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The Periodical of Politics, Economics and Philosophy Issue V Spring 2008

“...Because It’s the LAW!” The VOX Special Edition on Law

Hell is Other people: Society as a prison The Philosophy of punishment prudent fiscal Governance legal services reform lawS in the e.U. Minority rights

The Club of

PEP Journal


The Periodical of Politics, Economics and Philosophy

The Club of

PEP Journal

“There will always be those who are willing to trade rights for the promise of increased security, but for now, at least, there is still a strong voice for protection of rights.”

ISSUE V Spring 2008

Professor James O’Fallon on minority rights in the VOX interview on page 28.


ESSAY panopticon as a way of life By Magda Assanowicz


what do we say when we punish By Alfonso Donoso


prudent fiscal policy By Dr Waltraud Schelkle


legal services reform By Professor Stephen Mayson


civil and commercial law in the e.U. By Diana Wallis MEP


the rigHTs of minorities Interview with Professor James O’Fallon


photo credit: Rudolf Struzyna (cover),,

vox -the periodical of Politics, economics and philosophy



The Periodical of Politics, Economics and Philosophy

__________________ VOX is the Club of PEP’s termly journal that serves a plattform for critical insight into the wide abyss of Politics, Economics and Philosophy. The aim is to fill the academic void on campus and in general. The essence of VOX is its interdisciplinary approach to each edition’s issue. __________________ VOX committee: Ilaf Scheikh Elard Jasper Littmann Paul Mertenskötter Ibrahim Said Magda Assanowicz Henry Smith Euan Edwards __________________


lthough it is said that if one studied all the laws,

one would not have time anymore to break them, we have nevertheless dedicated this edition of VOX to the topic “...because it’s the law!” We choose this rather polemical title because the law is often seen as something abstract and arbitrary, as it is the case with laws coming from the European Parliament (p. 23) and specifically the European Stability Pact (p.16). The most visible application of laws is the punishment of criminals. Alfonso Donoso explores what needs to be done to overcome the feeling of arbitrariness when punishing by looking at what we say when we punish (p.10). Another article on punishment focuses on the Panopticon, a project that was created with the purpose of establishing the perfect prison but that has made individuals into prisoners of other individuals, as Magda Assanowicz argues (p.6). Last but not least, this edition includes the first VOX interview as we spoke to U.S. academic James O’Fallon on the state of minority rights in today’s world (p.28). The next edition of VOX will be on the topic “East and West”. If you want to write on the possible shift of global dominance from West to East, Asian philosophy, democracy, environmental issues, emerging economies, prospects for social revolution, the Olympic games, politics of development, or if you want to suggest another topic for a contribution to the next issue, then contact us at Undergraduates, post-graduates and academics are all welcome to write. Ilaf Scheikh Elard, Jasper Littmann Editors

Issue V - spring 2008

To live as one likes is plebeian; The noble man aspires to order and law. Johann Wolfgang von Goethe

The less people know about how sausages and laws are made, the better they sleep. Otto von Bismarck

Citizen: “What is the law?” Robespierre: “The will of the people!” Georg Büchner in Danton’s Death, Act I 

vox -the periodical of Politics, economics and philosophy

Issue V - spring 2008

Hell is other people: The Panopticon as a way of life A philosophical exploration of how punishment and the prison system meet the needs of society

By Magda Assanowicz


there are rules that are effectively controlling our lives. We cannot leave our house without being aware of basic norms of conduct: closing the windows (so rain would not damage our apartment), switching off the lights (saving electricity) and finally closing the door when leaving (so unwelcome visitors cannot get in). There are also rules that are stricter and, as it were, more serious. These rules are commonly known as ‘the Law’. One thing about these rules is obvious – if we break them, there will be serious consequences. This statement in reality means that if one breaks any fundamental laws, one ends up in prison. But, as we will see, a prison is not only 

e can be certain that

the building where people who have committed a crime spend their sentence. In 1785, the English philosopher Jeremy Bentham came up with a special type of prison building. He called it the ‘Panopticon’, as it is a circular prison where all (lat. pan) the prisoners can be seen (lat. optare) from outside the cell. In his analysis of Bentham’s theory, 20th century French post-moderninst Michel Foucault suggested that not only prisons, but also numerous hierarchical structures like the army, schools, hospitals, and even factories, have evolved through history to resemble Bentham’s Panopticon. Examining this claim further will prove rewarding for the curious.

