Taxes, penalties, and the moral content of law (review of XI.6 & XI.7)

Otro triste 20 de mayo. (Another melancholic 20th of May.) Today would have been Cuban Independence Day had JFK not botched the Bay of Pigs invasion. When will our beloved Cuba be free? In the meantime, let’s pick up where we left off with our review of “Natural Law and Natural Rights” (NLNR).

Thus far, Professor Finnis has drawn a distinction between two distinct types of “obligation”–moral and legal–and has speculated about the content of our legal duties. Next, Prof Finnis will explore the moral side of legal duties in subsections six and seven of Chapter XI of NLNR. In particular, does the enactment of a law in a given polity generate any moral duties? Or put another way, what moral duties, if any, do laws impose on the members of the polity to whom those laws apply? In short, what is the moral content of law? Alas, the answer to these deep queries boils down to this: “it depends.” For Finnis, the moral content of any given law depends on the type of law under consideration, or to be more precise, it depends on purpose of the law and the way it is enforced. Simply put, does the law in question impose a penalty or a tax? Is its main purpose to punish or collect revenue? (I have added the word “main” to the previous sentence since a single law can be animated by multiple and conflicting purposes.)

Although Finnis concedes that “this distinction [between taxes and penalties] inevitably is hard to draw in practice” (p. 332), since both taxes and penalties often produce similar incentive effects, this “basic distinction” (p. 327) is the secret key to unlocking the moral mysteries of legal duties. Why? Because to determine what the moral content of a law is we first need to figure out what the purpose of the law in question is (i.e. why was the law enacted?), and for Finnis, the most important clue for discovering a law’s purpose is to identify the way in which the law is enforced. In his own words, Finnis explains the inner logic of his tax/penalty litmus test thus (p. 332):

Is this (i) a form of conduct authoritatively declared to be incompatible with the authoritatively chosen common way (and therefore subjected to penalty) or is it (ii) a form of conduct which the legislator perhaps (a) approves but finds convenient as an occasion for raising revenue, or perhaps (b) disapproves of but is willing to concede to citizens (including the law-abiding) but only at a discouraging price?

In other words, in evaluating the moral content of a law what matters most for Finnis is not the intent of the lawmaker but rather the underlying behavior that the lawmaker is trying to regulate, in particular, whether a given behavior promotes or hinders the common good, i.e. whether such behavior promotes human cooperation and contributes to the solution of whatever collective action problem that the lawmaker is trying to solve. So, the tax/penalty distinction is a proxy for a law’s moral content: laws enforced via taxes regulate conduct that the lawmaker regards as compatible with the common good (i.e. human cooperation), while laws enforced via penalties involve conduct that the lawmaker deems to be incompatible with the common good.

This is a beautiful theory, and I appreciate how Finnis defines the common good in terms of human cooperation and the solution of collective action problems. That said, I will simply restate my previous objections to Finnis’s theory in the form of three Socratic questions:

  • Why is human cooperation and the solution of social dilemmas and collective action problems a moral imperative as opposed to just a practical one?
  • Why should we accept as authoritative the lawmaker’s solutions to our social dilemmas and collective action problems?
  • And why is law and legal regulation a morally good method for solving our social dilemmas and collective action problems?

For now, it suffices to say that the main weaknesses with Finnis’s theory of law is that it does not grapple with our Socratic questions; instead, Finnis appears to take the answers to them for granted. (If you don’t believe me, check out the top of page 335.) In any case, we will conclude our review of Chapter XI in our next post.

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Perform or pay? (Holmes versus Finnis: review of XI.5)

In our previous post, we explored Finnis’s formulation of legal and moral duties. For Finnis, laws generate two distinct types of duties: legal obligations and moral ones. But what is the content of these duties, and what is their ultimate source? Finnis will explore these key questions in the remainder of Chapter XI of NLNR (i.e. subsections XI.5 through XI.9). First, Finnis poses the following fundamental question in subsection five: What legal duties does contract law impose on persons who make legally-binding promises?

