THE DIVERSITY AND EVOLUTION OF COMPETITION: AN IDEAL PROPOSED FOR REGULATORY DESIGN by MICHAEL PETER ILG A THESIS SUBMITTED IN PARTIAL FULLFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE STUDIES (Law) THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) April 2008 © Michael Peter Ilg, 2008 ii ABSTRACT This dissertation presents a concept of diversity as an ideal of international economic regulation. The theme of diversity refers to the differentiation of individual competitive strategies. The first advantage of such differentiation is argued to be as a means of stable and adaptive progress; increasing the number of possible techniques with which to meet as yet unforeseen challenges. As the first principle of diversity entails a method for systemic responsiveness, the second principle gives content to this method and states that social goals should serve as the incentives encouraging competitors toward differentiation. The advantage offered by the second principle is that social non-economic goals may be advanced in the present, as individuals attempt new routes to personal reward via the satisfaction of collective objectives that previously may have had little or no economic value. As an ideal of diversity contemplates a method of systemic incentives, rather than mandated outcomes, the location of innovation remains individual competitors. Accordingly, the ideal of diversity is justified and articulated from a basis in individual rights. Diversity is argued to be the optimal set of principles which individuals would select if given the ability to design a new competitive system. In joining a method of differentiation with the added social content of non-economic priority, diversity offers a unique blend of economic efficiency and equity; or of self-interest and concern for the welfare of others. Diversity allows an individual to think of their own pursuit of gain, but also and simultaneously further collective goals by selecting the priorities that should influence competitors toward differentiation. Other’s welfare becomes a route to individual success. The project progresses through three broad conceptual stages. First, international problems of market failure are considered in light of strategies and the economic impulses toward self and system defeating cycles of competition. Second, a redefinition of legal and economic progress is offered to meet conditions of unpredictability, and to arrive at an evolutionary method that encourages constantly competitive variation with which to meet society’s future challenges. Third, an evolutionary approach to international regulation is translated into a priority system of legal rights. iii TABLE OF CONTENTS ABSTRACT…...………………………………………………………………………... ii TABLE OF CONTENTS……………………..……………………………………….. iii LIST OF FIGURES…………………………………..……………………………….. vii ACKNOWLEDGEMENTS……………………………………………………….…. viii INTRODUCTION……………………………………………………………..……….. 1 A. Reconsidering Competitive Individuality…….……….……………………….. 3 B. Reconsidering Outcomes…………………….……....………………………… 4 C. Reconsidering Solutions……………………….………………………………. 5 D. A Regulatory Philosophy of Rights…….…….………………………………. 15 A Note on Scheme of Progression……………………………………………….. 29 CHAPTER ONE…………………..…………………………………………………... 31 MARKET FAILURE THROUGH THE LENS OF LAW AND STRATEGY Introducing Strategic Analysis for International Law…….………...….………..… 33 International Framework……..…………………..….…….……..…………..……. 38 A. Common Resources & Social Divisions….…..….………………….… 38 B. Atmospheric Awareness………………. ….….….…………………… 40 C. Conceptual Examples…………..…………….….……………………. 41 D. Compliance and Consensus…………………..……………………….. 47 Theoretical Framework……………………………………………………………. 50 A. Game Theory……………………………………….….……………….50 B. Nash Equilibrium...……………………………………………………..51 C. Nash Equilibrium Versus Pareto Optimum…………………………….52 D. Game Theory & The Environment……………………………………..54 Paradigm Change……………………..…………………………………………….58 A. Environmental Economics………………….………….……………….58 B. Theories of Change……………………….……………….……………59 C. Solving the Commons Problem?..............................................................60 D. Variations in Game Theory…….…..….……….…………………….....66 E. Systemic Observation……………………………….………………….69 F. Montreal & Kyoto……………...………….………..…………………..70 G. A New Paradigm?....................................................................................72 Decline and Lost Meaning………………………………………………………….73 A. Assumptions & Perception………………………………..…………….73 B. The Minimizing Game……………………………………..……………74 iv Conclusion………………………………………………………………………….75 CHAPTER TWO……………………………………………………………………….77 LEGAL & ECONOMIC EVOLUTION MEETS THE ENCOURAGMENT OF PROGESS Introduction………………………………………………………………………..79 Evolutionary Metaphor Across Disciplines………………………………………..81 Legal Pragmatism…….…………………….…...…………………………………85 Rorty & Pragmatism…………..………..…….……………………………………91 Economic Evolution……………………….………………………………………97 Path Dependence...…………………….…………………………………………100 Biology as Metaphor………………..……………………………………………106 The Individual as Agent of Change………………..……………………………..108 Identifying Points for Non-Convergence…………….…………………………..113 A. Encouraging the Few Out of Convergence…….……………………….116 B. Encouraging the Many Out of Competitive Insecurity…….…………..119 A Method in Search of Direction………………….……………………………...126 CHAPTER THREE…………………………………………………………………...127 EXAMINING THE RIGHT & GOOD IN MODERN CONTEXT Liberal Themes & Systemic Responsiveness …………………………………….128 Divisions in Legal Theory and Political Philosophy……….………..……………132 Teleology………………………………………………………………………….134 A. Aristotle & the Good……….………………………………………….134 B. Maximizing the Good……………………………………………….....137 C. The Good & Market Failure…………………………………………...139 D. Involvement as the Good………………………………………………141 The Social Contract……………………………………………………………….146 A. Individual Protection………………………………………….……….149 B. Individual Possession……………………………………….…………156 C. Individual Rationality………………………………………….……...162 D. Non-Euclidean Knowledge……………………………………………165 E. Autonomy & Subjectivity…………………………………………….170 Conclusion……………………………………………………………..…………172 CHAPTER FOUR……………………………………………………………………..174 DIVERSE INDIVIDUAL CONCERN IN RATIONAL DECISION-MAKING Introducing the Possibility of Variable Rationality…………...……….…………176 Legal Theory & the Imposition of Economic Theory…………………………….177 v Methods of Skepticism……………………………………………………………181 From Normative to Descriptive Challenges………………………………………186 Behavioural Evidence……………………………………………………………..190 Regulating Irrationality…………………….……………………………………...195 The Ultimatum Game & Simultaneous Values…………………………………...201 Conclusion – Open Possibilities…………………………………………………..206 CHAPTER FIVE……………………………………………………………………...208 ABSTRACT CHOICE AS LENS OF SOLUTION FOR COMPETITIVE INSECURITY Abstraction & the Freedom of Interest…………………………………………...208 Rational Choice Reconsidered……………………………………………………210 A. Distilling From Commitment………………………………………....213 Immediacy and Dependent Rationality……….…………………………………..215 Principle & a Competitive Context……………………………………………….216 Conclusion - Abstraction as Relief From Competitive Insecurity………………..222 CHAPTER SIX………………………………………………………………………..223 A PLACE FOR INDIVIDUAL (IM)PERFECTIONS: DIVERSITY AS A THEORY OF EQUITABLE COMPETITION Introduction….……………………………………………………………………225 Self-Interest & Efficiency………………………………………………………...229 A. Markets & Liberty……………………………………………………..230 B. Descriptive Law & Economics………………………………………...233 C. Normative Law & Economics…………………………………………234 D. The Coase Theorem and Normative Law & Economics………………237 E. Coase and the Status Quo Bias………………………………………...240 Self-Interest & Equity …………………………………………………………….243 A. The Liberal Critique of Law & Economics……………………………243 B. Rawls and Equitable Self-Interest……………………………………..245 Self-Interest & Diversity………………………………………………………….251 A. Limited Ends……………………………………..……………………251 B. Individual Potential……………………………..……………………..255 C. Evolution as Metaphor a Model of Diversity….…….……………….259 D. Diversity and Liberal Rights…………………..………………………261 E. Rethinking Insecurity……………………..……………………..……264 Diversity from Abstraction………………………………………………………..267 A. A Conceptual Example of Individual Choice……………..……….….267 B. The Good of Diversity and the Avoidance of Intrusion…..…………..270 Conclusion…………………………………………………………………………272 vi CHAPTER SEVEN……………………………………………………………………275 STATES, STRATEGY AND DIVERSITY: LEGAL THEORY FOR THE INTERNATIONAL SYSTEM Introduction – International Legal Theory in View of Diversity………………....276 A Rapprochment Between Disciplines……………………………………………278 A. An Extension & Selection of Economic Methods…….………………283 B. Types of Coordination………………………………………….……..285 C. Public Goods and Common Resources………………………………..288 Rules, Strategies, and the Alteration of Interest…………………………………..289 A. Transaction Costs……………….……………………………………..289 B. Dependent Strategies…………….……………………………………291 C. Cognitivism…………...….……………………………………………294 A Normative Theory of International Law……………………………………..…296 A. International Law and Normative Value………………………………297 B. Procedural Incentives………………………………………………….299 C. Diversity……………………………………….………………………301 D. Diversity and Differentiation of Success………………………………304 E. Defining the Diversity of Success……………………………………..307 Conclusion………………………………………………………………………...315 CONCLUSION………………………………………………………………………..316 A. Concluding Thoughts on Legal Application…………………………….……316 B. Concluding Overview and Object…………………………………………….321 REFERENCES………………………………………………………………………...330 vii LIST OF FIGURES Figure 1.1 A Representation of Commons Competition…………………………..…55 Figure 1.2 A Representation of Commons Competition – The Second Round………67 viii ACKNOWLEDGEMENTS I would first like to express my gratitude to my supervisor, Dr. Janis Sarra, for her helpful guidance in the development of both this dissertation, and my academic career. I would also like to thank the members of my supervisory committee: Professors Catherine Dauvergne; Ronald Davis; Shi-Ling Hsu; and Margaret Schabas. The insightful comments the committee members provided at various stages of the process was very much appreciated. I respect greatly the academic voluntarism that each of the above individuals has displayed in contributing to this project, and I can only hope that their advice will continue to aid my future work as it has this dissertation. Finally, and most essentially, I wish to thank my partner, Sumana Dasgupta. This dissertation would not have been possible without her support, the extent of which is beyond description. INTRODUCTION I. The proposed ideal of diversity offers a potential improvement to social problems that are international in scope and yet exacerbated by a lack of international cooperation. My object in this introduction is to sketch a theory of ideal international economic regulation, in which incentive is given for competition to: 1) produce a more varied set of techniques and strategies in order to meet future, as yet unrealized problems, and; 2) simultaneously incorporate social, non- economic goals in a manner that ameliorates problems of the present. As this project contemplates an ideal for influencing the regulation of international competition, the promotion of a theory of diversity is not intended to denote descriptive explanation in a scientific sense, but rather indicate an aspirational, normative idea. The first and primary principle of a system of diversity is that long-term social benefit may be furthered through an indeterminate, or even modest, view of progress. Indeterminacy entails the recognition that future problems of a physical or scientific nature may not easily, if ever, be predicted in a consensual manner. Unknown external impacts in the future will react unpredictably with the techniques and strategies of individual competitors, favouring some unequally and in ways dissimilar to present conditions. The acknowledgement of indeterminacy places the responsibility for solutions upon individuals, with innovations arrived at through competition. A socially optimal approach to the regulation of competition would seek to increase the number of individual risks taken on new techniques and strategies, so that there is the greatest possible variation of potential solutions available to meet changing future impact. The function of individuality toward difference is given greater importance within the method of diversity than the separate, or procedurally neutral, standing of each individual competitor. 