In the eighteenth century, Jeremy Bentham was inspired by the plan of a military school in Paris to create a project called Panopticon. As a purpose-built project, this type of prison was thought to be the most economic method of social discipline so far conceived. The Panopticon prison requires almost no staff since all prisoners can be observed, while the prisoners also observe each other. Moreover, Bentham came up with the architectural structure so that a Panopticon could be built in praxis. Unfortunately or fortunately, his plan has never seen the light of day. Being devoid of right angles and corners, the actuality of such a prison may be hard to imagine, but it is the overall concept of people

watching people that is crucial in this case. Bentham called the Panopticon ‘a new mode of obtaining power over mind in a quantity hitherto without example.’ One could call it a fanatical idea, but the Panopticon is believed to have had an identifiable influence on the design of many buildings: prisons, as for example the Carabanchel Prison in Madrid, the Caseros Prison in Buenos Aires etc., but also hospitals and industrial buildings. Therefore, Foucault’s suggestion that the Panopticon has influenced many spheres of life does not seem to be too far fetched. Analyzing the structure and idea of Bentham’s prison, Foucault identifies a special type of cause and effect system: discipline – power – punishment. 

vox -the periodical of Politics, economics and philosophy

Issue V - spring 2008

Bentham the aim of the Panopticon was, in his words, to see ‘morals reformed – health preserved – industry invigorated – instruction diffused – public burdens lightened.’ However, would it work like this? There is little doubt about the truthfulness of Foucault’s assumption that our society is not dissimilar to a Panopticon. Bentham created the project of a prison where prisoners, by being watched, would at the same time be under threat (they would not be able to commit any crime) and secure (being watched means being protected).

Discipline requires both power and punishment – they are permanently intermingling spheres. Foucault has taken Bentham’s theory and introduced it in a more general way, applying it to cities, regions or even countries and whole societies. Theory became in Foucault’s eyes reality: people watching people to keep discipline and order. For an individual, being clearly visible can become a trap. This structure of a society might seem threatening and totalitarian, but Bentham and Foucault both ultimately maintain that it is strictly democratic – everyone has the same rights and responsibility to observe others. If we begin to think that this system is somehow reminiscent of totalitarianism, imagining scenes from George 

Orwell’s 1984, we are mistaken. Foucault calls the Panopticon a ‘cruel, ingenious cage’, which refers not only to the theory of punishment, but in my view, has rather become reality. We are indeed living in a cage. We are being constantly watched by security cameras, which are supposedly protecting us from thieves, terrorists, or all hosts of other dangers. Everyday we use a plethora of pin codes for banking, mobile phones, email accounts, entering buildings, while all of this information is collected and stored. Moreover, citizens of some countries even have identity numbers, which can tell anyone with access to the central database almost everything about them. One question then comes to mind: have we built ourselves a prison? For

A project that once was created with the purpose of establishing the perfect prison has made individuals into prisoners of other individuals. If an individual in modern society resembles a prisoner as in the Panopticon, he lives under threat and is simultaneously protected. Moreover a prisoner is a person who is despised by the society, or at least is not trusted. We are therefore treating our neighbors and colleagues in the same way as we treat people who have committed a crime, simply by watching them (not in person, of course). Foucault believed that this type of power and punishment was ‘far more insidious than public torture and execution.’ With this concept of society, Jean-Paul

Sartre’s claim that ‘hell is other people’ becomes reality. Is there an escape from this? Recently, there were media reports about the fact that people who live in estates that are surrounded by walls and protected by security – ex-pat compounds, gated developments for the super-rich, etc. – feel as if they were living in a cage and not being well-protected at all. They came up with the idea of building an estate where neighbors would watch neighbors, which would give them security and mental comfort. However, this project sounds all too similar to the project of the Panopticon. A project that once was created with the purpose of establishing the perfect prison has made individuals into prisoners of other individuals. It seems that people are choosing to live in this way. The explanation for this phenomenon might be that Bentham’s project was not suitable for the purposes of a prison, but that is does in fact suit to our society. Or one could assert that society, as Foucault says, has developed in a way that was previously inconceivable. There is no doubt that we are subconsciously agreeing to live in a way that other people are telling us to. Nevertheless, this is not as frightening as living in a prison, is it?

_____________________________ Magda Assanowicz is a first year undergraduate reading Philosophy and Sociology at York University. 

Issue V - spring 2008

What do we say when we punish An essay on punishment, justification and communication By Alfonso Donoso


an injection administered by someone else, or electrocuted while tied to a chair, or if someone is locked in a room for years, with stringent restrictions of movement, impeded of seeing her family and friends and not even being able to decide what kind of life she lives within that room, many would 10

f some one is killed by

say that something extremely wrong is happening. But this happens every day. Actually, these practices increase over the years, but we tend not to question them because we label them as criminal punishment. Such a label stands as a sort of shield protecting the practice of inflicting painful, overwhelming

and sometimes insufferable treatment from moral criticisms. However, when we think carefully about it, we realize that its justification is a serious and persistent problem that, despite intense philosophical efforts, has not developed into a complete and conclusive theory. Some recent theorists of punishment have emphasised the communicative character that punishment ought to have in order to be justified (see Feinberg 1970, Nozick 1981, Hampton 1984, Duff 1986, 2001, Primoratz 1989). Punishment as communication tries to highlight the fact that in punishing we are dealing with persons who, like us, should be considered members of a moral community that shares a normative language; it is only within that framework that punishment may end up being morally justified. By contrast, the mere infliction of painful, burdensome or hard treatment on the punished will not do for the normatively adequate practice of criminal punishment. In a way, communicative theories are neutral to the traditional debate between consequentialists (punishment can be justified only if it has good future consequences) and retributivists (punishment can be justified only if it is deserved for a past act). They are necessarily neither looking at the future consequences of punishing nor looking at the past acts that deserve to be punished. Rather, communicative

