Abstract
The classical theory of legislation found in the concept of public interest the explanation and justification of laws. The social state was built on the premise that the market is the most natural and efficient mechanism for allocating resources, provided that certain conditions are safeguarded, such as free competition and perfect information. But when the market fails in its distributive function, the public interest demands that the state intervenes to correct such failures. The classical theory of legislation has defended that the state can and must intervene when there is a need to establish natural monopolies, when certain public assets must be guaranteed, when the market produces externalities, when the market does not have access to adequate information or when crisis situations arise. The state must also intervene legislatively to make the ideal of social justice in the community a reality. Facing this classical theory that explains the reasons for of laws, economic theory applied to law is primarily concerned with analysing the reasons why of laws. Particularly relevant in this sense is the Public Choice theory: here we analyse and criticise its methodological premises, together with the deregulatory policies and the mistrust in legislation derived from it.
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Notes
- 1.
For Posner (1974, pp. 339–340), two factors are usually neglected which would actually improve the explanation as to why the government fails. The first one refers to the intractable character of many of the tasks assigned to regulatory agencies: they are asked the impossible, like ascertaining the costs of regulated companies or connecting their prices with their costs, and there are good reasons to believe that the right tools to measure and control such things simply do not exist. This is the first explanation to their failure. The second factor is the cost of the legislative supervision of the results produced by the agencies. The process of legislative production implies a long negotiation period that entails a very high cost. The government is left with no other option but to delegate more and more normative powers to the agencies, gradually losing control over them.
- 2.
For instance, not every agency pursued initially a public interest that, as time went by, was “perverted”: some agencies where created, from their onset, to defend private interests of the regulated groups. Moreover, the theory lacks predictive potential, for it doesn’t explain what happens when the same agency regulates different industries.
- 3.
The first one to suggest the idea that regulatory agencies have a life cycle that takes them to gradually subordinate the public interest to the private industries was Bernstein (1955). According to Bernstein regulatory agencies have their own “life cycle”. In the first stage of their existence they usually perform their regulatory duty zealously, but after some time they gradually lose power and degenerate to the point of being captured by the regulated groups. This idea was popularised later by Ralph Nader.
- 4.
A somewhat more nuanced position is that of Downs (1973, p. 18), for whom “the organismic view of government is untrue because it is based upon a mythical entity: a state which is a thing apart” from individuals. On the other hand, the “individualistic” approach is incomplete “because it does not take coalitions into consideration”: when a small group of people ally themselves to manage the state apparatus, “we can reasonably speak of the government as a decision-maker separate from individual citizens at large”; this way “we avoid both false personification of a mental construct and an over individualistic view of society”.
- 5.
Regarding the problems that free-riders pose to group dynamics, see the seminal work of Olson (1965). For Olson, rational individuals, naturally selfish, will only act in the interest of the collective if the group is very small or if they are coerced into doing so. The most rational attitude, from this perspective, is to be a social cadger.
- 6.
Peltzman (1976) asks himself why do politicians offer laws, and his answer is because politicians want to maximise electoral majorities.
- 7.
- 8.
For Downs (1962, p. 10), the struggle for power forces each politician or public servant to develop a conception of public interest which justifies his particular decisions. From the perspective of the citizen, the task of politicians or public servants is to make decisions in favor of the public interest, and therefore it is rational to demand from them public interest arguments for their decisions, even if these were taken for other reasons. From the perspective of politicians, the development of a conception of public interest and its connection with the decisions they make is a way of fighting for power by obtaining the support of the majority.
- 9.
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Zapatero Gómez, V. (2019). Laws Under Suspicion. In: The Art of Legislating. Legisprudence Library, vol 6. Springer, Cham. https://doi.org/10.1007/978-3-030-23388-4_3
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