2 While differentiation is the primary principle of diversity, it remains that the theory can and should accommodate added social content rather than encourage difference without direction. The second principle of diversity offers that non-economic social value be introduced as reward targets in competition. Social concerns are accordingly introduced into competition so as to give incentive toward differentiation while simultaneously including wider achievements into the outcome of competition. A theory of diversity may be justified from an ideal start-point to international competition, in which a membership comes together to orchestrate the incentives for regulation, and do so from a position of abstraction. Abstraction serves to separate individuals from knowledge of their circumstances and attributes, as well as permitting for a more long-term view of social benefit. The most rational choice perspective from abstraction is argued to arise from imagining the ideal qualities of the winner, who one will in all probability lose out to. In the simplest terms, individuals would optimally design their system of regulatory incentive so as to reward the competitor who innovated in a manner that benefited others en route to their attempts at personal gain. The appeal of such a choice perspective is that it accords well with a blended, or nuanced manifestation of individual self-interest: containing at once an individualistic hope of greater rewards, of topping a pyramid of economic outcomes; while a more conservative and realistic assessment on the likelihood of joining the less successful majority leads individuals to favour incentives which promote an increase to the welfare of the wider society at large. I hope to demonstrate ultimately that a theory of diversity represents an appealing vision of open-ended progress, and, when combined with a view to the qualities of an ideal winner, 3 yields a more optimal and equitable system of private regulation. This introduction is a preliminary step in this regard. II. A. Reconsidering Competitive Individuality A theory of international regulation which proposes a move from the status-quo toward a more ideal configuration must confront the concept of individuality; of separate actors who pursue with some intent their own self-interest. Most obviously, individuality characterizes the current international system comprised of legally autonomous and sovereign states. Sovereignty entails that individual states must be enticed into agreement, with a view to their own self- interest, and that subsequent negotiation toward an agreement’s conclusion would be informed by this same self-interest. Also and unsurprisingly, individuality is also the basis of the economic and political themes, in market competition and liberal democracy respectively, which are ascendant internationally. The mere fact of current status quo affairs, however, should not limit or prefigure the possibility of individuality in international competition. Under a system of diversity, individuality is to be a means of meeting social problems, but international regulation is to be designed so as to encourage wider considerations than presently. Given greater latitude of choice under diversity’s rule design, individuals would be permitted to manifest both wider possibilities in their own calculations of success, in the potential ways to rewarded outcome, and in their assessment of value, by deciding on rules that may favour issues and other individuals who are beyond their immediate selves. 4 Individuality receives reconsideration within a theory of diversity in three major and related areas: beginning and progressing from problem identification; through to proposed method for solutions, and; concluding with a system of rights that extends out of and supports the method of solution. In the first instance, individuality becomes the means of problem recognition, of viewing the physical consequences of economic competition, through consideration of the strategy and outcomes of individual competitors to determine the extent of needed institutional and regulatory change. In the second stage, individuality assumes its essential role within diversity, of providing a base response to unknown future difficulties in the differentiation of competition and the utmost of individual attempts at innovation. The third element of diversity involves giving the above solution perspective the added and needed assurance of a basis in individual rights; of justification for a future minded system in individual choice. In sum, the following sketch of diversity uses the concept of individuality to move through a different valuation of systemic failure, then to arrive at a future oriented system of viewing legal and economic progress, and finally to conclude in a political philosophy of rights for international regulation. III. B. Reconsidering Outcomes A theory of diversity begins conceptually, and by way of first inspiration, in the face of a certain interconnectedness of impact. Though much commentary has been made on international interconnected under the well-worn rubric of globalization – with a closer world portrayed in the growth of information technology and economic liberalization – the focus here is first upon the complexity of economic competition as demonstrated through its impact upon the physical 5 world. This phenomenon forms a simple chain, in which individual economic output impacts upon the external environment and which in turn have a harmful impact upon individuals in both physical and economic terms. The double detriment of physical and economic loss finds a prominent example in the issue of global warming and climate change; or in any circumstance which similarly corresponds with the tragedy of the commons. In the tragedy of the commons metaphor, the economic strategy of each individual to pollute produces a physical deterioration in the commonly shared resource, as well as an economic loss for each individual when all similar strategies to pollute are aggregated. The metaphor of the tragedy of commons may be seen as supporting the principle of private property, turning metaphor to parable, for it is the unregulated nature of the commons that leads self-interested individuals to shift as much as possible of their costs unto the resource that is shared; in effect having each neighbour share in the output or pollution costs of a production that only the polluter enjoys the gains from. Were each to have defined property stake, or were there an institution that could tax outputs from the use of property, the incentive to despoil physical space for economic gain would be lessened or eliminated outright. Given the diffuse movement of pollution across the national boundaries of sovereign states, and through it the difficulty of placing a restraint or cost on output, the tragedy of the commons has obvious relation to global environmental issues. This tendency renders each state a collection of individual outputs with no economic accountability or incentive for restraint, as the common resource impacted upon is atmospheric and transnational. As with the tragedy of the commons metaphor, the international system enables individuals to shift the expenses of dealing with pollution unto the wider neighbourhood of competitors. 6 Though the tragedy of commons metaphor points to institutional governance which may both grant property rights and constrain their usage, on the international stage this points initially to the revolutionary step of one world government. While such a goal should not be rejected theoretically simply because of its seeming practical and present impossibility, it is important to observe that such an extreme and revolutionary step may not be the only relevant approach to addressing the tragedy of the commons type situations on the international level. First, many specialists in the subject of common resources have noted that informal social norms have succeeded in certain cases of enforcing restraint and individual accountability even in the absence of institutional order. Unfortunately, these cases of informal regulatory success are very limited in number, and further limited to tiny and personally connected communities which may have little prescriptive relevance for the entire international system. Second, the international system, while anarchic and without overarching authority, has witnessed countless examples of international cooperation and agreement, which increasingly take a legalistic form. It is easily demonstrated that states have pursued their interests, and perhaps have had their basic interests altered, through cooperation with other and competing states. Therefore, if influential international legal regimes and organizations, such as the World Trade Organization and the European Union, may flourish, it becomes conceivable to question the development of solutions to common resource problems without absolute authority. In essence, it should be possible to juxtapose the above examples of coordination; of informal solutions in the absence absolute authority as well as the demonstrated possibility of international agreement. The focus of observation is then to be placed upon the ability of international coordination to meet the ideal of informal solutions for restraint as witnessed in small scale 7 examples. Are international actors, and their agreements, learning in the face of demonstrated harm so as to adapt toward more effective and responsive regulation? Uniquely, evaluating cooperation’s effective move to informal solutions introduces a method of observation that measures a current system’s adaptability against physical impact. While the scale of a dramatic problem may point necessarily to a dramatic, or even revolutionary, change such as a single world government, it nevertheless remains that questions of response and impact may be evaluated in rational, even scientific terms. Scientific knowledge of human economic impact upon the physical world, and then through it upon individual concerns, may provide for an essential marking of needed response, and the window of evaluation for how well international competitors are cooperating toward a solution. The potential of systemic evaluation begins with, and is made possible by, a modern convergence of complexity, in which the increasing complexity of human economic output – of scale, participation rates, and techniques – is met by a greater awareness of this complexity as it interacts with the natural world and the individuals who receive its effects. Such observations may take the form of improved scientific observation, or even a layperson’s observation of change in their everyday experience. And while the first and main example used in this dissertation involves global warming and climate change, a focus upon physical and economic outcomes would include any economic practices which are found to produce illness in a given population that has no recourse upon the party of causation. Indeed, the perspective extends by definition to any social problem that is caused in large part by a lack of governance, which allows for exported costs, widely defined, to be visited upon another without recourse or proper accounting of harm. 8 Were the focus of observation to be solely scientific this would, however, introduce a potentially insurmountable obstacle of certainty. Even supposing a preponderance of scientific writing in support of situations of grave physical deterioration and its resultant harm, there would always seem to be room for a glimmer of doubt as to causation and eventual consequence. Accordingly, physical effect must be joined with a view to economic causation and the rational pursuit of self-interest that leads to the physical impact. It must be remembered that the physical world is the intermediate stage, the conduit of harm connecting individual economic activity with economic and physical detriment. Were the environment infinitely absorptive, there would be no tragedy of the commons. The focus of evaluation should, therefore, be upon the rational strategies engendered by the competitive situation and how these strategies are altered potentially by international accord. Scientific observation may mark issues of concern, and give account to the scale of the physical problem, but the systemic analysis should transition to allow for a more consistent and emphatic view of economic detriment. For instance, the tragedy of commons is essentially an instance of extreme market failure, in which the most rational and self-interested strategy for each individual member – to offload their costs unto a common resource whose detriment is shared by all – combines with the same rational choice for all others. Unfortunately, when these rational and individual strategies that lead one to cheat upon the whole are aggregated, when each rational competitor chooses likewise, the result is that each competitor ends up worse off. A purely scientific view of economic effect might concentrate upon the denigrated environment, in the lessened fish population in a pond and its multi-layered ecological effect for example, while a view to economic causation would reveal that that strategy to pollute the pond in the process of fishing saves expense. Market failure is seen to ensue when all the strategies to 9 reduce expense are aggregated, with the result that less fish are available for every competitor or individual who shares the common pond resource. Thus the strategy that is perfectly and economically rational in isolation becomes irrational, inefficient, or suboptimal when each competitor assumes the same strategy. Scientific observation should mark a moment of first concern, of when potentially disastrous impact is first witnessed and discussed, to then pass to a strategic view of causation and instigation. Essentially, a strategic view to systemic adaptability concentrates upon the dangerous competitive tendency of causation, which is here given the label of competitive insecurity. The problem of physical impact and loss is caused by and exacerbated by the central tendency of competitive insecurity – when individuals must take short-term strategies, which they may know to be of long-term detriment to both themselves and everyone else – for fear that their competitors will gain advantage from doing so first. This obviously becomes a self- fulfilling prophecy, making it rational for each to predict and then take the most short-sighted yet immediately beneficial strategy. This introduces a notable quality to competitive insecurity, in which the individual freedom of choice is constricted by concerns of individual competitive survival. Significant themes that underlie this dissertation develop from and upon this central concept of competitive insecurity. Competitive insecurity is at first the problematic tendency to be measured, with growing instances of its harm and suboptimal outcomes used to indicate systemic response. In doing so, and in addition, competitive insecurity endorses a view to individual strategies, and shifts the problem focus from pure physical problems to one of suboptimal competition. Consequently, the problem to be addressed also shifts from physical degradation to that of alleviating competitive insecurity. 