punishment refers to the hic et nunc of punishing. This is not to say that a complete communicative theory of punishment is neither backward nor forward-looking when offering a justification of criminal punishment. But, I shall argue, communicative theories focus on a different part of the justification of punishment. Conceptually speaking, the question ‘why should we punish?’ can be distinguished from the question ‘what should we do when we punish?’ And both are a necessary part of a complete justification of punishment. Thus, if I am a consequentialist about punishment I may answer the first question by saying that I punish because that is the most effective way to obtain a crimeless society. By contrast, if I am a retributivist, I may answer the same question saying that certain acts deserve to be punished. However, the question about what I should do when I punish—which I shall call the synchronic question, by contrast to the rather diachronic character of the first query—does not depend on either the consequentialist or retributivist alternative. The same response can be given to both, and the same alternative can work with two different answers. (cont. on p. 16) Let me illustrate this point. When talking about punishment, justification means moral justification. Thus, if I endorse consequentialism I may morally justify, say, incarceration as a means 11

vox -the periodical of PEP

to bring about a better state of affairs for society. As a retributivist, instead, I may say that what morally justifies punishment is that it restores the state of affairs that the crime unfairly disturbed. However, there is something lacking in these plausible answers: why does the prospect of a better state of affairs, or the recovery of a past state of affairs, justify the infliction of punishment?

There is something special about hard treatment compared to other possible manners of communication that makes it the right way to condemn criminal offences. It is now when the answer to the synchronic question turns out to be important, as it attempts to bridge the gap between punishment and its aim (either consequentialist or non-consequentialist). Thus, to complete further the justification of punishment we need to ask now not why to punish, but what to do when punishing. As has been said, communicative theorists of punishment have recently developed an answer to the synchronic question. They claim that punishment should be seen as a communicative enterprise carried out both by the punisher (the state and society) and the punished (the offender). This en12

Issue V - Spring 2008

terprise entails that both sides of the practice should share a common moral language, which, in turns, requires understanding both the inflicter and the sufferer of punishment as equal moral agents. Communication, then, is possible only through a common language. If this condition is achieved, then the question about the content of the message to be communicated naturally emerges. The punisher, communicative theorists claim, should communicate condemnation to the offender for her wrongdoing. Moreover, the punished should be able to participate in the communicative act by being able to understand – and hopefully accept – the message as a condemnation delivered to censure the act she has committed. The message, in short, acts as a reassurance and reminder of the values of the community that the criminal offence has flouted, as well as an act of censure for the performed offence. Thus, we have reached an answer to the synchronic question: when we punish, we should communicate condemnation for an action that represents a violation of certain values held by the community. Punishment does communicate this condemnation and censure to the offender and also stands as reminder for the society of the values of the community. If not totally, the justification of punishment is now more complete. But some difficulties remain. It

seems plausible to claim that punishment can communicate condemnation. But, could not an official letter or a tough email written by a judge also communicate the same? Could not an advertisement at prime time screened by the BBC communicate to the offender the same message, i.e., that we, the society, condemn her action and we want her to know that it represents a violation of the values we hold? The answer is certainly yes. And then, if the message can be communicated in many different ways, why should we communicate condemnation via hard treatment? This is by far the most problematic part of the justification of punishment for communicative theorists (but certainly not only for them). At this point, there are only two plausible (and mutually exclusive) answers that seem sensible to me. The first one is that punishment understood as hard treatment cannot be justified at all, and that consequently it should be abolished (see Mathiesen 1974, Bianchi & van Swaaningen 1986). This is the conclusion offered by abolitionist trends, which requires a complete reformation of the whole criminal system and addressing a large set of questions and difficulties that, for the sake of brevity, I cannot refer here. The second answer is that there is something special about hard treatment – compared to other possible manners of communication – that makes it the right way to condemn

criminal offences. First, punitive communication seems to be a more effective deterrence than other kinds of communication. This should sound sensible to a consequentialist mind. Second, in retributivist terms, punitive communication has a significant effect in the life of the wrongdoer (see Nozick 1981: 375), which makes clear to the community and offender herself that she experiences and faces the deserved burden for the wrong she has done to others.

