. As a
pragmatic approach, it eased the problem of identification, especially for
civil law countries, where the law must first, save in certain exceptions, be
generally founded on an existing legislative pronouncement.
c. Legal
Realism
Proponents of judicial legal realism on the other hand are
skeptical of the traditional views of the moralists on the one hand, and the
sterile approach of the positivists on the other. It seeks to assert the
flesh-and-blood character of law, and the pivotal position that judges have in
the legal system. As Chief Justice John Marshall asserted in Marbury v.
Madison (1 Cranch 137), “it is empathically the province and duty of the
Court to say what the law is.” In the same vein, Justice Holmes said:
The life of the law has not been logic, it has been experience. The felt necessities of the times, the prevalent moral and political theories, intentions of public policy avowed or unconscious, even the prejudices which judges share with their fellow men, have had a great deal to do than the syllogism in determining the rules by which men should be governed.
Professor
John Chapman Gray further emphasized that the law is what the court says it is,
and that statutes, like customs and usages, are no more than sources of the
law. It is the courts which put life into the dead words of the statute.
Realists criticize the other schools for ignoring the unarticulated feelings
and intentions of the different actors in a court setting, for the indifference
of the appellate processes to the realities of a courtroom trial, and for
including in the value of decisions rhetoric which does not address the
material facts and issue at hand.
d.
Critical Legal Theory
The Critical
Legal Studies movement is of very recent origin, and presents a radical view of
jurisprudence. According to its proponents, the task of a good law school is to
provide a legal education which frees the minds of professors and students
alike from the grips of the dominant liberal paradigm and to de-legitimize the
improper and illicit tie between law and politics.
“Deconstruction”
is the term used by the movement as a method or technique of:
1)
analysing the tendencies, beliefs, attitudes, and interpretations of the
dominant liberal paradigm, and 2) internal reformulation and development of the
ideas and concepts of the dominant liberal paradigm by the presentation of the
rationale or justification for the censure and the offer of alternative solutions.
Deconstruction is distinguished from de-legitimization, which is the technique
of unmasking the illicit tie between law and politics.
Critical
legal scholars seek to internally reformulate the dominant liberal paradigm
toward a post-liberal socio-legal order. Jural concepts and constructs which
have been abused or misinterpreted through the subtle and sophisticated ways by
the dominant liberal paradigm to give them different casts and meanings, will
be developed to nurture the law as an effective means of balancing interests,
demands and expectations of the different sectors of society. In the context of
Philippine jurisprudence, the rule of law, separation of government powers,
majoritarian rule. positive equality, checks and balances, rights and obligations,
consent of the governed. equal protection of the law, judicial activism, and
free enterprise are but a few of these.
e. Policy
Science
The
policy-oriented approach was proposed by two Yale University professors during
the Second World War in reaction to the value-free approach of legal
positivism. Policy science regards the view that there are no moral principles
that consciously precede the law as dangerous, leading in fact to ruinous and
destructive conflicts. On the other hand, it views the concept of judicial
legal realism that statutes, rules and ordinances are no more than sources of
the law and that the law is what the courts will do or likely do as destructive
of the separation of governmental powers and functions.
The policy
science school of jurisprudence underscores the need for the eventual
identification of basic social values in the legal orders of all societies. The
end result of the policy science approach is the survival of humanity through
the universal identification and recognition of the social values. These social
values are power, knowledge, respect, income, safety and health, liberty, and
equality. Esteem for human personality and dignity however, is regarded as the
overarching social value. Where it is taken into account all other social
values are easier to attain and are then widely and equitably shared among the
people. Conversely, where this is not considered at all the other social values
are difficult to attain.
a. Law and
Anthropology, Sociology, etc.
In the
same manner that legal theory is bound up by a socio-political theory, the
social sciences have been used to illuminate one’s understanding of human
society within the framework of a proponent’s system of values.