10 IV. C. Reconsidering Solutions As the core problem to be addressed is competitive insecurity, the solution is argued to lie in leading individuals out of situations of forced and uniform choice. The proposed method of solution lies in embracing individuality in a very real sense of difference: of allowing, and indeed encouraging, individuals to express themselves through competition in different ways from one another. On the all important systemic level, the proposed theory embraces the notion that the best results occur when individual competitive activity as is very as possible, so as to produce the greatest possible number of techniques and strategies to serve as solutions to future and unforeseen problems. Examples from the previous heading on reconsidering outcomes may help justify a future looking perspective; a perspective that is reconciled to the interconnectedness of impact, and the unpredictable future situations that may arise from the intertwining of economic strategies with the physical environment that in turn revisits impact upon individuals. Assuming that previous generations and groups of individual competitors do not plan to have the consequences of their behaviour balloon in effect to the detriment of future generations, then one must account for the unforeseeable nature of economic impact, and the need for an adaptable, response system of competitive regulation. The fact of unpredictability should lead one to the embrace of indeterminacy and modesty: an approach that favours no one strategy or technique as providing all the answers, or of having achieved perfection above others in finality. Exception is taken to the widespread philosophical and theoretical school of pragmatism, which may be seen to influence, or at least coincide with, so much of legal and economic theory. Pragmatism holds generally that there is 11 no one absolute truth possible, and that accepted knowledge and social value is but an evolving social construction of what works best as accepted by the majority in present circumstances. While the above recognition of evolution is appealing partially, pragmatism’s neutral view to outcomes is problematic and ultimately an obstacle of further evolution, competitive, social, or otherwise. Legal and economic evolution under pragmatism assumes that the next and new idea, if any, will win out. This at once underappreciates the extent to which political and economic organization must inevitably favour the status quo, or the last winner, adding additional weight against the freedom of new solutions emerging. More importantly, pragmatism suffers from a key logical shortcoming: if individuals are (rightly) to be the location of individual of innovation, then taking a neutral position as to the competition of techniques, within a ‘marketplace of ideas,’ does nothing to support the ideal which is supposedly at the heart of the philosophy, the evolution of useful ideas. A neutral view to progress and the competition of ideas is in effect an endorsement of the status quo, for it demands that new ideas not only win over the public, but all the governance instruments that are founded upon status quo assumptions that skew public perception toward it. When an economic, and especially legal, theory claims fidelity to pragmatism and its supposedly flexible basis in the marketplace of ideas, it is of questionable meaning when there is no mandated institutional means for encouraging the very individuality that is the only means of producing competing and contrary ideas. The theory of path dependence, a variant strand in evolutionary biology and economic theory, proposes that once effective techniques may win out because of particular and time limited conditions, thereby to gain a virtual monopoly on procedure despite evolving need or efficiency. For once the previous limitations or conditions are altered, it may no longer be found 12 that the successful practice is as useful in meeting present or future demands. An idea or technique that was discarded long ago, or more probably never considered, may be more adept at handling a present situation, or a wider array of circumstances; yet the built up infrastructure around the previous technique makes this space of improvement impossible. For example, the colonial trail cut by fur traders that swerved around a wolves den, to later become a worn path, a frequented road, and eventually a paved highway, is an inefficient route between cities A and B when the threat of wolves has long since passed, but the costs of undoing past developments outweigh the gains of reconstructing as if the problem of moving between and A and B were considered anew and for the first time. Legal and economic theory, to the extent that they represent and influence policymakers and decision-makers, must be seen as part of the infrastructure impeding more optimal solutions for the present and future. To continue with the path metaphor of above, pragmatism is neutral as to which ideas win out, and therefore sits in wait for an individual idea to emerge of such magnitude that it overcomes not only all personal predilections for the same, but also the entirety of institutional build-up around the status quo. Incremental change may be easily accepted by pragmatism, admittedly. But the belated wait for the acceptance of a monumental idea of revolutionary effect means that pragmatist followers may be a source of conservatism over dynamism, which they can only be convinced out of once the majority of society has already passed them by. If individuality is the source of innovation within the ‘marketplace of ideas,’ which pragmatists support theoretically, then institutions of governance should be directed with all effort to ensuring that individuals have the utmost ability to offer their own and potentially monumental ideas. Toward this end, a neutral stance as to content and outcomes is admirable, while a neutral stance as to the ability of attempt is both harmful and hypocritical. 13 The means of alleviating competitive insecurity (and the means of effecting monumental change to convince pragmatists of usefulness) is found in individual creativity. Individual innovation and their authorship of new ideas is the primary means of achieving a new ideal of usefulness; the paradigm adopted next because it best meets new and novel demands. Recalling the sense of unpredictably from the above section, in which competitive strategies and the physical world interconnect with increasing complexity and difficulty, encouraging individuality becomes an essential way out the causation impulse of competitive insecurity. Individuality, in a competitive sense, is thus the means of achieving the best solution or technique with which to answer unforeseen problems visited upon the present, as dictated by events, and the means of ensuring that unforeseen problems of the future are similarly provided for in the variation of individual innovation. Calling for an increased diversity of strategies, especially in response to situations of suboptimality and competitive insecurity, may give rise to confusion on the recognition of difference, or contra uniformity. For the sake of clarity, it should be stated that the observation of variation within a modern consumer marketplace options does not necessarily equal a finding of diversity. For instance, consumers of a certain product may face a wide array of choices both by way of company origins, of labelling, packaging, marketing, etc. This variation of options does not reflect diversity if there is not a corresponding reflection of strategy options for the competitors who produce and then offer various products. When the basic strategy of all individual actors, whether of state, firm, or person, within a competitive field is uniform, such as to pollute a common resource to save costs, then diversity is needed to identify difference in this single and underlying assessment of competitive action. In sum, strategic diversity refers to an 14 alteration to the behind the consumer marketplace facade of what is advertised, to inquire as how competitors assess their best approach in providing their services into this marketplace. The concentration upon individual innovation speaks of a refined view to legal and economic progress, in which a stance toward unknown problems take precedence over problems solved previously and in the past, however recent. An evolutionary inspiration to the theory on offer may be explained in no farther a source than the colloquial saying of ‘nature loves diversity.’ To continue the brief and simple analogy of biological evolution further, it is the environment which selects out from a field of unpredictable genetic variation that which will be of greater success in survival and of reproduction. Imagine the first giraffe born with an oddly higher neck than its counterparts, and the advantage this robust giraffe would hand down genetically in the ability of reaching high placed foliage on African plains. Two unpredictable screens collapse upon one another, so that further progress is based upon the terms set by the environment, but are to be answered or not by the genetic variations offered up by individuals and species. The ideal of nature loves diversity may be translated into regulatory ideal quite simply: individual competition is to serve as genetic variation, offering up innovation unpredictably and in various forms; while regulation is to serve as the environment that encourages variation through reward. At this point the biological analogy must end, however, for the object of a theory of diversity is not to select out success, nor define economic outcomes. The market and the function individual choice is to assume the role of environmental selection, as a theory of diversity remains merely the method for ensuring that this market selection is made from the widest possible range of options. 15 The limitation placed upon diversity is one of consistency – for if individuals are to serve future and unknown objectives, the system itself cannot favour certain ends above others, as this would lead to the same type of status quo bias that detracts from pragmatism and neutral liberalism. Neutrality in this instance is to be taken in another direction, for governance shall take an active role in promoting private behaviour along the minimal lines of requiring that individuals should be encouraged to compete differently from one another. Though this active role of governance is the antithesis of traditional liberal and economic individualism, it is restrained, and value neutral – that is, it is not the state directed outcomes or valuations of activity associated with socialism. The goal of a system of diversity is allowing for wider consideration, contemplation of viable attempts at success. Though they might fail, the greater the number of attempts being made at novelty are thought to be to society’s advantage. With the aim of encouraging competitive variation, a system of diversity would promote the widest and constantly renewed potentials of strategic attempt. As neutrality limits the role of a theory of diversity in terms of selection, with neutrality paramount and excluding institutional selection of outcomes, so too does it limit the scope of reward offered to promote this variation. Quite simply, were a reward too appealing, or a straightforward gain, every competitor would immediately adopt their strategies accordingly. This may favour a mandated policy, and be favoured by those who espouse discrete issues, but the object of a theory of diversity is to make competition work toward unforeseen issues – that which is unknown and therefore probably not of political concern at the moment. To this end, it would be hardly innovative to grant a systemic incentive such that all arrange around a new and uniform strategy. An incentive change under diversity must hold out a degree and measure of risk, otherwise all would immediately adopt their strategies to a new accumulation point and thereby 16 defeat the purpose of differentiation. If differentiation is to have the added systemic benefit of potential responsiveness, then different paths must be taken from the status quo. Incentives are to be structured so that the previously impossible becomes possible; but just barely so. To make gains from the added latitude of diversity style rules and incentives requires individual ingenuity and innovation. Diversity creates new space for attempts, but a gamble on individual attributes and reception must still underlie the proposed system, ensuring that new boundaries