As Prof Finnis correctly points out (p. 321), “There is the controversy amongst lawyers about the legal obligation created by a contract: [a] Is it to perform what was undertaken, or [b] is it no more than an obligation to pay compensatory damages to the other party in the event of one’s non-performance?” The latter view can be traced back to the great Oliver Wendell Holmes. For Holmes, “the duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it,—and nothing else.” On this Holmesian view, when you make a legally-binding promise to another person, your legal duty is to “perform or pay.” Simply put, the law gives you a choice: the law allows you to choose between keeping your promise or paying money damages to the other person if you decide not to keep your promise.

Some legal scholars, however, like Finnis himself and Seana Shiffrin, disagree with this Holmesian or “perform or pay” conception of one’s legal duties under the common law of contracts. For Finnis (and for Shiffrin too), the act of breaching a contract is not just an immoral act; it is an unlawful act. Therefore, the proper remedy for a breach of contract should not be limited to the mere payment of money damages; the proper remedy should be full on specific performance (p. 324): “allegiance to the legal system as a whole requires … that one perform what one undertook; offering or being willing to pay damages, or paying damages when assessed, does not suffice.” Let’s call Finnis’s hardcore view of contract duties the “specific performance” conception of legally-binding promises.

Now, how do we choose or decide between these two competing conceptions of contract law? In short, which theory–the Holmesian view or the hardcore one–is more likely to be true? Is this just an aesthetic question, or is there some reliable way of testing the truth values of either contract theory? For his part, Finnis selectively cites a handful of English cases in support of his hardcore view (see the sundry cases cited by Finnis on pp. 323-324), though his is a distorted picture of the common law. In reality, judges rarely order the remedy of specific performance in cases involving broken contracts. (As an aside, without getting bogged down in the details of the common law, I should add that the common law is far more complex and sophisticated than Finnis and most legal philosophers give it credit for. By way of example, see the image below, summarizing the law of contract remedies.)

But Finnis provides an additional reason against the Holmesian view. According to Finnis (p. 324), “contracts are upheld by the law for the sake of the common good, which is positively enhanced (i) by the co-ordination of action, and solution of co-ordination problems …, and (ii) by the continued existence of a social practice which actively encourages such fully co-ordinated performance and discourages non-performance.” In other words, the law enforces certain promises in order to promote human cooperation and facilitate the solution of collective action problems. Stated this way, it is now easy to spot the fundamental flaw in Finnis’s analysis. If the level of social cooperation is going to be our yardstick or criterion of theory choice in this domain (and, by the way, we think that this is a good yardstick), it is an empirical question whether the Holmesian view (“perform or pay”) or the hardcore/Finnian “specific performance” view of contracts does a better job of promoting social cooperation. In fact, it is quite possible that the hardcore or Finnian view of contract liability might actually dissuade or discourage persons and business firms from entering into contracts, for fear that a judge might indeed order specific performance in the event of breach instead of the more practical remedy of money damages.

Whether the hardcore view of contract liability is correct or not–and as a matter of law, it is not, except in some special cases–, Professor Finnis explores another deep and fascinating question in subsections six and seven of Chapter XI of NLNR: what moral duties does the law generate? We will proceed to XI.6 and XI.7 on Monday.

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Degrees of obligation (review of XI.3 & XI.4)

Professor Finnis compares and contrasts two major types of “obligation” in subsections three and four of NLNR: moral duties, such as the general moral duty to keep one’s promises, and legal duties, such as the general legal duty to perform one’s legally-binding contractual obligations. According to the learned professor, both types of duties embody social practices that help promote the common good (i.e. both are methods of promoting cooperation and solving collective action problems), but the main difference between moral and legal duties is this: moral duties are variable, while legal duties, by contrast, are invariant.

Consider the general moral duty to keep one’s promises. From a moral perspective, the binding force of promises is often feeble at best, or as Finnis himself correctly notes (p. 308-309): “… the obligation of promises is very variable, and is often quite weak. … a promise is usually an exclusionary reason that can be defeated by some countervailing reasons, often by a wide range of readily available reasons,” such as an unforeseen change in the circumstances of one or both of the parties. Legal duties, by contrast, are formally invariant, for the binding force of legal duties is “black-and-white” (p. 312, p. 314), or in the words of Finnis, “There are, legally speaking, no degrees of legal obligation ….” (p. 309).