Resolution
of cases using arguments drawn from the social sciences started with the works
of Max Weber and Roscoe Pound, wherein an attempt was made to use social
science data, specifically sociological data, to analyze legal behavior.
However, most of these works have focused on the participants’ behavior rather
on the substantive content of the law. It has only been more recently that
social studies have been applied in the some areas of legal research and legal
reform, such as family law, sexual crimes, welfare legislation, criminal
defenses, penology, etc.
b. Law and
Economics
No other
analytical framework in the social sciences has been used with a sufficiently
fair degree of application as law and economics. Although sociology and law,
for example, has been used for more than a hundred years, it has been the
tightness of economic analysis which has allowed its application to the fullest
range of legal situations. Of course, it can be argued that law and economics
has remained, except in the areas of antitrust and liability, only in the realm
of the academic disciplines. It is surprising, however, that economic tools of
analysis fuel many contemporary legal debates such as prison reform, the
welfare system, taxation, even procedure and family law. The ability of
economics to abstract from reality as a theoretical framework and arrive at
generalizations is in fact, its greatest strength.
The most
predominant use of law and economics, as a disciplinal tool, has been by the
neoclassical economists and the political conservatives. Although this paper is
not intended to evaluate the correctness of these ideologies, it is observed
that for purposes of coming up with a predictive theory of behavior, the
neoclassical approach must at the very least be understood. In the first place,
most modern legislation, especially in the field of competition policy and new
approaches to regulation of natural monopolies, such as public utilities, uses
the neoclassical analysis of markets. It is therefore this approach, by sheer
necessity, that will be the substantive focus of this paper.
a. Law and Development
A term for
the branch of discourse on the effects of law on societal development,
especially on economic development. Recognized in international organizations
as a very important field of concerns, it currently receives significant
international attention in the form of grants and project funding for the study
of its various aspects. Specific issues include questions on the
appropriateness of colonially-inherited or imposed laws on indigenous cultures,
the role of the legal profession on socio-economic development, and the
establishment of adequate legal infrastructures for newly-liberated societies
or emerging economies.
b. Economic and Business Laws
Refers to the study of positive law which impacts on the conduct of business or the economic processes. In the traditional Philippine law curriculum, includes all subjects in commercial law, taxation, and the sub-area of administrative law called public regulation of business.
These
first two levels of application are the more popular ones, and which can be
easily understood and appreciated by lawyers and judges alike, since they see
the immediate benefit of understanding the dynamics of law and economic growth
on the macroeconomic level on one hand, and the private consequences of rights
and obligations in commercial and other business-related law in the discharge
of their role to their clients and to the public.
It is the
third ‘level of application which is novel, apparently intimidating and
dismissed as irrelevant. However, far from being entirely academic, the
discourses on the academic discipline called law and economics can have
far-reaching practical application, both as a source of doctrine and as a
framework by which an analysis of cases can be made easier. Of course, the
limitations must always be kept in mind.
c. Law and Economics as a Legal Discipline
As an
academic discipline, became popular starting in the early 1960’s in America with
the works of Ronald Coase (who later won a Nobel prize in economics for his
study on social costs and the economics of institutions) and Guido Calabresi
(who later became dean of Yale Law School). The study of economic dynamics in
antitrust cases has always been recognized as the most advanced field of study
in law and economics, and since the Sherman Act in 1890, has been a rich field
of both legislation, judicial decisions, and scholarship. Until the early 60’s,
however, economic analytical tools were not applied to other legal situations.
Coase’s earliest work on the subject was an article on the problem of social
cost. Calabresi’s was on risk distribution and the law of torts.
Coase’s
article was especially groundbreaking because he attempted to create an
analytical model for assigning property rights and liability in economic terms.
Many followed, scrutinizing many legal doctrines through economic analysis.