are pushed with the pressure of both success and failure. V. D. A Regulatory Philosophy of Rights A theory of diversity is centred upon a method of differentiation, but it may and should be more. Diversity should receive and incorporate social content to prevent it from being a mechanism of differentiation without direction; of economic purpose without moral and social value. The introduction of social content to serve as the means for defining the incentives toward differentiation requires a democratic element for diversity. As diversity is a principled system, in which a method of differentiation takes precedence over current assumptions, its extension into political and legal theory should be similarly principled and justifiable from a start position that is to carry forward independent of social redefinition and political mood. With a concentration upon the promotion of individuality, to ease competitive insecurity and promote future response, the basis of diversity in political organization should obviously be made upon individual rights. A distinction will need to be drawn, however, between the individualism of traditional liberal democracy, of Lockean liberalism and its classical economic counterparts, and individual rights under diversity. Neutrality as to individual beliefs and 17 concerns is of course maintained, but under diversity governance would not be neutral as to the ends of individual behaviour: meaning some activities will favoured over others. However, the favoured ends of individuals are unspecified, and as the object of diversity is difference, the extent of governance involvement is to encourage that liberty is not a private case of individuals being free to behave and compete in the exact same manner as everyone else. Perhaps in this way a theory of diversity transitions in philosophical proximity from liberal individualism toward a form of teleology, or communitarianism, which sees democratic group concern take priority over individuals rights. In truth, diversity uses individual rights as but a function of ensuring future welfare of society, and of wider group concern. Yet, as individuality is the key function and expression needed for a system of diversity, whose method will not allow for an infringement upon its essential element of individual innovation, it may be said that a blended liberal approach is attempted. Offering a philosophy of rights premised upon diversity serves at once to complete the method of variation with important elements of social content, and to justify the theory itself from a position of individual choice. The method of diversity proposes a solution to the competitive insecurity problems of choice. Inspired by the work of John Rawls, the legal theory of diversity proposes that the method of diversity would be chosen as the ideal system of competitive organization by individuals free to choose without the burden of circumstance. VI. The use of individual rights to derive priorities of economic organization received its most well-known modern consideration in the work of John Rawls. While Rawls’s most famous work, A Theory of Justice, explicitly avoided thoughts on individual strategies within 18 competition, and instead offered a theory of post-competition distribution of society’s resources, two major procedural insights to competition may be gleaned nevertheless. A theory of diversity is developed with two main procedural concepts borrowed from Rawls: 1) abstraction, and; 2) self-interested selection in uncertainty. Rawls’s theory is argued for through something of a thought experiment, in which individuals face a hypothetical creation of their new political society from a vantage of ignorance as to their past abilities and their future economic potential. Within this negotiation period over their new society, the original position, individuals who are blind to their personal circumstances, behind a ‘veil of ignorance,’ have to agree upon political principles. In regard to key distributional questions, Rawls argues that self-interested individuals would vote to maxmin – have the bottommost position maximized or raised as first priority, for fear that they would find themselves occupying society’s bottom rung once the veil of ignorance has been lifted. Inspired by Kantian individualism, inviolable and universal beyond social definition, Rawls argued that individuals had no moral claim to their talents and individual advantages. Group agreement in abstraction serves to sever self-interested individuals from their circumstances so as to make their agreement abstract, or removed from the prejudice of possessing features or resources prior to regulatory design. Turning once again to thoughts on international coordination, abstraction would serve a similarly essential role in removing the myriad advantages and differences of circumstance that prefigure negotiating objectives. As with Rawls’ principles of justice, an international system of competition should be premised upon principles that could be justified as reasonable and fair from a point of abstraction and the freedom from situation. 19 A further benefit available under abstraction is the scope of how individual choice manifests itself. While the above usage of abstraction is concerned with the content informing self-interested choice, namely individual circumstance, it remains that abstraction may also point to priorities of selection that are not self-interested in nature. Behavourial evidence, gathered from abstract experiments such as the Ultimatum game, indicates that descriptive failures in the economic assumption that individuals are rational maximizers of their self-interest are not simply cognitive quirks, but may instead be said to result from the greater concern for systemic fairness in certain contexts. More to the point, is the privileged theoretical role ascribed to abstraction by scholars such as Amartya Sen, who note the central quality of abstraction in permitting for a relief from relentless self-interest. Abstraction, then, is seen to provide for the opportunity to display individual choice priorities apart from self-interest, whether it be fairness, or for a more altruistic concern for others, including an environment suitable, viable for future generations. The second feature of abstraction argued for here involves a wider choice in value potential, and may be seen to add to the feature of self-interest in uncertainty. Rawls’s thought experiment presents an alternative manifestation of self-interest to that commonly found in present economic society. Self-interested individuals are rendered cautious by the uncertainty of their future and actual positions in the society they are designing, and are thus made indirectly considerate of others who may equally fill the same positions contemplated. Importantly, however, Rawls merely altered the process of self-interest, he did not allow for alternative priorities in individual choice. It is Rawls’s ingenious decision structure that points toward redistribution, not the individuals themselves. A theory of diversity uses a fuller view from abstraction to achieve a truly alternative and coexistent conception of individual choice from and between self-interest and other social value. 20 VII. Beginning with a hypothetical start to economic organization in abstraction, the question remains of how abstracted individuals would choose the principles for their new competitive system of regulation. Unlike Rawls’s conservative choosers whose self-interest leads to an assurance for the safest bottom-most position, self-interest is argued here to likely and reasonably lead to an alternative view of success, with individuality in ascendance but not the exclusive value. Individuals would likely manifest a more optimistic, or even gambling, assessment of their chances for success, and the rewards due to it. Even absent information as to their actual capacities, individuals are bound to favour a greater appreciation for success, and the rewards that should accompany it, regardless of their individual achievement. A respect for success is independent, even if at times grudging, and is more persuasive than the resentment features of making success serve only those worst off. This means both a skew toward a reward system for individuals who succeed to the narrow pyramid top of competition, unlike Rawls dominating bottom, and a principled encouragement of the space and potential needed for individual attempts at success. Individual success alone would hardly require a principled regulatory basis beyond the minimalism of libertarianism and laissez faire capitalism, but the matter becomes more interesting and nuanced when the alternative expression of individual choice is introduced into the equation. Although conservative thoughts on feared for individual failure should not come to dominate a system of organization, it is reasonable and rational that realistic alternatives to outright success are contemplated. Therefore, as the first impulse of our hypothetical choosers would be to imagine themselves as the winners of future economic competition, the second impulse no doubt would be contemplate the situation should they not win. Now it must be 21 stressed that ‘not win’ is different from lose. Whereas lose denotes the bottommost position of competitive result or capacities, the notion of not win is more general, meaning that the individual is simply included in the great bulk of others who do not reach some pinnacle of success. Not win, then, entails a consideration of what it is to be a member of society’s middle mass or majority, neither top nor bottom, but simply the vast majority who is other than the winner. The thought of not win has important implications for the principles of organization, for it extends from the same individual in an almost simultaneous manner, as the chooser contemplates both potential winner and group. There is to be no one position priority or dominance as under Rawls, but rather a fuller consideration on the qualities of an ideal winner in economic competition. The ideal and rational selection question asked by an abstract chooser may be seen as a variation of the following: “I would like to win, but assuming I do not, what of the person who I lose out to?” Such a question maintains a self-interested vision of individual success, but may also factor in the vantage of the middle position group occupant. The point of such a question is essentially, “assuming that I do not win myself, what are the qualities of a winner that I would most willingly lose out to?” Note that the question does not equal “how do I benefit most from the winner?”, which would equate Rawls’s maxmin position. Such a resentful position is both contrary to treating individuals as ends in themselves, and is of course precluded by individuals’ initial impulse to favour success as quality itself independent of actual attributes. The ideal answer to the question on the qualities of competition’s future winner(s) would be that it is preferable to have success rewarded in such a way that social goals are achieved en route to the winner’s personal gain. 22 Asking on the qualities of an eventual winner does make the winner serve indirectly the widest group benefit, but it does so in a sense wider than a mere consideration of the choosers feared future position. Therefore, asking on the qualities of the individual winner contains a measure of self-interest, by furthering the middle group benefit of which the chooser will by probability join, but it is not tied completely to the individual’s feared position. By rendering the wider group the beneficiary, the chooser blends probable self-interest with other regarding concern, and a measure of altruism that is available under abstraction. Indeed, abstraction allows for a unique opportunity to simultaneously imagine success and define the attributes of the faceless winner who will most likely win out over the chooser. If the first instance of a chooser’s thought is occupied with winning, more reasoned consideration will place the chooser in the other and wider group. Faced with the imagined prospect of another’s success, a self-interested chooser who simultaneously contains impulses toward fairness or even altruism would conclude reasonably that a competition’s winner should at least achieve something worthwhile to others. Put in the language of strategy, the imagined winner should preferably be one who has raced to the top rather than bottom; one who has achieved gains and advances that benefit others rather than simply one who has most efficiently offloaded costs unto third parties. VIII. The ideal choice found in abstraction, which speaks to individuality and qualities of an unknown winner, remains to be translated into systemic principle. A theory of diversity is offered as the ideal response to ideal choice. A system of diversity would contain three broad principles, or components of: 1) an evolutionary and outcome neutral system; 2) in which social 23 goals are to be the means of differentiation, and; 3) construed so as to further and favour an assumption that individuals require a certain autonomy within which to be able to offer up new attempts and techniques. The first element or principle of diversity connects with evolutionary biology in the recognition that systemic selection, by the market in this case, remains ultimately unpredictable. It is unknown how genetic variations occur in the natural world so that the environment will favour one genetic variation over another. After the fact it may be obvious that longer neck giraffe offspring will have an advantage in feeding off the high foliage of the Savanna, but it remains uncertain as to what drives such genetic variations in the first place. The genetic aspect of competition may be equated with individual ideas, while the market may be thought of as the environment selecting out for success. The market may be influenced as to the selection of individual strategies, but the individual level of variation should remain independent of social design. Individuality is thus paramount in such an evolutionary system, for it assumes that uniqueness and variation will occur best from the expression of individuality. The evolutionary regulation system of diversity is value neutral as to the emergence of techniques or solutions, and instead focuses upon the environmental, market forces that encourage individual attention. A system of diversity may give democratic weight and advantage to alleviating certain social problems as a means to individual success, but the system remains inherently neutral as to how these incentives are incorporated into future successful strategies and outcomes. New and novel ideas must emerge from individuality, with a system of diversity altering reward structures so that tree tops are considered a viable means of sustenance, for instance. How longer necks evolve to take advantage of this previously untouched resource, if at all, remains a matter for individual creativity in competition. 