For my part, Finnis’s point about the degrees of obligation really captured my imagination, but is Finnis’s tidy picture of variable or mutable moral duties and invariant or all-or-nothing legal duties completely wrong? In short, isn’t it the other way around? For instance, aren’t moral duties–particularly from a Kantian perspective–supposed to be categorical, invariant, and universal, and by contrast, aren’t legal duties generally weak and ineffectual (when was the last time you saw anyone driving under the speed limit?), especially given the costs and vagaries of enforcing legal duties?

There are thus two gaping holes in Finnis’s analysis of legal and moral duties. One defect is theoretical: Finnis’s abject refusal to engage the ideas of ‘law-and-economics.’ Simply put, from a theoretical or ‘law-and-economics’ perspective, one would expect the actual efficacy of legal or moral duties to depend not on some abstract theory of obligation but rather on two key variables: the probability and severity of punishment. Worse yet, Finnis ignores two key features of all real-world legal systems. One is the reality of prosecutorial and public agency discretion. Many (most?) laws and regulations are under-enforced, since public prosecutors and regulatory agencies lack sufficient resources to apprehend or prosecute all law-breakers. The other key feature that Finnis doesn’t even mention is the fact that most legal duties are privately enforced via civil lawsuits, and the enforcement of such private wrongs, like torts and breaches of contract, is uneven and variable.

There is an additional anomaly in Prof Finnis’s analysis of legal duties, for Finnis draws a further distinction between one’s legal obligation to obey the law and one’s moral obligation to do so (p. 318, emphasis in original): “Like the obligation of promises, the moral obligation to obey each law is variable in force. It will vary according to the subject-matter of the law and the circumstances of a possible violation; for some subject-matters are in greater need of legal regulation than others, and some violations of law make a greater rent in the fabric of the law than others.” Wait, so we now get to pick and choose which laws we want to obey? But perhaps the biggest problem with Finnis’s analysis of moral and legal duties thus far is that his theory is completely untestable. His claim about the invariance of legal duties might be true in some ideal world or at some level of generality, but there is no way of testing the truth of this claim. In sum, since most offenses go undetected and since so few laws are fully enforced, what difference, if any, does the invariance of legal duties make in practice? Hardly any … I am beginning to think that if I want to defend natural law and natural rights (which I do!), I am going to have to start from scratch and do the job myself. Before we attempt such a Sisyphean task, however, we will proceed to subsection XI.5 of NLNR in our next post.

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On promises: Hume v. Finnis (review of XI.2)

Professor Finnis addresses some fascinating questions in subsection two of Chapter XI. Specifically, what is a promise, and why is a promise morally binding? To his credit, Prof Finnis correctly notes that the practice of making promises can take many forms (p. 300): “It need not … be assumed that there is only one ‘promising’ practice in any given community; there can indeed be many, containing the same basic elements in varying forms, some wider, some narrower, some more relaxed, others more stringent.”

So, what are these “same basic elements” that all promises share in common? According to Finnis, a promise has two basic elements: a communication of an intention from A to B, and B’s acceptance of this intention. (Or in Finnis’s own words (pp. 298-299): “Centrally, then, a promise is constituted if and only if (i) A communicates to B his intention to undertake, by that very act of communication …, an obligation to perform a certain action (or to see to it that certain actions are performed), and (ii) B accepts this undertaking in the interests of himself, or of A or of some third party, C.”) But at the same time, Finnis also identifies a serious objection to this definition of a promise, an objection first made by David Hume (pictured below): why should the mere utterance of certain words create a moral obligation? Or as Finnis acknowledges (pp. 299-300, emphasis in original): “there is no obligation-creating magic in uttering a sign signifying the creation of obligation. How, then, do promises bind?

Prof Finnis then restates David Hume’s reciprocity-based solution to this problem: the reason why promises are morally binding is because of self-interest. According to Hume, it is in one’s self-interest to keep one’s promises because “if I do not perform my obligations to others, others will not perform their obligations to me” (p. 302). Finnis, by contrast, unequivocally rejects Hume’s reciprocity line of reasoning. For Finnis, the real reason why promises are morally binding is because the practice of making (and keeping) promises promotes the common good (p. 303): “if one is to be a person who favours and contributes to the common good, one must go along with the practice of promising.”