Gary Becker made the next important breakthrough with his prolific writings on
the relevance of economics to a wide range of non-market behavior, even charity
and love, and wrote on specific subjects as economic analysis of crime, racial
discrimination, marriage and divorce. It was the University of Chicago Law
School that sustained the most intense interest in the new law and economics.
The most famous member of its faculty was a judge, Richard Posner, who became
quite well-known for his many books and articles on law and economics. One
famous judge, Judge Learned Hand, is also known for his law and economics
analysis in several cases, one of which became known as the Learned Hand
formula in negligence cases.
i. The Law on Antitrust
Antitrust
laws, started with the Sherman Act which prohibited contracts and other
combinations in restraint of trade, monopolies, and on conspiracies and
attempts to monopolize. It sought to prevent cartelization, and imposed both
civil and criminal sanctions. For a long time, the law emphasized the “legal”
aspect of the behavior by focusing on the illegality of the agreement, rather
than its effects on price and output. Neither did the cases make a sufficient
distinction between legitimate uses of market monopoly power and cartelization,
such as in the exercise of property rights arising from patent. Cases in the
United States had such dramatic impact on the economy, such as the United
States Steel corporation cases, the breakup of the American Bell, and the
American Tobacco case. The most famous cases today are the series of suits
brought by the Department of Justice and other software companies against
Microsoft corporation, the computer programs behemoth. In the Philippines, of
course, the most important landmark is the Tatad v. Viray case ( GR 124360
& 127867, November 5, 1997) which is being sought to be reconsidered by the
government, and to a partial extent by one of the petitioners. Notice how the
following antitrust concepts were discussed in the decision: monopolies,
cartelization, predatory pricing and barriers IO entry. US
courts base pronounced the following instances, among others, as antitrust
behavior: (a) the maintenance of a minimum price by which retailers may sell
the manufacturers’ product; (b) mergers which result in the acquisition of
monopoly power; (c) oligopolies exhibiting cartelization behavior; (d)
predatory price discrimination; (e) foreclosure, i.e., the attempt by one firm
to “foreclose” entry by other firms, such as buying all retail outlets, the
other description of this behavior is the creation of “barriers to entry;” and
(f) boycotts, whereby a group of sellers might agree to boycott a supplier who
enters into competition with them.
ii. Doctrines of Liability and Adjudication of Property
Rights
Property
rights are analyzed in terms of what extent and distribution of rights maximize
the efficient allocation of limited resources, and the effects of enforcement
or non-enforcement of such rights on output and prices. Corollarily, liability
for damages caused by such properties are distributed among the property owners
and the victims in accordance with the question of risk. Who should bear the
risk is analyzed according to the various options available to the courts and
legislators, according to the question of which liability judgment will bring
about the desired efficient behavior from both the property owner and the
victim. Although economics is not considered ultimately with regard to who
should pay for an incurred cost, since such cost no longer impacts on the
efficiency criterion, it is however immensely concerned with the effects of liability
judgments on future behavior. This field has given rise to the various
doctrines not only in tort, but also in insurance law, and criminal behavior.
iii. Some Pioneering Areas: Criminal Law, Family Law and
the Legal Process
These were
in the past never considered as being affected by economic processes, but the
wealth of literature created after the 1960’s allowed many scholars to analyze
criminal behavior, family rights and even legal processes according to economic
frameworks, most significantly the efficiency framework.
The basic
questions in an analysis of criminal law are: (1) finding the optimum criminal
sanction to achieve the desired social end, and (2) determining which behavior
ought to be criminalized and which would be sufficiently deterred by a simple
remedy for damages or requiring pre-breach security. The optimum criminal
sanction is determined first by comparing the cost of the action to the victim
as against the expected benefit to the criminal. If that is so, then society
must force the criminal to enter into a voluntary transaction with the victim
if he wants the benefits. As the criminal is unwilling or unable, then, the
performance of the act prohibited must be outweighed by the cost of the crime
to the criminal, measured by the severity of the punishment multiplied by the
probability of apprehension and conviction less the expected benefits from the
crime. Thus, in a society where the probability of apprehension and conviction
is very small, property crimes are very attractive as a method of saving on the
cost of entering into voluntary transactions with the victim.