24 The second principle of diversity moves on from the realization of the market as a social environment. While state or regulatory solutions should not be imposed upon a group of competitors, it is nonetheless open to influence the environment that selects out for success. If individuality and the creativity of competitive attempts are to be the motor of economic and social gain, what is needed is a mechanism for encouraging strategies away from the minimal baseline of sameness often witnessed in status-quo competition. Social goals provide the means for individual differentiation by establishing alternative paths to conceiving, achieving success. In terms of strategic thinking, instances of competitive insecurity display a lack of options, a minimal singularity of strategy, which should be alleviated with alternate routes of competitive devise. Social goals, therefore, provide an additional option within individual strategy, an alternative route to success which is meant to trigger further and unforeseen creative attempts. The third principle is meant to qualify the second principle of social incentive within the paramount priority of individuality. Accordingly, all usage of social goods as the means to differentiation should be interpreted in light of a view to individuality and the potential for each to make a contribution to society’s unknown and unpredictable future success. Simply, the furtherance of individual autonomy should rank higher than, and influence, other social goals of incentive. The principles of diversity may be furthered illustrated and clarified with an example of hypothetical application. Imagine that an ideal system designer is summoned to institute the principles of diversity in accordance with the ideal choice witnessed in abstraction. Beginning with the address of choice in abstraction, the designer might define the general scheme of priority numerically and as follows: 25 A (A2) B (B2) C (C2) 7 (0) 6 (2) 5 (2) The labels A, B, C, refer to three competitors, while the corresponding number below represents their individual gain in round one, before the prearranged principles of social goal and concern have been incorporated. The labels of A(2)… refer to the practices of the competitors which have impacted upon a prearranged subject area of concern, such as the environment. In the most straightforward manner, the administrative object would then be to incorporate the secondary benefits into each actor’s individual result. In this simple example it would enough to conclude that B and C should have their individual results (through taxation relief perhaps) include the added benefit of two units. The result prior to social priority, the non-bracketed values, would find A the most successful. With principle incorporated, the bracketed values, it would be B who is most successful. The practices of B are therefore to be the most rewarded strategy, conceivably altering the conceptions of other competitors who will respond with renewed assumptions on what is successful. And while the above numerical example corresponds with the ‘qualities of the winner’ approach indicated by ideal choice, it would be the duty of the designer to envision a wider competitive system that builds from these impulses into the greater principles of diversity. First, an evolutionary assumption of unpredictable success is established through an economic measure such as taxation, or trade tariff, which will act as the reward for various strategies. For present purposes let us assume a universal tax, or tariff (the value T), upon the goods exported from each member country, or ‘individual.’ Second, social goals (SG) are to make up the rewards that encourage differentiation, taken here as a group of labour standards, environmental degradation, and education (L, D, and E 26 respectively). Notably, present here is a mix of a concerns, both for purposes of social advantage and, more importantly, for the opportunity of individual attempts at success. The designer would accordingly devise an indexed system of economic reward, in which the satisfaction of prearranged social priorities, with the three areas above as example, would lead to preference in economic treatment. In keeping with the third principle of diversity, principles which encourage individual autonomy are to be furthered especially, and in this case could be seen to favour the lessening of environmental degradation (D). The consequence of social goods upon a competitor’s standing may be symbolized by the value of C. The designer’s simple development from the ideal choice matrix displayed above may take the following form: C = T x SG ratio where SG ratio = % gain in L + D(x 2) + E The point of moving between the simple examples above is to note the introduction of multiple concerns for multiple rewards. An indexed system of prearranged reward offers the opportunity for a widely improved differentiation of viable strategies. Moreover, an adequately designed system promises equal opportunity for each to at least envision success. Note the above scheme example and imagine an economically developed and less developed state facing competition: while the developed state may be assumed to have immediate advantages in the form of an educated society (E) along with stricter labour standards and enforcement (L), it is the less developed country that has an equal advantage in having much less of an impact upon others (D). The future effect upon state and individual strategy is imagined easily enough, for either developed or less developed state may seek to gain economic advantages for its individuals and industries (T) by improvements in areas of weakness rather than exacerbating past and current 27 problem areas. The less developed may wish to maintain some environmental advantage, which now translates into economic gain, just as the developed state would have renewed incentive to lessen their environmental competitive disadvantage. So while the important first and second principles of diversity, of evolutionary system and social reward, set the structure of competition, it is the essential ingredient of autonomy and individual potential which allows for the ideal that each individual actor will have to begin from current positions to seek reward. The ideal system of diversity, therefore, allows for creativity to compete in a regulatory first instance, in which present circumstances are accounted for but not favoured in the way forward. IX. The theory of diversity sketched above is intended to blend conceptions of the right and the good for a more ideal arrangement in the area of international economic organization. Diversity thus bridges between and combines conceptions of individual rights, namely the inviolability of individuality, with conceptions of the social good, as contained in both economic social welfare and non-economic visions of social purpose. While no side of the individual and social good divide is provided for stridently, it is argued that an improvement is made to each in a blended form of two previous oppositions. Operating within the confines of a system of competitive regulation, a theory of diversity results in a unique endpoint of defining a social good dependent entirely upon individual rights. While diversity may be thought of as social good, as it places the ends of social purpose above the articulation of individual rights, the concept of individuality is the fundamental basis of the good itself. Individual rights, therefore, become the essential function or means of achieving the end of individual differentiation. Unlike usual conceptions of the social good, whether it be community democracy, truth, or beauty, the 28 good of diversity is necessarily value neutral. Diversity, at its heart, is about the imposition of a process of regulation which demands change through the constant encouragement of individual difference. The underlying point of these machinations between right and good is to achieve a viable improvement to current economic problems and status quo international economic organization. On one level, diversity proposes an organizational solution meant to improve group benefit via individuality and its increase. In direct response to problems of market failure, rules of competition are to provide avenues for both the increase of individual and group gain. Through a priority of lessened impact and the respect for the autonomy needed for individual attempts at competitive creativity, diversity offers an other-regarding and principled system of competitive balance and reasonableness. Furthermore, even should diversity’s claims to simultaneous economics improvements for both individual and group be ignored, there remains an important evolutionary and theoretical message of importance. Too often theories of law, and especially economics, view ideas as existing within a historical and competitive struggle; a struggle in which present forms and assumptions have deservedly won, thus justifying their present ascendancy. While it may be true that past solutions effectively met problems of the past, this does not mean that status quo concepts are apt for future and as yet unforeseen problems. It may be that our present theoretical assumptions are ideas grown indolent through want of serious testing. Diversity is an institutional, regulatory commitment to favour diversification and reject any possibility of the status quo as the final, perfect point in the evolution of thought and regulation. Diversity involves a procedural, principled commitment to further individual creativity at the expense of a stasis in public belief. Diversity is ultimately about planning for future problems and their 29 solution from a position of modesty, assuming that we do not know the answer, much less the question, to future problems, while all the time hoping that individual creativity within competition may yield unforeseen yet valuable insight. A Note on Scheme of Progression: The above introduction will have hopefully indicated the three major elements within this dissertation’s progression. First, international problems of market failure are considered in light of strategies and the economic impulses toward self and system defeating cycles of competition. Second, a redefinition of legal and economic progress is offered to meet conditions of unpredictability, and to arrive at an evolutionary method that encourages constantly competitive variation with which to meet society’s future challenges. Third, an evolutionary approach to international regulation is translated into a theory of legal rights. While the above three elements characterize the major steps in articulating a theory of diversity, it must be noted that the third and final step involving a theory of rights is the most complex and, therefore, demanding of further and subdivided consideration. Accordingly, chapter three examines major themes in liberal political philosophy as the most likely influences on constructing an agreement of individual actors toward meeting social goals. These main themes of liberal social organization, identified with the right and the good, are held to a standard of responsive to dramatic system change and failure in line with the type treated in chapter one. Chapters four and five address the wider potential of individual interest available under choice situations of abstraction, with individuals severed from the prejudices of their current situations so as to permit for their value preferences to include the welfare of others, including future generations, and non-human organisms and life-forms. Chapters six and seven articulate a theory 30 of diversity, as first the ideal system choice for individuals in abstraction, and then as a useful reform to the study of international law with diversity acting as a normative, optimal example to hold against current affairs. CHAPTER ONE MARKET FAILURE THROUGH THE LENS OF LAW & STRATEGY I met a traveler from an antique land, Who said: “Two vast and trunkless legs of stone Stand in the desert. . . . Near them, on the sand, Half sunk, a shattered visage lies, whose frown, And wrinkled lip, and sneer of cold command, Tell that its sculptor well those passions read Which yet survive, stamped on these lifeless things, The hand that mocked them, and the heart that fed: And on the pedestal these words appear: My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair! Nothing beside remains. Round the decay of that colossal wreck, boundless and bare The lone and level sands stretch far away.” —“Ozymandias,” Percy Bysshe Shelley Inherent to an analysis of international law are difficulties not known with domestic legal matters that enjoy the certainty of state sovereignty and the potential for strict legal enforcement. An added layer of difficulty may be found, however, in international legal attempts at regulating the environment, for the absence of order results in, and is combined with, a further element of market failure. Without a defined and legally mandated cost to pollution, the market fails to attach an accurate price to production, and an externality is created. In the following chapter, the dynamics of market failure are examined in relation to the issue of global warming, and the Kyoto Protocol on climate change in particular. The issue is not only topical, but the subject matter example of atmospheric pollution is particularly apt for revealing the tremendous obstacles to collective international action, and the creative coordination solutions likely needed. 