Given our multicultural societies, communicative punishment entails serious difficulties, as it demands a shared moral language in order to justify punishment. But again, could not either a BBC spot or a harsh email has a similar deterring and significant effect to hard treatment? My answer is that in a world different from ours non-punitive communication does accomplish the effects previously mentioned. That world is more virtuous than ours, and condemnation from the fellow members of the community plus the understanding that criminal acts are wrong and that we should not do wrong is enough to both deter potential criminals and condemn the action of those members of the community that may act wrongly. 13

vox -the periodical of Politics, economics and philosophy

However, in a world like ours, punishment as hard treatment seems to be the most adequate way to communicate condemnation and fulfil the demands posed by both consequentialism and retributivism. Although on occasions we may act virtuously, we are not virtuous, but rather morally weak beings characterized by an internal struggle between right and wrong. Considering this context, hard treatment (some kinds of it) appears to be the type of communication that more realistically makes us grasp the message of condemnation, both as offenders and as community fellows. To conclude, it must be noticed that, although more plausible than pure consequentialist and retributivist justifications, punishment as communication advances only a partial and rather contingent moral justification for the practice of criminal punishment. Moreover, given our multicultural societies, communicative punishment entails serious difficulties, as it demands a shared moral language in order to justify punishment. Despite these difficulties, its deep value lies in that – unlike other more pragmatic or metaphysical justifications – communicative theories strongly try to rescue the practice of criminal punishment as an endeavour

Issue V - spring 2008

that should take place between morally and equally valuable agents. I believe that without that minimal point of departure (which is one that we seem to forget too often) we should rather start thinking like abolitionists do.


Alfonso Donoso is a second year PhD student at the Department of Politics at York University. Bibliography: Bianchi, H. & Swaaningen , R. (eds.) 1986 Abolitionism: Towards a Non Repressive Approach to Crime (Amsterdam: Free University Press) Duff, A. 1986 Trial and Punishment (Cambridge: CUP) --- 2001 Punishment, Communication and Community (Oxford: OUP) Feinberg, J. 1970 ‘The Expressive Function of Punishment’ in Doing and Deserving (Princeton: PUP) Hampton, J. 1984 ‘The Moral Education Theory of Punishment’ Philosophy and Public Affairs 13: 208-38 Mathiesen, T. 1974 The Politics of Abolition (London: Martin Robertson) Nozick, R. 1981 Philosophical Explanations (Oxford: OUP) Primoratz, I. 1989 ‘Punishment as Language’ Philosophy 64:187-205

Painting on the right: “Prudence and Justice with Six Antique Wisemen” (1497) by Pietro Perugino 14


vox -the periodical of Politics, economics and philosophy

Developments in civil and commercial law in the European Union By Diana Wallis MEP


urope’S civil and commercial legal order needs attention.

It has been pushed from centre stage over the last years by the political imperatives dictated by the war against terrorism. However, the time has now come to take notice of the pressures building up in the wake of a greater take up of freedom of movement by both persons and corporations now exercised over a much bigger Union. We need to look a new at what is necessary to provide a real Europe of Justice along the lines originally set out at Tampere before the dramatic events of 9/11 turned everything up side down. Over this last year, the European institutions have been grappling with a number of legislative proposals which are either directly in the civil law area or impinge on it. In the Parliament many of us are desperate to tackle the legal issues that increasingly face our citizens in an Internal Market of increasing mobility, yet so often we are confronted with an interpretation 16

of the Treaties which allows Member States to refuse to venture into these areas on the basis that we would interfere too much in their national legal orders. Conversely, there seems to be no such reticence from some voices in the new Member States. I encountered one senior national judge at a conference this year who made it quite clear that if her country had been prepared to completely overhaul its civil law system to become a Member then maybe they could in turn expect a bit more flexibility from the old Member States in relation to changes designed to create a more accessible legal order for all EU citizens. For instance, in relation to both of the important proposals for a European Payment Order and the European Small Claims Procedure during this year we have had the unending discussion about whether or not these instruments should be cross-border only. The original Commission proposal envisaged their use for internal cases

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as well; however the Member States could not be persuaded. This leaves us with a situation in the UK where it will now be easier to collect a debt or deal with a small claim between London and Helsinki, or Birmingham and Krakow than between London and Edinburgh or London and Belfast. Still, on the positive side, it may persuade some court users that the EU can provide a better service than the UK! For the moment, it appears that all intervention is restricted to cross-border only. The same fate seems likely to befall the Mediation Directive, the one area outside the traditional legal structures where many felt it would be a helpful starting point to adopt an overall approach. Of course, this cross-border only approach to the Union’s civil law instruments may be justifiable, but we have to understand that where the original inspiration may have been to create a cohesive universal system, the final outcome is a separate and additional system running alongside all the many national systems. Thus we create a parallel European legal system. Likewise, in the area of contractual and non-contractual obligations, and indeed matrimonial law we are set to go down a path of applicable law rules which underpin national law but simplify the rules for designating whose law applies to any given situation. In theory it sounds fine, but it relies heavily on national judges being both prepared and equipped to use the foreign

law of all other Member States. Then, as legislators we are besieged by business and other interests who indicate that they cannot possibly deal with these twenty seven different legal regimes and that in accordance with Internal Market principles they should be allowed always to use their own law.