Alas, I call bullshit. Why? Because as I explained in a previous post (and as no less an authority as James Madison explains in Federalist #10), there is no such thing as a single or unifying “common good”. Instead, polities will consist of diverse factions and interest groups, and those factions and groups are going to have conflicting purposes and goals. We are thus with Hume and Madison and their public choice disciples like James Buchanan and Gordon Tullock on this one. In any case, even if we could identify such an all-encompassing common good or common purpose of a given group, Finnis fails to consider another theoretical problem: immoral or illegal promises. In other words, we need some way to distinguish good common goods from bad common goods. Since we have made this objection in a previous post, we won’t belabor it here. Instead, we will proceed to subsections three and four of Chapter XI in our next post …

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Taxonomy of duties (review of XI.1)

We now proceed to Chapter XI of “Natural Law and Natural Rights.” This chapter is titled “Obligation” and contains nine subsections. Since I like to emphasize duties and responsibilities instead of rights, and since this is my favorite chapter of Professor Finnis’s erudite tome, I will not speed through these pages as I have the previous ones. I will slow down my pace and review each subsection separately, beginning with subsection XI.1. Here, Prof Finnis identifies three ways in which the word “obligation” can be used:

  1. To refer to the general moral idea of duty or ought, i.e. “things, within our power either to do or not to do, which (whatever we desire) we have to do (but not because we are forced to), or must do, which it is our duty to do …, which one morally (or legally) ought to do …” (p. 297, emphasis in the original);
  2. To refer to the more specific idea of keeping one’s promises, both explicit promises and implied ones, i.e. “the ‘binding force’ (ligare, to bind) of promissory or quasi-promissory commitments” (ibid.); and
  3. To refer to the even more specific subset of relational commitments, presumably to one’s family and friends (again, Finnis is maddingly vague), i.e. obligations “deriving from particular roles, arrangements, or relationships” (ibid.).

In other words, the concept of “obligation” encompasses a wide range of diverse moral duties, promissory commitments, and relational responsibilities. (I shall hereafter use the simple word “duty” to refer to all three types of obligation.) Some of these duties are imposed by the dictates of morality or ethics or by one’s conscience. Others are self-imposed via voluntary promises. Still others are “relational” in nature, arising not out of an agreement or contract but out of one’s family relations and friendships. For his part, Prof Finnis will set aside the first and third categories of duties and probe the second category (“promissory obligation”) in the next subsection of Chapter XI, so we will proceed to XI.2 in our next post.

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Fairness versus accuracy (review of Chapter X)

We shall now review Chapter X of “Natural Law and Natural Rights.” Among other things, Professor Finnis explores the relation between law and coercion (pp. 260-264), identifies the main features of a legal order (pp. 266-270), and presents a “multi-faceted” conception of law (pp. 276-281). Alas, this chapter is hard to take seriously. Why? Because Finnis’s premises are built on theoretical quicksand. In the words of Finnis, “The authority of the law depends … on its justice or at least its ability to secure to justice.” But what is justice? For Finnis, “the objective of justice is … the common good” (p. 174). Now, before proceeding, recall that Finnis defines the common good in terms of our ability to promote cooperation and solve collective action problems. Alas, for any polity with a large enough number of members, that polity is going to consist of groups or factions favoring competing and conflicting solutions to such collective active problems, so putting aside such crude general measures as GDP or life satisfaction/happiness surveys, it’s not clear whether we can identify a master “common good” as opposed to the individual interests or individual goods of each member.

Nevertheless, there is at least one aspect of Chapter X that we can try to salvage: Finnis’s analysis of the rule of law on pp. 270-276 of his book. Finnis identifies eight separate “desiderata” or requirements of the rule of law, including (i) prospectivity, (2) ease of compliance, (3) public promulgation, (4) clarity, (5) coherence, (6) stability, (7) generality, and (8) accountability. Again, in the words of Finnis (pp. 270-271):

A legal system exemplifies the Rule of Law to the extent (it is a matter of degree in respect of each item of the list) that (i) its rules are prospective, not retroactive, and (ii) are not in any other way impossible to comply with; that (iii) its rules are promulgated, (iv) clear, and (v) coherent one with another; that (vi) its rules are sufficiently stable to allow people to be guided by their knowledge of the content of the rules; that (vii) the making of decrees and orders applicable to relatively limited situations is guided by rules that are promulgated, clear, stable, and relatively general; and that (viii) those people who have authority to make, administer, and apply the rules in an official capacity (a) are accountable for their compliance with rules applicable to their performance and (b) do actually administer the law consistently and in accordance with its tenor.

