Spatial dependence in constitutional constraints: the case of US states

Several theories suggest that states?? choices of constitutional rules are at least partially a function of neighboring constitutions. This paper provides the first analysis of spatial dependence of specific provisions within state constitutions in the United States. The analysis effectively makes constitutional rules endogenous, contributing to a relatively underdeveloped branch of constitutional economics. By employing a series of probit estimations of nineteen specific constitutional rules, I find evidence of spatial dependence in state constitutions. Specifically, the presence of specific constitutional constraints pertaining to term limits, supreme court justice selection, recall, home rule, direct democracy, constitutional amendment by convention, balanced budget requirements, tax and expenditure limits, line item veto, victims?? bill of rights, health and welfare, right to privacy, environmental protection, sex discrimination, abortion, and official language all exhibit some evidence spatial dependence.     

The political economy of constitutional restraints

Constitutions are multidimensional objects with non-trivial implications on the structure of the political environment and, therefore, on the policy outcomes. This paper models constitutions as sets of “restraints” on the authority’s choice freedom (absolute and democracy restraints). We argue that even if both kinds of restraints seem to be serving the same purpose (increase social welfare), “democracy restraints” prolong the “life” of a constitution while “absolute restraints” not. We moreover use the proposed way of modelling constitutions in order to explain the dominance of intermediate (in terms of tightness of “democracy restraints”) constitutions in the real world.     

Constitutional Origins of Dictatorship and Democracy

Many emerging democracies across the globe are scrambling to craft new constitutions. The modal constitution being chosen in this most recent wave of democratization is a rather unknown, and under-theorized, type: semi-presidentialism. This article brings semi-presidentialism back to comparative constitutional theory, distinguishing it from presidentialism and parliamentarism, and guarding against its hasty export to new democracies. This article details when, and why, semi-presidentialism can be problematic from the standpoints of democracy, constitutionalism, and the protection of fundamental rights; and the conditions under which it can be supportive of them. After establishing the analytical framework, this article compares developments in two important historical cases of regime change under semi-presidentialism, cases which have also been among the most influential countries for European politics in the twentieth century: the French Fifth Republic and Weimar Germany. The concluding section draws the evidence together.     

制度变迁中土地产权的性质与合约选择:一个有关合作经济的案例分析

This paper discusses an evolutionary process of rural collective property rights or agricultural cooperation economy in detail. We convince that both the evolution of the household contract system and the rural cooperation economy in the market elaborate the key position of property rights’ multi-attribute in the formation of contract structure and organization shape. If there were strong externality between several elements of household, the collective property rights should be chosen. __________ Translated from Guanli Shijie 管理世界 (Management World), 2008, (6): 61–67, 94     

Market power, survival and accuracy of predictions in financial markets

In a standard General Equilibrium framework, we consider an agent strategically using her large volume of trade to influence asset prices to increase her consumption. We show that, as in Sandroni (Econometrica 68:1303–1341, 2000) for the competitive case, if markets are dynamically complete and some general conditions on market preferences are met then this agent’ long-run consumption will vanish if she makes less accurate predictions than the market, and will maintain her market power otherwise. We thus argue that the Market Selection Hypothesis extends to this situation of market power, in contrast to Alchian (J Pol Econ 58:211–221, 1950) and Friedman (Essays in Positive Economics, University of Chicago Press, Chicago, 1953) who claimed that this selection was solely driven by the competitiveness of markets. I would like to thank T. Hens, A. Kirman and A. Sandroni for many stimulating conversations and encouragements. Two anonymous referees also provided very valuable comments.     

Development, democracy, and mass killings

Using a newly assembled dataset spanning from 1820 to 1998, we study the relationship between the occurrence and magnitude of episodes of mass killing and the levels of development and democracy across countries and over time. Mass killings appear to be more likely at intermediate levels of income and less likely at very high levels of democracy. However, the estimated relationship between democracy and probability of mass killings is not linear in the full sample. In the XXth century, discrete improvements in democracy are systematically associated with episodes involving fewer victims.When human lives are endangered, when human dignity is in jeopardy, national borders and sensitivities become irrelevant. Whenever men or women are persecuted because of their race, religion, or political views, that place must—at that moment—become the center of the universe. – Elie Wiesel– Nobel Prize acceptance speech, 1986.     