European Commission in Bussels

It is an intractable problem. Some thought it was laid to rest with the Services Directive; not so; it undermined rational debate on the so-called “Rome I” Regulation on the law applicable to contractual obligations, and will resurface in relation to the whole new discussion on patient mobility and liability for service providers. We still have yet to really explain how choice of law rules and a country of origin approach really function and interface. We need to acknowledge that this failure has practical implications for our citizens as the European Parliament has seen in its enquiry into the failure of the UK insurance and pensions provider Equitable Life, with citizens literally being sent from pillar to post, from one national regulator 17

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to another, all shifting responsibility. In an Internal Market, there should be the freedom, the mobility to provide services but not without the concurrent liability. Of course, we can add to this the further complication of various optouts obtained by the UK, Denmark and Ireland. Perhaps more importantly as a country, we have up until now been in the vanguard of influencing the development of European law in a manner helpful to the common law, which others have great respect for.

We still have yet to really explain how choice of law rules and a country of origin approach really function and interface. With the UK making increasing use of its opt-out in the civil law field, there is evidence of a tendency on the part of the European Commission to reduce common law participation in various schemes and partnerships, no doubt on the basis of our own non-participation and negative attitude to various justice instruments. This circular negativity can only be destructive to the very common law influences we seek to protect and nurture in the longer term. With all respect to both Member States, how will we feel if the defence of the common law in the EU is left to 18

Malta and Cyprus? In the meanwhile, Europe’s citizens and businesses are increasingly active over the full geographical stretch of the enlarged Union. The question remains whether or not we have created a legal edifice that can assist and protect them when things go wrong. Are we also prepared to have a political rather than a technical discussion within the Union about civil and commercial law, so as to create a transparent structure that people can understand how to access, and that will not confront them with impossible costs and contradictions? It seems to some of us that we need an holistic vision of Europe’s civil law system and indeed we need the courage to be able to call it that, not hide bits here and there either within Internal Market legislation or elsewhere in a piecemeal fashion. _____________________________ Diana Wallis MEP, Yorkshire and the Humber, is the Vice President of the European Parliament, Member of the Legal Affairs and Petitions Committees.

Issue V - spring 2008

PrudenT fiscal philosophy because it’s the law! An essay on the philosophy of fiscal governance in the European Union By Dr Waltraud Schelkle


he title of this issue of vox

sums up, nicely and polemically, the original philosophy of fiscal governance in the European Monetary Union (EMU). The rules were meant to be as close as possible to a legal commitment, tying the hands of governments. A simple numerical criterion stated what constitutes an ‘excessive’ deficit and thus a breach of the law. The 3% deficit rule applied to high and low debt countries alike, so there was formal equality before the law. It foresaw a quasi-automatic system of punishment thanks to well-defined steps and procedures, underlining the judicial nature of the framework. The Pact was not meant to change as would a temporary political compro-

mise but instead act as a constitutional constraint. All this was to make fiscal governance in EMU a matter of following rules rather than exercising political discretion. With the exception of some macroeconomists, economists endorsed this legalistic logic of the Stability and Growth Pact. The endorsement was based on the latest methodological advancement, i.e. rational expectations. ‘Rules rather than discretion’ was the title of the article by Kydland and Prescott in 1977 that started the contemporary political economy of commitment and policy credibility and got its authors the Nobel Prize in economics in 2006. The Pact should have been self-enforcing; we now know 19

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that it was anything but. I will argue that this is because political economy, as practised by economists, lacks plausible theories about the relationship between the economic and the political system.

Was this a sad ending, the triumph of the forces of evil over a prudent but tragic hero? Or was it a happy ending, the political and economic logic eventually married in what will remain a stormy relationship? The interesting and relevant question that the literature on credibility set out to tackle was the following: why do governments subject themselves to institutionalised discipline or tie their hands with respect to certain policies when they have not done so in the past? The European Central Bank would tie governments’ monetary hands, while the Pact would discipline them in the use of the remaining macroeconomic policy. In an article with the telling title: ‘The advantage of tying one’s hands’, Giavazzi and Pagano argued that it may be welfare-improving for monetary (or fiscal) authorities with an inflation (or deficit) bias to stay as member of a club that imposes low money growth (or a balanced budget). In a rational expectations equilibrium, all actors exploit shared information 20

optimally. The incentives of the authorities are anticipated and wages and prices set accordingly so that inflation through low interest rates or high public expenditure cannot generate any additional employment. Membership in a stability-oriented club like EMU can then be attractive to the government because it imposes a penalty on ‘excess’ deficits and conspicuously takes away the scope for abusing monetary power. The public recognises this change in incentives and constraints and therefore adjusts its expectations. Another, welfare-superior rational expectations equilibrium is achieved with lower inflation and more sustainable public finances. It did it not quite work out that way. While inflation is overall low, the Pact was challenged soon after the onset of the monetary union. Worse, it was not one of the usual suspects, but Germany, the champion of the original framework, that became one of the first sinners. The demise was a drama in three acts: it started with the Council of economic and finance ministers in November 2003 which replaced the Commission’s recommendation to open the Excessive Deficit Procedure (EDP) against Germany and others with its own recommendations. The Commission took the Council to Court for this decision which was duly annulled in June 2004. The Pact was eventually revised in March 2005. Was this a sad ending, the triumph of the forces of evil over a prudent but tragic