In family
law, the family is considered as a maximizing production unit. In most
societies where the husband works and the wife manages the household, there is
a maximization of income by both since the husband maximizes the monetary
income from outside sources, while the wife maximizes income from the
production of the family’s basic goal, which is believed by most law and
economics scholars to be the birth, caring and rearing of children. With
increasing opportunities and incomes for women outside the home, the
opportunity costs of rearing children has also risen, making the price of
production of children higher. With higher prices, the demand for children will
decrease, and this has been the observed trend in many developed countries. The
interesting question of why then do parents produce children could yield four
answers: (1) as an unintended by-product of sexual activity: (2) the
maximization of income from the children (# 1 and 2 are true in poor countries,
but not in others); (3) maximization of other services from the children (such
as respect); and (4) the instinct to preserve the genetic line. Why parents
maximize the investment in the children when it is true love which animates
their relationship can be explained by a parent maximizing his utility
function, which is identical to the utility function of the child. Thus, the
happier the child, the happier the parent also.
a.
Assumptions
The first
basic assumption in economics is that the world is one of limited resources,
yet human beings possess unlimited wants. The basic goal therefore of economics
is value-maximization or efficiency. Human beings therefore will tend to
maximize their utility function, whether this function be measurable in direct
monetary or property terms, or in nonmaterial, affective or ethical goals.
Economics does not pass judgment on “human values” per se, but having been
directed to the desired goal, economics can say whether the means chosen result
in greater or less efficiency. It can also point out the costs of social and
personal choices. It is in this light that it is normative, but beyond that, is
already the realm of metaphysics, and social ethics. From this assumption,
rises another assumption, that price is inversely related to demand, and
conversely, that people resort to substitution to maximize utility. Economic
cost, which is the standard by which a maximizer evaluates his choices, is not
limited to the monetary price, but rather is equivalent to opportunity cost,
i.e., the cost that will be incurred because resources were devoted to the
production of Product X instead of Product Y. Goods, therefore which are not
denied the use of, are free goods, like the cost of breathing air. It is the
diversion of one resource to one use as against another that is the principal
determinant of cost. Efficiency is the maximization of the value of one good or
service to a human being as against economic cost.
Although
these assumptions have been strongly questioned, they are no more necessary to
make than assumptions in any mathematical model or in any explanative theory
for that matter. Nonmaterial values are still capable of being accommodated
within that framework, because it allows the societal or individual to define
the utility function, i.e., the society’s utility or welfare is maximized by
putting more resources into ethical choices which society values. The fact that
these assumptions may not be realistic or may be too simple to describe reality
is precisely its strength as an analytical tool – its ability to abstract from
the richness of reality to arrive at a general prediction of behavior. Neither
is the fact that economics cannot answer a lot of questions and can often be
mistaken, enough reason to deny its value as a tool. All sciences and fields of
study, by their very nature, will be wrong many times, yet they
need not be dismissed solely on that basis.
b. Tools
of Logic
The beauty
of economic analysis is its ability to immediately conceptualize the scenario
which confronts all decision makers, whether from an individual or from a more
collective point of view: that of having finite choices. Whereas other social
sciences cannot capture in hierarchical’ form these choices, and the effects
they may have, economics attempts to do that by abstracting from the situation
and predicting what would be the probable outcome on behavior had the parties
been made to shoulder the costs in cases of voluntary transactions, pay
damages, or be put under pains and penalties. In this way, it has been very
useful in resolving by way of direct application not only antitrust cases, but
tort, liability, contract, property rights, insurance, taxation, issues on the
welfare system, and pollution and environmental cases.