Notice what all these sundry and maddingly vague desiderata have in common: they are all procedural in nature. For Finnis, the rule of law is not about the substantive content of law; rather, it’s about how the law (whatever its content) is made and applied. (By the way, this focus on procedural natural law or the “inner morality of law” is not Finnis’s idea. It is an idea that can be traced back to the great Lon Fuller.) The essential ideas here boil down to notice and universality: people must be able to find out what the law is, and these same laws must also apply to the rulers themselves. But there is something missing in both Finnis and Fuller’s work on the rule of law: what about the value of accuracy? Why do so many legal philosophers or “jurisprudes” omit this key variable in their explorations of the rule of law?

I have covered this ground before, for as I noted in a previous post–back when I was reviewing the breathtaking work and ideas of my hero Robert Nozick: “any procedure is going to be imperfect to a greater or lesser degree. An innocent man might be found guilty with some positive probability, and a guilty man might be declared innocent with some probability, and furthermore, the choice of procedural rules will produce trade-offs [between accuracy and justice].” (To quantify this tragic trade off, consider the famous Blackstonian legal maxim below.) To my mind, then, the key question in the domain of procedural fairness is this: which procedural probabilities and which trade-offs are morally required or morally acceptable? Alas, neither Finnis nor Fuller has anything to say about these legal and moral probabilities. For now, it suffices to say that I am deeply dissatisfied with Finnis’s (and Fuller’s, for that matter) procedural approach to the rule of law. That said, I will proceed to the next chapter of “Natural Law and Natural Rights” (Chapter XI) and begin wrapping up my review of Finnis in my next few posts …

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Why 10? Why not 20, 50, or 100?

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Authority, the nirvana fallacy, and the costs and benefits of co-ordination (review of IX)

We now proceed to Chapter IX of “Natural Law and Natural Rights.” This chapter contains five subsections and is devoted to the theme of authority. By “authority,” Professor Finnis means coercion or the power “to require one to choose what one would not otherwise have chosen” (p. 231), and he offers the following insight: authority or coercion are not just necessary evils; they are necessary goods (!),* for without some kind of centralized authority (alas, Finnis is too aloof to delve into the details of actual governance), men would be unable to solve the many types of co-ordination problems that afflict any group, among which are:

  1. How to reconcile conflicting rights;
  2. How children should be educated;
  3. How natural resources should be allocated and used;
  4. How the use of force should be regulated; and
  5. How speech should be regulated.

While we agree with Finnis about the ubiquity of co-ordination problems, his sanguine analysis of authority is fallacious on multiple levels: theoretical and empirical. To begin with, the creation and maintenance of a centralized authority is itself a co-ordination problem! So, how does this meta-coordination problem get solved in the absence of some pre-existing meta-authority? In addition to this regress problem, the remaining problems with Professor Finnis’s analysis of authority are entirely empirical. Although Prof Finnis’s armchair theorizing might be persuasive to some scholarly souls, Finnis fails to compare both the benefits and the costs of authority. By way of example, what about “forced riders,” i.e. individuals who are required to contribute against their will to the costs of goods or services they do not want? (See item C in the chart below.)

Moreover, we don’t always need a centralized authority to solve our co-ordination problems. As such influential scholars as Elinor Ostrom and Robert Sugden have shown (look them up!), bottom-up solutions to collective action problems and other forms of “spontaneous order” are often more effective–and perhaps more morally legitimate to boot!–than centralized solutions. (See item B below.) Lastly, Finnis commits what Harold Demsetz has called the nirvana fallacy: the fallacy of comparing actual coordination problems (such as the set of co-ordination problems listed above) with unrealistic or ideal solutions to these problems (some authority capable of providing ideal or perfect solutions to our co-ordination problems). More simply put, just because a co-ordination problem exists doesn’t mean it needs to be solved; sometimes it’s better to leave a problem alone; sometimes the solutions are worse than the problem itself! (See item A below.)

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