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hero? Or was it a happy ending, the political and economic logic eventually married in what will remain a stormy relationship? The critics who go for the sad ending interpretation see it as yet another proof that sovereign actors are like rational addicts. They try to contain their worst excesses but are always inclined to give in to self-harming habits when cold turkey sets in. There is no easy way to refute or confirm this interpretation. But we should at least notice that the Pact was not abolished which, after all, was an option at the time. The financial markets had not punished the breaches of the Pact;

on the contrary, the Euro started its rise against the dollar just when one country after the other had to admit to excessive deficits. Inflation remained low throughout and is only now starting to rise, when fewer governments are in excessive deficits. Truly devious governments would presumably have seized the opportunity to get rid of their fetters. Is the Pact dead as the same critics suggest? There are now many exceptions from the simple 3% rule, for example due to an extended period of low growth or high ‘contributions to international solidarity’. There are different rules for high and low debt 21

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countries with respect to the mediumterm objective of ‘close to balance or in surplus’ over the cycle. The EDP will be reassessed at each step and will advance only if a government has not made a visible minimum effort. But the role of the Commission and Eurostat has been strengthened in terms of rights to inspect governments’ monitoring of their fiscal performance in detail. Reporting requirements have been vastly extended, in particular as regards the long-term commitments from age-related expenditures such as pensions, health, and education. Methods of crunching the numbers have been agreed and Eurostat can inspect national offices any time and check whether administrations have followed the Statistical Code of Conduct. Control has become more low key, in that it is more technical, frequent and at the administrative rather than government level. Thus, the Pact is dead as a law-like constraint on governments. Its operation resembles rather a settlement out of court, a hearing before an expert committee in which the defendants can make their case. What are the lessons for Political Economy as a field of study? The demise of the original Pact directly speaks to our theories because they were quite influential in devising the EMU framework. Its failure points to a lack of understanding the political system. The political economy of commitment and credibility sees governments as self-interested, myopic opportunists 22

who respond only to electoral rewards and punishments. This was directed against the benevolent dictator view of government in normative welfare economics where the authorities simply do what economists say they should do. Our present theories are either built on excessive mistrust or excessive trust in governments. The revised Pact can be interpreted as an attempt to match an economic and a political logic. It leaves the dayto-day business of monitoring to experts in administrations and financial markets, thus following a technocratic-economic logic. If this fails and a country is found to have an excessive deficit, governments can and must use the many exceptions and country-specific circumstances to make their case before their political peers in the Council. This provides an opportunity for a collective renewal or readjustment of the political consensus on which EMU is built. In the end, it is for national parliaments to assess how well their government has made the case and whether they endorse the political consensus. Fiscal surveillance in EMU can only improve democratic processes at home; it cannot substitute for them. _____________________________

Dr Waltraud Schelkle is a Lecturer in Political Economy at the European Institute of the London School of Economics & Political Science (LSE).

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Legal Services reform An essay on why the legal market is ripe for reform. By Professor Stephen Mayson


ripe for reform? The marketplace for legal services is large, valuable and growing. It is worth around £20 billion a year (about 2% of GDP), of which about 10% is exported and a further 10% is legal aid. There is no reason to believe that its value will not continue to rise. At the same time, the number of lawyers has increased. The number of solicitors in practice in England & Wales has more than doubled in the past 20 years, in part driven by the admission of increasing numbers of women. In total, the ratio of lawyers per head of population has increased from around 1:1,000 twenty years ago to about 1:400 today. This gives rise to a related problem. If the hy is the legal market

volume of ‘qualified lawyer’ work has not doubled (and given the accelerating trends towards standardisation and commoditisation, I don’t believe that it has), then we now have too many qualified lawyers for the work available. The consequences of an over-supply of qualified people are, first, that the cost base of legal services becomes too high and, second, that competition for work drives down fees. Rising costs and declining fee levels result in a squeeze on profitability. The challenge of managing costs, responding to pressure on fees, and investing in new approaches to the delivery of legal services has slowly but surely driven mergers and the consolidation of law firms. As Law Society statistics 23

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show, the number of law firms in England & Wales has declined by around a tenth in the past ten years. But there are still almost 9,000 private practice firms, and this represents a substantially fragmented supplier base. Every one of those firms has an unavoidable level of establishment costs just to be in business. Viewing the market as a whole, therefore, there are inevitably duplicated costs which are ultimately either borne by clients in higher fees or by partners as lower profits than might prevail in a less fragmented market. Opportunities for further growth in a market characterised by over-supply and inefficient business practices cer24

tainly exemplify a market that is ripe for reform. Reform has to balance different interests It was against this background that the Government invited David Clementi to review the regulatory framework for legal services that resulted in the Legal Services Act 2007. In a marketplace for legal services, there are three principal interests that must be balanced: lawyers, clients, and the public. The ‘mood music’ of public opinion during the last quarter-cen-