32 Failure on the atmospheric level need not be explained away by the absence of a pure legal order, for there are certainly instances of coordinated international regulatory success, but the degree and trend of failure will tell us something about how ambitious, or even revolutionary, coordinated change may need be in this given subject area. Returning to thoughts on the theoretical arch of this overall project, it may be useful to first reiterate the focus on a view to strategies and the incentives informed by rules. Secondly, and arguably more importantly, the strategic lens should be placed within its theoretical role within this greater project. As this project involves the contemplation of achieving more efficient and equitable rules, which should be arrived at democratically, the strategic vision brought out in this first chapter may be thought of as an essential first level of inquiry. Before a hypothetical set of individuals and decision-makers choose their ideal future competitive system, it would be logical to have an evaluative method for examining what currently is - the nature of the strategic failure of current rule structures. As later parts and chapters argue for how rational individuals would best choose diversity as their guiding principle, this first chapter provides the method for these hypothetical rule designers to evaluate the systemic environment they hope to improve. Before the weighty question of which way forward is addressed by our hypothetical and international society, given the luxury to retreat into abstraction and begin anew, a rigorous view of past and present failings is needed. In general, then, the following first chapter provides a method for evaluating the dynamics of what exists within the international system, against which to gauge the needed degree of coordinated response, while the second chapter provides insight into the individual potentials and concerns that system designers must use as their primary tool. 33 I.I INTRODUCING STRATEGIC ANALSIS FOR INTERNATIONAL LAW The Kyoto Protocol (Kyoto) on climate change is one of the most ambitious attempts to address a global environmental issue to date.1 Kyoto is chosen here as a framework example for how hypothetical system designers should respond to instances of collective market failure, both because of the Protocol’s ambition and its topicality. As to ambition, the Kyoto focus on climate change is atmospheric, and thus necessarily global in its attention, and demonstration of the irrational economic tendencies of states and the individual actors they contain. As to topicality, viewing Kyoto at a time surrounding its formation and ratification brings into relief the intense and often rationally contradictory impulses that influence agreement or not. Reduced to the basics of explanation, Kyoto is chosen as a framework case because it is the largest and latest environmental demonstration of the difficulties of collective coordination on the international level. Furthermore, Kyoto’s failings serve as a representative justification for the more abstract and ambitious decision-making model that is to follow in this dissertation. So while the scope and importance of Kyoto’s focus area of climate change ensures its centrality amongst modern international legal attempts, the revealed tendencies of failed coordination are of a more general and pressing concern. As with many initiatives aimed at environmental protection, Kyoto has been met with both criticism and inaction.2 In an anarchic international system, where there is no 1 Protocol to the United Nations Framework Convention on Climate Change, 3d Sess., Dec. 11, 1997, 37 I.L.M. 32 (1998) [hereinafter Kyoto Protocol], available at http://unfccc.int/resource/docs/cpmvkp/kpeng.html. Article 3 of the Kyoto Protocol stated its aim of reducing the overall emissions of carbon dioxide and other greenhouse gases by at least five percent of the 1990 levels during the treaty’s commitment period. See Annex A of the Kyoto Protocol for a list of the other greenhouse gases. 2 See, generally, Scott Barrett, ENIVORNMENT AND STATECRAFT: THE ART OF ENVIRONMENTAL TREATY MAKING 360 (2003): (noting that Kyoto is criticized because the 34 authority above that of the sovereign state, the issue of adherence to agreements is especially problematic.3 Without binding authority, enforcement must arise indirectly from the collective itself, making compliance, rather than content, the reflection of international norms. Unlike domestic laws that depend upon the authority of the issuing state for legitimacy, the legitimacy of international law is not created, but found in patterns of behavior. International law gains legitimacy when member states join in a united consensus, where before there was only autonomy and separation. When considering the relative success of some international regimes in comparison with others, it becomes apparent that a lack of authority in the international system is not necessarily fatal to altering behavior. That one regime succeeds while another fails indicates that it is the subject and not the system that is determinative. If the success of international law is subject based, then the social perception of value underlies every regime. For instance, the phenomenal success of economic regimes, such as the World Trade Organization (WTO), rests in large part upon the importance of their subject matter to the concerns of decisionmakers.4 In this sense, it is not the rules themselves that require examination, but the social perception of the game that is played. International environmental law presents a unique opportunity to objectively scrutinize a system against the principles that it purports to hold. In the past, criticism of economic structure has largely been centered on normative disagreement with the human consequences resulting from competition. This chapter assumes self-interested monitoring of the agreement is imperfect, its mechanisms are too complicated, its implementation too costly, and the agreement fails to solve the enforcement problem). 3 See id. at xi (“Under the rules of international law, states can act pretty much how they like, and there is no World Government.”). 4 For an introduction to the international trade regime and the WTO, see: Michael J. Trebilcock & Robert Howse, THE REGULATION OF INTERNATIONAL TRADE 38 (1995). 35 competition is a given and questions the rationality of the system upon its own terms. Instead of challenging the system in place, this chapter questions whether the market provides the rational results so often claimed. The correlation between environmental degradation and individual well-being allows the environment to serve as a measurable connection between economic practice and social goals. The environment provides a scientifically observable screen upon which individual economic strategies contrast with collective benefit. My immediate purpose in this chapter is to construct a model for discerning paradigmatic breakdown and its systemic consequences. The question is, in what situations do dilemmas of rationality lead to contradictions in the basic aims of a system? The significance for international law lies in the possibility of constructing a logical system with which to view the effect of new knowledge upon preexisting assumptions and patterns of behavior. The first portion of this chapter discusses how new knowledge can redefine an apparently stable system. The problems posed by climate change are reflective of a modern realization that while the environment is a connected whole, the world’s organization is not. When we learn more about a subject that concerns us, we often find that a problem cannot be resolved using the mechanisms that we have traditionally relied upon. Atmospheric issues such as climate change reveal that causation is not directly attributable to the actions of any identifiable structure of authority or responsibility. Scientific data illustrates that our international atmospheric commons is a shared resource that an individual state may abuse at the expense of others. The second portion of this chapter introduces the concept of an international commons. Also introduced is the theory for predicting rational strategies in a commons. 36 Insofar as decisions involve two exclusive values—for example the benefit of being able to pollute and the benefit of clean air—it becomes easy to mathematically represent the intersection between individual strategies and optimal benefits. Predictably, individual perceptions of interest rarely result in decisions that are most beneficial to the whole, as each individual strategy alters what is available to all. The tragedy of the commons5 and the Prisoner’s Dilemma6 are examples of situations in which an individual’s best strategies (Nash Equilibrium7) are inevitably suboptimal for the whole. A dilemma of rationality occurs whenever a game promotes rational strategies that cause irrational results. As with the tragedy of the commons, it is rational for a player to offload costs unto the whole by polluting, but as every player realizes the same rational strategy, the available resources are reduced and everyone is worse off. The third portion of this chapter develops a simple game theory model for viewing the dynamics of information assimilation. By comparing individual strategies with knowledge signals, in the context of international protocols such as Kyoto, we can determine whether players are learning from the consequences of detrimental group behavior. If the distance between individual choice and the benefit to the whole is widening, then actors are not recognizing a new paradigm of thought. In this sense, we may differentiate between situations that call for regulatory change and those that require a paradigmatic shift. Where regulation attempts to alter behavior through traditional adjuncts to game play, a paradigm shift involves environmental protection as a goal that 5 Garret Hardin, The Tragedy of the Commons, 162 Science 1243 (1968). 6 The prisoner’s dilemma is arguably the most famous hypothetical in game theory literature. See K.G. Binmore & Ken Binmore, ESSAYS ON THE FOUNDATIONS OF GAME THEORY 28 (1990); Robert Axelrod, THE EVOLUTION OF COOPERATION 92 (1984). 7 John F. Nash, Jr., Equilibrium Points in N-Person Games and the Bargaining Problem, in CLASSICS IN GAME THEORY (Harold W. Kuhn ed., 1997). 37 underlies the entire economic game. Instead of modeling the environment as an external appendage to economic market mechanisms, a paradigm shift would ensure that environmental concerns precede the functioning of the market itself. We must create a model for determining when knowledge is incompatible with systemic imperatives. While some systems have the potential to eliminate problems through regulation, this chapter addresses a different question: whether there are problems that simply cannot be surpassed because they are derived from the rules of the game itself. Beyond the evidence of a continuing dilemma of rationality, the fourth part of this chapter illustrates when a system faces incompatible knowledge. If a system is externally shown to be illogical from the irrational results that it produces, there is a possibility that irrational results will also have implications for the internal logic of the system. A pattern of behavior appears different under the light of new knowledge, revealing that the behavior motivated by one principle is contrary to that defended by another. What occurs is not a sudden vanishing of legal structures such as the state, but rather that these structures regressively lose their meaning in the game. If one of the central justifications for the state is to provide a solution to the tragedy of the commons, then what happens to that justification when the state is shown to be worsening that tragedy? The state prevents what it once was: a solution to the commons. It may be impossible to say whether there is a truer or inherently better form for law to take, but one can prove when a legal structure is false based upon its own assumptions. New knowledge can reveal how the irrational tendencies of a system can eventually render its founding principles meaningless. 