It has
been said that even the earliest cases on property rights and torts were
actually descriptions of resource-maximization. Hadley v. Baxendale (1852) is
the most often-cited case which laid the groundwork for limiting the liability
for contract breach only on foreseeable consequences. If liability were made
greater than that standard, then there would be no incentive for the victim to
exercise caution, since the gains to him from breach would be greater than the
benefit from fulfillment. On the other hand, liability less than that will
induce the breacher to cause the breach intentionally, or in negligence cases,
wantonly, inasmuch as the loss to him arising from the breach will be less than
the benefit arising from the fulfillment of the contract. This is a simple
application of the efficiency criterion.
However,
even in separation of powers cases, it has even been said that Justice Hugo
Black in 1963 stated in Ferguson v. Sbupa (372 US
726,729), in formulating the “rationality review” doctrine to strike down a
legislation which does not overtly infringe a specific constitutional right,
used economic analysis in justifying the concept of social welfare and public
interest. Thus, as a tool for drawing the logical nexus between the means and
the avowed end, economics can be useful. For one, economists never presume that
legislation is enacted to promote the public interest. The more dominant theory
is that the legislative process is the redistribution of wealth in favor of
some politically effective interest group. In this light, therefore, court
intervention can sometimes, in the view of economists, even balance out the
interests, to give representation to the politically underrepresented. However,
this does not seem to be the prevailing view of our Supreme Court by many
economists. But that is entirely a different matter.
c. The
Question of Justice and Equity
The most
emotional debates on the place of economics in legal reasoning have to do with
the notion that justice and equity can never be set against the standard of
efficiency. The first way by which economics can be useful in the
justice and equity debate is to show that in the majority of
instances, the concepts are just descriptions of economic
conditions in two senses: (a) “distributive justice” is nothing more than
pronouncements on the tolerable degree of economic inequality in society, and
which issue economics can definitely help, and (2) the notion of due process
and rights as illustrations of the value against the waste of resources.
Penalties without trial, unjust enrichment, and failure to redress the demand
for damages are simply, at bare bones, efficiency concepts. The second manner
by which economics can be useful is for values clarification - to show that in
many instances there are pseudo-justice issues masquerading under intellectual
disguises and at the same time, concretize the cost of justice. After all, any
debate on justice is not complete without a consideration of its costs.
a. Tort
Blyth v.
Birmingham (156 Eng Rep. 1047 [1856}). - The
question was whether a water company had been negligent in failing to bury its
pipe deep enough to prevent them from bursting because of frost and inflicting damage
on the plaintiffs home. The court held that inasmuch as the frost that period
had been of unprecedented severity, the probability of the pipe bursting had
been low, and therefore the defendant was not negligent. Nor was the loss so
great as to justify the heavy expenses in burying the pipes deeper. The
economic formula used was: Cost of Prevention is greater than Expected Cost of
the Accident, therefore, it is more efficient not to make the defendant incur
the greater expenses. This later was elucidated into the Learned Hand Formula:
the defendant is guilty of negligence if the loss caused by the accident,
multiplied by the probability of the accident occurring, exceeds the burden of
precaution.
b.
Contracts
The law of
contracts is important to maintain the theory of incentives and
value-maximization. If the law does not make a future promise enforceable, then
a seller would be better off seIling at a low price for instant cash, than for
a higher price but with the promise of payment in the future. The value to the
seller is not maximized, he loses the price difference, and the thing sold
-does not go to the person who values it more, the deferred payor. With
contract law, the efficient outcome is encouraged. The autonomy of contracts
principle also respects the bargain, the voluntary transaction, as the most
efficient, assuming of course that the basis and the consent for the contract
existed. The most famous early application of these principles can be found in
the Hadley v. Baxendale case, the issue being the extent of liability of the
promissor in cases of contract breach (See IV.b., supra).