Issue V - spring 2008

tury has been supporting Government initiatives to remove restrictive practices and anti-competitive protection from the professions. We have therefore seen an inexorable shift in the balance of power from the lawyer to the client. But the public interest does not require the balance of power, whether through competition or regulation, to favour either lawyers’ interests or clients’ interests: what it requires – often in very different circumstances – is a balance of those interests. The public interest is not the same thing as the client interest or the consumer interest. Public interest must protect the rule of law and promote the effective and efficient administration of justice. This gives a legitimate interest in the efficiency of the legal services market and so in the business arrangements of lawyers. But then there might also be a conflict. There is a private market for legal services, and a public one. When the State pays for legal services (as it does through legal aid), it has an interest not just as representative and guardian of the public interest, but also as a buyer. The public interest in keeping a cap on public expenditure gives rise to a different interest in the efficiency of the market for legal services. So we must examine closely the Government’s wish to see ‘market-based’ reforms. What sort of ‘market’ are we talking about? A truly competitive market would encourage independently contracting parties, each with sufficient knowledge

of the other and with equality of bargaining power. This would promote supply and demand at a price that satisfied a volume of demand for value for money from clients and an equivalent volume of supply that secured an acceptable return to lawyers.

Lawyers have to lose their current tendency to equate the legal services market with the legal professions. The market will grow and prosper; the legal professions might not. But there is more than one supply at issue in relation to legal aid. It is not simply the provision of legal services by law-firm suppliers paid for out of public funds. The demand from clients for the services of these firms is also influenced by the ‘supply’ of legal rights through legislation. Here is an area where supply and demand are out of kilter. The Government is responsible both for the creation of legal rights in respect of which legal aid for enforcement might be required, and for the financial wherewithal for many of those affected to be able to pursue their rights. The supply and cost of publicly funded legal services is not driven entirely by the expectations of a rapacious legal profession; the Government itself has to bear much of the 25

vox -the periodical of Politics, economics and philosophy

responsibility for supply of need into the system. It is not just the financial tap that needs managing in order to match levels of demand with budgets. The current situation of a fragmented supplier base inevitably builds in duplicated overheads at some cost to the system as a whole; and it clearly drives up the Legal Services Commission’s administration costs in having to deal with so many suppliers. I therefore see the logic of seeking larger-scale providers.

The need to reduce the number of firms is crystal clear, in the interests of quality, consistency, efficiency and cost. But scale does not inevitably lead to economies of scale. Some aspects of legally aided services are highly knowledge-intensive, and require a considerable degree of technical legal input specifically tailored to the client’s circumstances. Examples might be aspects of immigration and social welfare advice. These do not inevitably deliver economies of scale. An approach to legal aid funding that assumes a universal opportunity for scale and scale economies will fail to deliver the services and quality of service required. But equally, current suppliers refusing or resisting the invitation to consolidate and scale up where that can and should be achieved will result in a loss of work. 26

We therefore have to accept that consolidation is required in the legal aid market just as much as it is needed in other parts of the legal services market. What will drive that consolidation? Consolidation If there is one theme that comes through as we contemplate the future of the legal services market, it is consolidation. The need to reduce the number of firms is crystal clear, in the interests of quality, consistency, efficiency and cost. In the market for commercial legal services, that need has been recognised through the natural forces of competition, and has been happening for a number of years. According to Law Society data, for example, the number of firms with more than ten partners fell by 30% to 366 in the five years to 2006; but the largest 100 firms (barely 1% of the total) accounted for just over one-third of solicitors in private practice, and for about half of the £20 billion turnover in legal services. But the ‘retail’ legal market largely has not felt these forces. With greater volume and processing in the conveyancing and personal injury markets, the need to scale up has been recognised. But the potential entry of High Street and institutional brands into the consumer market will drive further consolidation. Co-operative Legal Servic-

Issue V - spring 2008

es, Halifax (HBos) Legal Solutions, the AA, DAS, and Capita, to name some of those who wish to participate in the emerging market for consumer legal services, will be impossible to beat at the current levels of scale and investment that characterise typical law firm presence in this market. The Law Society commissioned research that suggested that 800 legal aid firms might disappear as a result of the proposed reforms of legal aid. In the context of the market reforms as a whole, however, even 800 might be a significant underestimate. In the 7,500 or so law firms that have fewer than five partners (87% of the total), there is on average just three solicitors in each firm. This is not a sustainable, cost-efficient distribution of capacity. Lawyers have to lose their current tendency to equate the legal services market with the legal professions. The market will grow and prosper; the legal professions might not. ___________________________ Stephen Mayson is Professor of Strategy and the Director of the Legal Services Policy Institute at the College of Law of England and Wales.