38 I.II INTERNATIONAL FRAMEWORK First Postulate: When international agreements are derived from scientific advancement they reflect a community’s acceptance of new knowledge. Agreements may only be said to reflect changing international norms to the extent that there is an alteration of behavior. A. Common Resources and Social Divisions Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. . . . As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, ‘What is the utility to me of adding one more animal to my herd?’. . . . Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him is to add another animal to his herd. And another. . . . But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit—in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in society that believes in the freedom of the commons. Freedom in the commons brings ruin to all.8 The “tragedy of the commons” is a famous concept, effective for its simple imagery and appealing universality. Before discussing how the tragedy of the commons is a fluid concept open to scientific discovery, it is pertinent to place the concept in a historical context. Dates and specific events are not essential to this discussion, but the notion of social change and development is. Every arrangement and relationship between the individual and the group must involve some sort of social division. Even if there is no overt decision-making process, every social structure is dependent upon social definition and a tacit understanding of what is an acceptable form of organization and what is not. 8 Partha Dasgupta, THE CONTROL OF RESOURCES 13 (1982) (quoting Hardin, supra note 5, at 1243- 48). 39 Social divisions are simpler commonalities that define what certain things—family, prison, property, etc.—look like from afar. Hardin’s passage, introduces a dimensional sense of social divisions. The ownership of cattle represents a one-dimensional division. In this sense, society acknowledges that people may individually own things and animals. In the above hypothetical the problem of the commons arises from mixed ownership: one economic form, cattle, is dependent upon another, land, which has no direct economic cost to the cattle owner. It is important to note that the exploited land has an economic value, and an indirect cost, but that these values are obscured when they are borne by society as a whole. Most societies respond to this problem by giving the land a direct economic value by dividing it into private property. Property, and other territorial divisions such as the state, represent a two- dimensional social division. Unlike one-dimensional divisions that may rely on custom alone, institutions like the state necessarily involve a level of formal organization. The two-dimensional organization is fundamentally engaged in control; a protective function is exercised by an authority over the commons to insure at least a minimal level of future benefit and access. Moving from a one-dimensional division of ownership to a second level of organization sees the free market blended with a social need for control. Dealing with a commons is reducible to two key elements: (1) the recognition of a system that engenders limitless maximization in a limited context and (2) the imposition of rules to preserve the exploited resource. With each recognition of wider interconnected economic effects the commons necessarily grows, and with it the area of potential organization. Where a degraded pasture points to the economic activity of one’s 40 immediate neighbors, the quality of water that passes in rivers and streams indicates a dependence upon distant communities. Despite the complexity of modern governments and their international arrangements, the organization of the world remains tied to an antiquated two- dimensional model of territory. Recalling Hardin’s famous “tragedy of the commons” and the imagery of a “pasture shared by all,” human experience demonstrates that obligations and restrictions placed on individuals no longer meet the needs of society. As individuals passed from nomadic existence into a settled stationary society, the effects of their behavior became recognizable in their immediate surroundings—the pasture. From the physical observation of the “pasture shared by all,” science has now permitted an awareness of the global ecosystem shared by all. B. Atmospheric Awareness Perhaps the most striking aspect of modern environmental degradation is the speed with which concerns have outstripped levels of political organization. The central actor in the international system remains the state, meaning that more and more issues which impact individuals are beyond the control of their representation. Since climate change was scientifically measured, it has demanded a global view. In 1896 Svante Arrhenius, a Swedish chemist, calculated that a doubling in the atmospheric concentration of carbon dioxide(CO2), brought about by the burning of fossil fuels, would increase the global mean temperature by about 5 degrees Celsius. In retrospect this was a remarkable prediction, but not until the 1980s did a near consensus begin to emerge about the direction of climate change and the 41 need to reduce growth in atmospheric concentrations of greenhouse gases.9 The importance of Arrhenius’ calculation should not be underestimated, for a five percent increase in global temperature is more dramatic than the lowly number would indicate. Indeed the effects are likely unquantifiable when considering the unpredictable effects of warmer temperatures and increased water flows upon innumerable sensitive species. Regardless of quantification, the effects are likely to be profound, as the international community began to realize in the late 1980s and early 1990s. The Intergovernmental Panel on Climate Change (IPCC) released its first findings in 1990, estimating that emissions of such long-lived gases as CO2 would have to be reduced by more than sixty percent just to stabilize current levels. Member countries to the Organization for Economic Cooperation and Development (OECD) announced their intention of reducing CO2 emissions, “[b]ut in contrast to the case of ozone depletion, most countries have not lived up to their unilateral commitments to reduce greenhouse gas emissions.”10 This dichotomy between intention and individual action leads to a question of compliance: if the directives of the Kyoto Protocol only suggest that industrialized members reduce their emissions to 1990 levels,11 why is it so difficult to translate these comparatively modest intentions into actual behavior? C. Conceptual Examples The increased public concern over environmental degradation in recent decades has led to a broad international movement to coordinate responses to the problem of the 9 Scott Barrett, Montreal Versus Kyoto: International Cooperation and the Global Environment, in GLOBAL PUBLIC GOODS: INTERNATIONAL COOPERATION IN THE 21ST CENTURY 196 (Inge Kaul et al. eds., 1999). 10 Id. 11 Id. 42 atmospheric commons. Two agreements in particular, Montreal and Kyoto, illustrate the contrasting effectiveness that exists between many modern environmental regimes. The Montreal Protocol, which aims to reduce the use of CFCs, has been quite successful.12 The Kyoto Protocol, on the other hand, has had no such success in reducing emissions of CO2 as it has only recently been ratified by enough countries to bring it into force.13 For Kyoto to come into force fifty five percent of countries that produce fifty five percent the world’s CO2 emissions (the Annex I countries) were required to ratify it.14 The Protocol entered into force on February 15, 2005.15 However, it remains unclear whether the membership will be willing to accept the costs involved and impose penalties upon those who do not. The success of a regime in this regard may be simply defined as the acknowledgement of a problem and the coordination of rules of behavior that are enforced by the membership to further a solution. The contrast between Montreal and Kyoto is more than an issue of time, which admittedly is an unfair test since Montreal is a slightly older proposal. More substantively, many argue that once ratified Kyoto would be largely ineffective at reducing world-wide emissions of CO2.16 As Barrett notes in his book Environment and Statecraft, Kyoto was explicitly designed along the lines of Montreal, but lacks the 12 Protocol on Substances that Deplete the Ozone Layer, Sept. 16, 1987, 26 I.L.M. 1541, 1550 (entered into force Jan. 1, 1989) [hereinafter Montreal Protocol]; Protocol Parties: Adjustments and Amendments to the Montreal Protocol on Substances that Deplete the Ozone Layer, June 29, 1990, 30 I.L.M. 537 [hereinafter London Amendments], available at http://www.unep.org/ozone/pdfs/Montreal-Protocol2000.pdf.; Barrett, supra note 9, at 192; see David A. Wirth & Daniel A. Lashof, Beyond Vienna and Montreal: A Global Framework Convention on Greenhouse Gases, 2 Transnat’l & Contemp. Probs. 79 (1992); see also Michael Grubb et al., THE KYOTO PROTOCOL: A GUIDE AND ASSESSMENT 9 (1999). 13 Barrett, supra note 9, at 192. For a chart comparing the Montreal and Kyoto Protocols, see Barret, supra note 2, at 361. 14 Kyoto Protocol, supra note 1, at art. 25; Grubb et al., supra note 12, at 9. 15 For more information on current status, see http://unfccc.int//kyoto_protocol/background/status_of_ratification/items/2613.php 16 See, e.g. Barrett, supra note 2, at 360. 43 essential enforcement and incentive mechanisms found in Montreal which make real progress likely.17 Although Kyoto elaborates stringent mechanisms for monitoring whether Annex I members are in fact maintaining their emissions at 1990 levels, it contains no mechanisms for requiring them to do so.18 Negotiating sessions held in Bonn and Marrakesh in 2001 structured the Kyoto Protocol in a manner that may have created substantial obstacles to its success. An inducement mechanism has been devised in which countries that fail meet their initial 1990 targets on time are given higher reduction targets for the following measurement period.19 However, the difficulty remains that compliance under Kyoto is not binding.20 Monitoring organizations may only suggest penalties, and members would have to accept treaty amendments in order to make these penalties binding.21 If there is no penalty for missing targets, it is unclear what effect the addition of higher targets would achieve. As Barrett notes, the success of Montreal is due to providing both a “carrot” and a “stick.”22 The weaknesses of Kyoto may be characterized as arising from both the construction of the agreement and the concessions used to induce key industrial 17 Id. 18 Grubb et al., supra note 12, at 142. 19 Axel Michaelowa, Hamburg Inst. of Econ: Discussion Paper, Rio, Kyoto, Marrakesh—Ground Rules for the Global Climate Policy Regime, 152, 25 (Department World Economy ed., 2001), at http://www.hwwa.de/Publikationen/Discussion_Paper/2001 /152.pdf (last visited Oct. 31, 2004). 20 Kyoto Protocol, supra note 1, at art. 18. The last sentence of Article 18 of the Kyoto Protocol states that “binding consequences” of noncompliance may be adopted only by an amendment to the Protocol. See Glenn Wiser & Donal Goldberg, Implementing Kyoto, 2 Intl’l & Comp. L. 1, 14-15 (2002) (advancing a new theory to promote compliance with the Kyoto Treaty). 21 As Jutta Brunnee has observed, members have generally been unwilling to express their views on which compliance structure ought to be set in place, and it is likely that “the question of penalties will be the most fought over issue in the development of the Kyoto Protocol Compliance Regime.” Jutta Brunnee, A Fine Balance: Facilitation and Enforcement in the Design of a Compliance Regime for the Kyoto Protocol, 13 Tul. Envtl. L.J. 223, 247, 255 (2000). 22 Barrett, supra note 9, at 351. 44 signatories. In terms of explicit sanctions, Kyoto lacks a mechanism for blocking the trade of goods that are produced in manner inconsistent with the agreement.23 Trade sanctions have provided an excellent inducement mechanism under Montreal because countries could block the entry of goods that continued to use the prohibited CFCs.24 Countries continuing to use CFCs face a trade burden—in the form of lost access to markets—that significantly outweighs any competitive advantage gained by using the cheaper CFCs. Imposing trade sanctions upon those who do not comply with, or who are not party to, an agreement effectively places a cost upon those not participating. Kyoto imposes no penalties for those members who do not comply with the agreement, nor any external means of placing costs upon those who are not members. The diverse nature of CO2 production makes selective trade sanctions upon specific goods unlikely, and furthermore, the current structure of the Protocol would make such sanctions against noncompliant countries impossible. Many of the world’s countries — particularly developing nations — can be party to Kyoto without having any commitments to reduce CO2 emissions.25 Additionally, the world’s largest polluter, the United States, has abstained from participating and Kyoto provides no means to impose a cost upon this nonparticipation.26 While Montreal has allowed members to impose an external cost upon nonmembers, under Kyoto costs are borne only by developed country- members.27 That is, the initial costs of Kyoto are only to be borne by the industrialized countries that voluntarily ratify the agreement. 