Russian commodity exchanges: A case study of organized markets in the transition process, 1990-96

Few developments are more significant in transitional economics than the development of organized commodity and financial markets. Working from a transaction costs framework, this paper analyses a set of these markets, the Russian commodity exchanges, and their attempts to order trade in commodities in the period 1990-96. These exchanges have incurred high transaction costs both in defining the property rights involved in trading and in overcoming the problems of agent search and 'immediacy'. Parallels between Russian commodity exchanges and other organized markets in Eastern Europe are drawn and remedies for the problems encountered are suggested.     

Legal positivism and property rights: a critique of Hayek and Peczenik

Scholars such as Friedrich Hayek and Aleksander Peczenik have criticized legal positivism for undermining constitutionalism and the rule of law, an implication of which is weakened private property rights. This conclusion is far from evident. First, I contend that legal positivism is compatible with a strong support for property rights. Second, the causal relationship between legal positivism and the degree to which property rights are applied and protected is analyzed. The main arguments for a negative relationship—that legal positivism centralizes and politicizes legislation and that it makes the legal culture servile in relation to the political sphere—are considered unconvincing.

Constitutional stability

Political scientists in the pluralist tradition disagree sharply with public and social choice theorists about the importance of institutions and with William Riker in particular, who argues inLiberalism against Populism that the liberal institutions of indirect democracy ought to be preferred to those of populism. This essay reconsiders this dispute in light of two ideas unavailable to Riker at the time. The first, offered by Russell Hardin, is that if we conceptualize constitutions as coordinating devices rather than as social contracts, then we can develop a more satisfying view of the way in which constitutions become self-enforcing. The second idea derives from the various applications of concepts such as the uncovered set. Briefly, although institutions such as the direct election of president are subject to the usual instabilities that concern social choice theorists, those instabilities do not imply that “anything can happen” —instead, final outcomes will be constrained, where the severity of those constraints depends on institutional details. We maintain that these ideas strengthen Riker's argument about the importance of such constitutional devices as the separation of powers, bicameralism, the executive veto, and scheduled elections, as well as the view that federalism is an important component of the institutions that stabilize the American political system. We conclude with the proposition that the American Civil War should not be regarded as a constitutional failure, but rather as a success. I have benefitted from the comments of a number of people on earlier drafts of this essay, especially William Riker, Emerson Niou, Kenneth Shepsle, Gordon Tullock, Thomas Schwartz, and Matthew Spitzer.     

The Nature of the State and the State of Nature: a Comment on Grady & McGuire's Paper

In 'The Nature of Constitutions', Mark Grady & Michael McGuire provide a model of the evolution and purposes of constitutions as arising to minimize appropriation by dominants of subordinates. This Comment builds on Grady & McGuire's article in three ways. First, it supplements their analysis by operationalizing a model of constitutional evolution that views constitutions as arising out of the conflict of competing high-ranking individuals to preserve their own authority. From this clash of self-interest of dominant individuals, constitutions are born. This predicts that constitutions will not simply tame all forms of appropriation, but will also hard-wire some forms of appropriation behavior into the permanent constitutional structure. Second, it examines the American constitution in light of this model to show how that constitution reflects the mixture of appropriation and appropriation-taming behavior. Third, this Comment argues that the breakdown of constitutionalism in the United States this century can be explained by a failure to fully appreciate the purposes of constitutionalism in a biological framework.     

EU Enlargement, Migration and the New Constitution

The paper deals with the effects of migration resulting fromEU Eastern enlargement on the welfare states of Western Europe.Although migration is good in principle, as it yields gainsfrom trade and specialization for all countries involved, itdoes so only if it meets with flexible labour markets and ifit is not artificially induced by gifts of the welfare state.This is not the present state of affairs in Western Europe.In addition to measures that make labour markets more flexible,the introduction of delayed integration of working migrantsand the home country principle for nonworking migrants is arational reaction of the state. The proposed new EU constitution,which contains far-reaching rules for a European social union,should be amended accordingly. (JEL E2, F2, H0, J3, J6)     