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Minority rights or majority rule? VOX’s Paul Mertenskötter interviews Professor James O’Fallon about minority rights


N a recent article in the International Herald Tribune entitled “Democracy’s root: Diversity”, Thomas Friedman argues that “democracy is not about majority rule: it is about minority rights”. Minority rights is an interesting field of jurisprudence for historical and contemporary reasons. From a historical standpoint one can say that the first settlers in the North American colonies were for a large part fleeing some kind of oppression in their home countries: for example the Protestants were fleeing from religious persecution in England and the Irish from the potato crisis. Later, the Bill of Rights, especially with the 1st and 4th Amendments, made minority rights vital to the U.S. constitution. Thus when debating minority rights, one might look first at the U.S. as the country that welcomes the tired, the poor, the “huddled masses yearning


to breather free” as Emma Lazarus’ poem reads on the pedestal of the Statue of Liberty Furthermore, minority rights are important for contemporary arguments. In the aftermath of September 11 the U.S. Congress passed the Patriot Act, a piece of legislation that severely limits civil and minority rights spelled out in the Bill of Rights. This rather worrying development can also be observed in other democratic countries. Recent highly controversial topics in the U.S. Supreme Court are often related to the question of minority rights. Guantanomo is an example. Minority and civil rights also pertain to Great Britain where terrorist suspects can be detained without charge for 28 days, with some MPs arguing for an increase to 42, whereas in the U.S. the current limit is 2 days.

Issue V - spring 2008

VOX – The PPE Journal – spoke to James O’Fallon, the Frank Nash Professor of Law at the University of Oregon. He is qualified as an expert both in theory and in practice on the issue of minority and civil rights. Following a clerkship with the U.S. Court of Appeals for the Ninth Circuit, O’Fallon taught at Richmond and Detroit law schools and was a National Endowment for the Humanities Fellow at Harvard. His scholarly work, including articles on Marbury v. Madison and the Missouri Controversy, Professor focuses on constitutional O’Fallon history and theory, and legal philosophy. VOX: How is the Bill of Rights responsible for restrictions on capping minority rights and in how far do you think that the Bill of Rights is the crucial pillar to a democratic constitution? Also: Are minority rights more important than majority rule? James O’Fallon: It is useful to recall that the Bill of Rights was an add-on to the Constitution. The architects of the original document were crafting a “republican form of government” which included a broadened suffrage in the process for selecting public officials, but was still a few steps removed from what we would call democracy. The architects resisted a bill of rights, claiming that the limits on power of the new national government were

found in the structure of the document, and in the fact that only limited powers were delegated to the new government. However, many of the states during the ratification process objected to the lack of a bill of rights, which was by then a familiar feature of many state constitutions. This was particularly so in Virginia, and James Madison promised that if the Constitution were ratified, it could then be amended to include a bill of rights. Madison was elected to the Congress, and followed through on his promise by proposing the amendments that became the bill of rights. I think it is fair to say that the minority rights most in mind for the supporters of the amendments were those of the wealthy. The Federalists, in particular, were very concerned that this new form of government could slip into “mob rule” where laws favouring the masses would undermine the holdings of the wealthy – for example, laws that gave relief to debtors in hard times, or that substituted paper currency for gold and silver as a means of paying debt. Most of the familiar rights of the Bill of Rights were probably not considered minority rights, but necessary protections of the people against the inevitable corruptions of government. Even with the democratic features of the new government, it was still necessary to insure that the liberties of the people were respected. The written constitution and bill of 29

vox -the periodical of Politics, economics and philosophy

rights was itself an innovation, but it built on a common understanding of the “rights of Englishmen” held under the political understandings that constituted the English Constitution. Rather than ask whether rights are more important than democracy, I think you might consider them as equally important parts of an overall program for political legitimacy that guarantees a voice in the political process, but also puts limits on how much can be put at risk in that process. I prefer to think of a system that treats every person as a full and respected participant, and identifies certain aspects of that personhood as so fundamental that they cannot be affected without extraordinary cause. It is important to keep in mind that the rights provisions of the constitution are not absolute –typically, they impose special burdens of justification on government when it seeks to interfere with them. VOX: Have minority rights fallen off the political radar of almost all western-governments when trying to establish stability in the form of democracy in the rest of the world. Should they not rather concentrate on a functioning judiciary rather than a legislature as their primary goal? Or do they necessarily come together? JF: I am very sceptical of the transplant process. The “rights” approach will not take hold without commitment to the rule of law, and that re30

quires lawmakers, law enforcers and law appliers (judges). There are a lot of people in this country who are not very happy when someone “gets away with” a crime because the officials violated their rights, but the rule of law view is sufficiently embedded in the belief system of our citizenry that their unhappiness does not progress to political action. Thomas Friedman, un-astonishingly, focuses on the Middle East and Saudi Arabia when talking about a lack of acceptance for diversity. However it seems to me that in the Western world minority rights are slowly slipping as well. The scared state starts to turn into an un-reflected watchdog. Certainly the U.S. is not above criticism. But there are some interesting developments that show the importance of a deep commitment to rule of law and individual rights. In Eugene, Oregon, a federal judge recently declared part of the Patriot Act unconstitutional. Her word is not final, but it is an important first step. Recently, the U.S. Supreme Court heard extended arguments on the rights of the Guantanamo detainees, and there is reason to believe that at least some of the administration’s efforts to deny them legal recourse will be struck down. There will always be those who are willing to trade rights for the promise of increased security, but for now, at least, there is still a strong voice for protection of rights.



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"...Because it's the law!"  

In this issue of VOX, our contributors look at the topics surrounding the nature and justification of the law.