c. Pollution
In cases
of industrial pollution, the question most often is who bears the burden of
pollution. If we assign each neighboring homeowner the right to breathe fresh
air, then the polluter will have to purchase that right from each affected
person. Considering the number of individuals that will be involved, the cost
of transacting with each of them, apart from the purchase price of
the right, is too overwhelming to make it nigh impossible. There will also be
the problem of the hold-out, who will make his fee so exorbitant, that he might
prevent the resolution of the problem from ever happening. However, to
completely free the pollutant from liability is to inaccurately lower his cost,
i.e., he is subsidized in the indirect costs of the pollution to society. These
indirect costs, or costs which are largely social and ignored by the private
enterprise fall within the category of externalities, and the goal of the
economist is to factor them in to arrive at an accurate picture of the cost of
producing a number of units of a certain good. What is often resorted to is the
polluters’ fee, whereby administrative processes ensure that the cost of
pollution is paid by the polluter. A related case is Oposa v.
Fucforan where the concept of “intergenerational equity” is an
attempt to factor in an externality which is often ignored by the timber
industry - the cost to future generations of an environment bereft of forests.
d. The
Legal Process and Judicial Decision-Making
In
economic terms, the body of precedent is the lawyer’s capital stock. The body
of precedent yields value over a period of time, and this value is measured in
the durability of a legal doctrine - the length of time by which it has
predictive capability in the outcome of future similar cases. The more
frequently these precedents are overturned, the more their value diminishes.
That is why, unlike some professions, the value of a lawyer’s services increases
over time, i.e., his ability to utilize the capital stock in
relation to his age and experience, is positive. This capital stock is produced
by the lawyers of the litigants and the judges, yet the judges are not paid in
relation to the value the capital stock gives. Why is this so? What then do
judges maximize? Generally, it cannot be monetary gain because the rules of
judicial ethics prohibit them from doing so. Neither, on a general scale, can
it be the promotion of the interests of the class to which he belongs because
conflict-of-interest rules are intended to curtail that. And, by the way,
interesting studies in the United States reveal that the economic interests of
the Federal Supreme Court justices appreciated insignificantly in relation to
their decisions.
The more
dominant theories state that judges maximize either of two things: (a) their
ability to render decisions in such a way that the probability of their
promotion is increased, and (b) the promotion of their values and preferences,
thus their extreme sensitivity to being overturned, since the welfare-value of
their decision will be rendered worthless should it be overturned. This
welfare-maximization matrix is not incompatible with the viewed sacred duty of
judges to uphold the law. The usefulness of the insight is to draw attention to
areas that can be strengthened in the reform process - the stability of
judicial decisions as precedent to increase predictability in the system, and
the strategic importance of the educational process for the legal world.
With
respect to law-making, most economists view the process as redistribution of
wealth between the politically effective and ineffective. Thus, the importance
of an independent judiciary cannot be underemphasized because in many instances
an efficient outcome can result from judicial “intervention.” Since the process
of law-making is such, it is quite important to control the use and
solicitation of campaign funds, to minimize the frequency and severity of
interest-group politics, because this often brings about an inefficient
outcome.
Economics
can help, within bounds, to clarify the costs and benefits of a certain
outcome, and to arrive at a resolution of a case which attempts to maximize
societal welfare without sacrificing the non-negotiable values. In other
instances, where there is nothing at stake other than outright property
interests, a straightforward cost-benefit analysis might even be sufficient for
the final outcome. However, when a society’s intransmutable values are at
issue, then the role of economics is to clarify what are pseudo-justice issues,
and those which can be viewed with mere economic measures. To those that are
genuine nonmaterial justice issues, economics can also speak by clarifying for
society what is the cost of upholding these values. In all these instances,
there is room for making use of a tool which has been immensely helpful in
terms of economic development in many jurisdictions.
The author
would like to acknowledge Prof. Crisolito S, Pascual, retired Justice of the
Court of Appeals, and Richard A. Posner, U.S. Federal Judge, from whose works
the author took liberally in making these notes.