Book reviews

Book reviewed in this article
Coming to Terms with Accession. Forum Report of the Policy Initiative
The Technology of Transition. Science and Technology Policies for Transition Countries. By Dyker, David A.
Transforming the core: Restructuring industrial enterprises in Russia and Central Europe. By Ernst, Maurice
Economies in Transition: Comparing Asia and Eastern Europe. By Woo, Wing Thye, Stephen Parker and Jefferey D. Sachs, eds., Cambridge, Massachusetts and London, England
nade growth in transition economies: Export impediments for Central and Eastern Europe, By Richard N. Cooper     

Economics,Democracy, and the Distribution of Capital Ownership

This article holds that widespread, practical access to capital acquisition is essential for sustainable widespread economic prosperity and democracy. The founders of the U.S.A. agreed that sustainable democracy required widespread ownership of land to provide a viable earning capacity sufficient to support robust participation in democratic government. The importance of widespread land ownership to individual prosperity and sustainable democracy was supported not only by the prevailing philosophical views of property, it was also apparent to the common man and woman. Compared to Europe, America offered widespread access to land ownership, higher wages, better work conditions, cheaper staples and greater individual freedom, equal opportunity, prosperity, and political participation. This conviction that widespread access to ownership is a necessary condition for widespread prosperity and sustainable democracy continued throughout most of the nineteenth century, but today public discourse reveals virtually no trace of this once universally held opinion. This article suggests that the disappearance of this conviction can be traced to an erroneous view shaped by neoclassical economics and Keynesian economics. According to this view, (1) the disappearance of the American frontier and industrialization made the goal of widespread capital ownership either impractical or of little or no economic significance and (2) by way of technological advance, sufficient earning capacity and consumer demand to promote growth and sustain democracy can be achieved, without widespread ownership, primarily through jobs and welfare. Although differing in many respects, both mainstream schools, along with Adam Smith’s classical economics, share one common but unstated economic assumption: the broader distribution of capital acquisition (in itself) has no fundamental relationship to the fuller employment of people and capital, the broader distribution of greater individual earning capacity, and growth. Contemporary thinking, shaped by these economic schools, also tacitly assumes that widespread capital ownership is not essential for the sustainable individual earning capacity needed to support robust democracy. This erroneous “ownership-neutrality assumption” (1) contradicts both the views of America’s founders and the colonial experience, and (2) provides theoretical justification for structuring capital markets and capital acquisition transactions to unfairly and dysfunctionally favor existing owners at the expense of broader ownership distribution, more widely shared prosperity, greater efficiency, ecologically friendly growth, and a vital democracy. America’s conscientious founders would be shocked by the diminished importance of the distribution of ownership in the mainstream analysis of prices, efficiency, production, growth, and democracy. Rather than enhancing democracy, they would view the “ownership-neutrality assumption” of mainstream economics as contributing to its deterioration and corruption. They would openly search for economic analysis built on an alternate assumption more consistent with their understanding of the requisite conditions for sustainable democracy. This article advances an economic analysis that suspends the ownership-neutrality assumption, replaces it with a “broader-ownership-growth assumption,” and suggests a voluntary market strategy for substantially broadening capital ownership, enhancing individual earning capacity, and providing the widespread economic prosperity needed for robust democracy.     

Constitutionalism and credibility in reforming economies1

There has been relatively little investigation of the effect of constitutional transformations on the economic transition in post‐communist countries. We develop a simple signalling model in which constitutionalism – a commitment to limit political power and provide judicial defence of basic rights – reinforces the credibility of pro‐market candidates’ electoral promises and boosts public support for economic reforms. These findings are tested using opinion poll data on public support for reform in Central and Eastern Europe, and in the former Soviet Union, in the 1990s. In a two‐stage procedure we show that public support for market reforms is higher in countries where incumbents have taken deliberate steps to increase political accountability and judicial independence. Public support also spurs actual economic reform.     

From contract to mental model: Constitutional culture as a fact of the social sciences

This paper develops the concept of constitutional culture—the attitude, thoughts, and feelings about constitutional constraints and the nature, scope, and function of constitutionalism. Constitutional culture is approached as a complex emergent phenomenon bridging Hayekian cognitive and institutional insights. It can be studied as a mental model, a series of expectations and understandings about the constitutional order, how it is, and how it ought to be. The “map” and “model” approach from Hayek’s Sensory Order (1952) is employed to understand how individuals and (cautiously) groups of individuals at the national level approach constitutionalism. This paper goes beyond the more traditional one-size-fits-all approach where all individuals respond uniformly to incentives, as provided by the constitution qua contract. Instead, constitutionalism is tied up in the individual’s vision of the world, that is, what Hayek (1948) labels “the facts of the social sciences.” The paper concludes with four areas where constitutional culture can further the insights of constitutional political economy: comparative political economy, constitutional stickiness, constitutional maintenance, and the new development economics.     

What Belongs in a Constitution?

The essay argues that the content of constitutions should derive from its political functions: granting stability and legitimacy to government. There are three main candidates for inclusion in constitutions: regime arrangements, human rights, and general credo. All constitutions must include institutional arrangements. The level of detail and entrenchment may vary. There are important reasons for including Bills of rights in constitutions, but attention should be given to their mode of entrenchment and enforcement. Credos should only be included in constitutions if they are widely shared. In principles, constitutions should specify their modes of amendment and enforcement. If a society cannot have a widely-agreed constitution, it may be better to defer its enactment until such broad agreement is possible.     

Conservatives on the supreme court

It is shown: (a) the core conservatives justices now on the Supreme Court (identified as White, Rehnquist, O'Connor, Scalia and Kennedy) are preoccupied with the problem of the fit between their rulings and the sources of law and with the ideal of predictability; (b) a new jurisprudential approach developed by Justice Scalia is gaining acceptance amongst them; (c) Scalia's reasons for rejecting the neo-conservative doctrine that the intentions of the Constitution's Framers should be the only legitimate point of reference in constitutional cases are sound; (d) his suggestions for an alternative theory offer a defensible way forward which has advantages over competing orientations. Associate Professor, Department of Political Science, University of Melbourne, Australia. Much of the work on this paper was done while a visiting scholar at Georgetown University, Washington D.C.—The final draft of this paper was accepted in November 1991.     

The Democratic Efficiency Debate and Definitions of Political Equilibrium

An ongoing debate has been occurring within public choice for over a decade concerning the efficiency of democracy. Virginia Political Economy holds that political markets perform very differently from traditional markets. Chicago Political Economy, exemplified by the work of Becker and Wittman, maintains that political equilibrium, properly defined, is relatively efficient. I argue that the debate can be understood at least partially in methodological terms: Chicago views politics exclusively within the equilibrium framework of traditional economics, while Virginia draws at least implicitly on Austrian economics' view of the economy as a disequilibrium process. I contend that the factors which public choice scholarship has identified as distinguishing politics from markets—rational ignorance, majority rule, collective outcomes—affect the performance of politics as a process even if political equilibrium is relatively efficient.     

Foreign Direct Investment,Sectoral Effects and Economic Growth in Africa

Abstract

Many small, frontier equity markets in regions such as Africa and Eastern Europe have opened in recent years. As in other larger emerging markets, important issues for investors are the extent of financial integration with exchanges in other countries and, if some reasonable degree of integration is found, whether such markets still provide diversification opportunities. Here, we will examine a frequently used metric of integration by testing for the existence of common trends, or cointegration, in these frontier markets. While common stochastic trends are found, results show that coefficients on cointegrating vectors are at times negative, and reaction to deviations from the long-run trend are often slow, thus indicating that frontier markets are a good source of diversification opportunities despite a degree of integration.     

The foundations of constitutionalism: an analysis of debaathification

This article analyzes the administration of lustration—what Arthur Stinchcombe termed the “social basis of constitutionalism”—and its unintended consequences in comparative and international law and politics. It is concerned with the social function of animating ideas in the evolution of institutions. The article demonstrates that in the case of Iraq, the commitment of institutional engineers and transitional administrators to the idea of purifying the state, and their concomitant willingness to watch the institution of lustration naturally evolve in respect of that central idea, has had disastrous consequences for the foundations of constitutionalism. These consequences flowed from the institutional design of the U.S. occupation more generally. By reconstructing, for the very first time, the evolution of debaathification in contemporary Iraq, this article deepens our understanding of the foundations of constitutionalism. Aside from its contribution to the theory of institutional design, the article also speaks to the ongoing debate over the creation of governments, regimes, and states in the international system. In the context of this debate, which has important implications for the practice of institutional design, the administration of lustration—from within or from without—is an insufficiently understood phenomenon, making it a worthy subject for institutional analysis.