23 See id. at 307 (focusing on the use of trade restrictions for deterring noncooperation). 24 Id. at 313. 25 Id. at 373. 26 See Barrett, supra note 9, at 215. 27 See id. 45 The prospect that Kyoto will deliver a comparative advantage to those who do not undertake to reduce CO2 emissions has been a serious concern for many Annex I countries that have contemplated membership.28 The Bonn/Marrakesh process may demonstrate the reluctance of countries to accept the substantial costs of reducing CO2 emissions within a process of uneven implementation.29 The incentives given to major industrial countries to ratify Kyoto not only lessens the cumulative amount of CO2 reductions required, but introduces a large measure of uncertainty into the process for giving CO2 emissions a detrimental cost.30 As with Montreal, Kyoto establishes a framework under which countries can trade pollution permits, making a market for pollution that rewards those who more efficiently and “cleanly” compete.31 The manner in which the agreement is being ratified seriously questions whether there will be sufficient demand to have a functioning market.32 Russia and other former Soviet republics, such as the Ukraine, have 1990 targets that are substantially higher than their present post-Communist outputs of CO2.33 The former Soviet republics will thus have a great surplus to sell on the market. However, as Barrett details, some of the most significant Annex I signatories who have signaled ratification, 28 Barret, supra note 2, at 370 (noting that as of March 2001, only one Annex I country—those countries that have to limit their emissions—had ratified the Kyoto Protocol). 29 Id. at 371-74. For a discussion on the concessions sought and achieved by various Annex I countries see generally Wiser & Goldberg, supra note 20 and Matthew Coghlan, Prospects and Pitfalls of the Kyoto Protocol to the United Nations Framework Convention on Climate Change, 3 Melb. J. Int’l L. 165, 180 (2002). 30 Barret, supra note 2, at 370-71. 31 On trading within the Montreal Protocol, see Wirth & Lashof, supra note 12, at 105. In terms of the Kyoto Protocol, see Coghlan, supra note 29, at 173. For a discussion on pollution trading in general, see Thomas Schelling, What Makes Greenhouse Sense—Time to Rethink the Kyoto Protocol, 81 Foreign Aff. 5, 2002. 32 Barret, supra note 2, at 382. 33 Grubb et al., supra note 12, at 214. 46 including Japan, Australia, and Canada, are each entering the agreement with substantial concessions that will lessen their targeted reductions.34 Additionally, Canada unilaterally claimed a further thirty percent credit that was said to account for its exports of “clean” hydroelectric and natural gas energy to the United States, a nonmember.35 It is difficult to see how an emissions market will work if countries are able to unilaterally determine their own standards. There would be no need to purchase permits from another member when one could simply declare a new calculation that reveals targets to be suddenly met.36 Without the demand for emission permits, the price of CO2 will provide no incentive for lessening its production. The Kyoto Protocol may eventually exert considerable influence over the behavior of state actors. The international trade regime has developed gradually, moving from the General Assembly on Tariff Trade (GATT)37 to the present WTO, while slowly gaining greater influence and membership. Perhaps developing countries, generally the most rapidly growing producers of CO2, will eventually be included within the regime’s requirements. Perhaps the United States will one day ratify. Hopefully the countries that have ratified Kyoto because it was of no present cost to them will bear the burden of future reduction targets. While such future progress may occur, as of 2007 the prospects do not look good. In 2007, the Canadian government acknowledged that it would not meet its Kyoto target 34 Id. at 371-74. Barrett notes that because the Kyoto Protocol does not constrain emissions, countries like Russia will have little incentive to sell their surplus entitlements, and may choose to “bank” them. Id. at 374. 35 Id. at 373. 36 See, e.g., Henry D. Jacoby et al., Kyoto’s Unfinished Business, 77 Foreign Aff. 64: “Kyoto is likely to yield far less than the targeted emissions reduction. That failure will most likely be papered over with creative accounting, shifting definitions of carbon sinks, and so on.” 37 For an interesting discussion on the origins of GATT and its relation to the postwar international system, see John Gerard Ruggie, International Regimes, Transactions, and Changes: Embedded Liberalism in the Postwar Economic Order, in INTERNATIONAL REGIMES 209 (Stephen D. Krasner ed., 1983). 47 commitments. This is a further low point in Kyoto’s prospects, as a once strong supporter of the Kyopto principles has become the first Annex I member to publicly announce that their targets would be missed while remaining party to the treaty.38 This could arguably dilute the perception of compliance from within the treaty, even as it gets underway. A salient issue of Kyoto’s success is whether a limited Annex I membership will continue to accept the idea of competing with the numerous countries that have not agreed to, or are not required to, reduce their CO2 levels. Kyoto provides neither the mechanisms to ensure that they do, nor the incentives for inducing others to join the treaty. In the end, for Kyoto to be considered a success, a majority of states will have to agree that it is worth the cost. Atmospheric environmental issues provide an excellent example for this investigation, because it represents a clear connection between new information and the need for competition to adjust based on the new information. Montreal and Kyoto further illustrate that there are instances where a game adapts to new information, as with Montreal, and instances where competition is much more difficult to alter, as with Kyoto. Yet Montreal and Kyoto are only examples used to illustrate how differing models of success may exist within similar issue areas. Ultimately, this chapter is not about environmental agreements, Kyoto, or even international law; it is about proposing a different way to view law as an instrument for informing competition. D. Compliance and Consensus The provision of public goods is constantly at odds with the tendencies of individual actors to seek the benefits without paying their requisite share of the costs, a 38 See: http://news.bbc.co.uk/2/hi/science/nature/6600585.stm 48 phenomenon known as “free-riding.”39 Indeed one of the historical motivations for the formation of the state was a response to the dilemma of public goods, in that everyone would benefit from a certain service which no one individual would be willing to supply. Without a world government the issue of free-riding remains salient in the international system. Free-riding requires that enforcement and compliance mechanisms arise directly from the collective membership and that these mechanisms are created and adhered to. While the former imputes the present and the latter the future, the distinction is artificial in that they both represent the same normative value. Normative values are represented by what the collective is willing to submit to in order to achieve the stated results.40 As such, weak enforcement mechanisms not only predict future failures; they also reflect the present state of value preferences. If a large membership is willing to bind itself to a system of defined accountability, then it follows that strong international support for the initiative exists. The grandest pronouncements remain hollow if there are no consequences for failing to meet common objectives. This statement is especially true for environmental agreements which deal with the interplay of inconsistent political and economic values. Environmental agreements often represent a collection of good intentions that have good rhetorical value, but they also involve making domestic policy decisions that likely have a significant short-term economic cost. Therefore, short-term economic costs must be counterbalanced by the costs of noncompliance imposed by the membership. As stated by Professor Barrett, in his article Montreal Versus Kyoto: International Cooperation and the 39 The problem of free-riding has received significant attention from scholars in the field of international relations. See Robert O. Keohane, Reciprocity in International Relations, 40 Int’l Org. 1, 12-13 (1986); see also, Robert Axelrod & Robert O. Keohane, Achieving Cooperation Under Anarchy: Strategies and Institutions, 37 World Pol. 226, 234-38 (1985). 40 See Brunnee, supra note 21, at 269. 49 Global Environment: Perhaps the Kyoto agreement can, with time, be amended to resemble the Montreal agreement. Putting the right words down on paper is not the problem, however. Rather, it is making the required mechanism credible. A threat is credible only if everyone believes that, when push comes to shove, it will be carried out.41 The inherent flaws of the Kyoto agreement may very well have a spiraling effect: nonexistent free-riding sanctions encourage noncompliance, so every party that fails to meet its commitments in turn reduces the value of compliance to the rest of the membership. While Barrett perceptively analyzes the potential consequences arising from the differing mechanisms of the Montreal and Kyoto Protocols, this may be a somewhat hasty evaluation. Before credible threats can be agreed upon, there must be a stable consensus on the merits of participation. The skewed application of Kyoto, which only covers developed country members,42 might well provide for continuing domestic criticism of Kyoto as a source of competitive disadvantage. Given the costs of increased environmental regulation, it is plausible to assume that industry may attempt to avoid these costs by relocating to countries not bound by the treaty.43 Concerns over competitive disadvantage may be characterized as examples of dependent reasoning. In this form of dependent reasoning it is not the central idea that is contested, in this case precautions to mitigate against climate change, but rather the 41 Barrett, supra note 9, at 216. 42 The developed countries signatories are those listed in Annex I of the Kyoto Protocol, supra note 1, at art. 25.1. 43 Developing countries are not bound by the 1990 targets set by the treaty. Nonmembers, most notably the United States, are obviously not covered by the treaty either. See Barret, supra note 2, at 371-74. On the concerns of U.S. nonparticipation and the potential competitive disadvantage faced by Canada see R. Fife, “Premiers Ambush Chretien on Kyoto,” Nat’l Post, Feb. 28, 2002, at A1; see also Philip Barton, Economic Instruments and the Kyoto Protocol: Can Parliament Implement Emissions Trading Without Provincial Co- operation?, 40 Alberta L. Rev. 418 (2003). 50 imagined benefits to competitors. If one assumes that another country may benefit by avoiding the costs of Kyoto, by attracting industries that wish to avoid further environmental regulation for instance, than it follows that membership may be viewed as a competitive disadvantage. What is most troubling about this form of dependent reasoning is that it is completely rational only so long as no one else follows the same reasoning. For example, it would be cheaper for country A not to ratify Kyoto; therefore, it would be cheaper for every country not to ratify Kyoto. The result of dependent reasoning in this instance is that no country would ratify Kyoto, but the future costs borne by everyone would be greater. I.III THEORETICAL FRAMEWORK Second Postulate: It is possible to mathematically represent the evolving relationship between individual decisions and common benefit. A. Game Theory A game is played by a group of individuals whenever the fate of an individual in the group depends not only on his own actions, but also on the actions of other individuals in the group.44 The most obvious examples of games are parlor games such as checkers, chess, and poker. In these games the play of A is dependent upon the plays, both past and anticipated, of players B, C and so on. The essential point is that individual strategies do not arise independently, but instead are contingent upon the behavior of others. Von Neumann and Morgenstern first introduced the notion that it is possible to systematically extrapolate the model of parlor games to more interesting social 44 Binmore & Binmore, supra note 6, at 1. 51 phenomena.45 At first glance, it seems trite to correlate the socially significant with trivial games intended for amusement, but the perceptiveness of Von Neumann and Morgenstern lies in realizing that the same basic premises apply to both. Two general conditions exist: dependent strategies and individual rationality. Rationality is the key to the mathematical model of game theory.46 Without the notion of individual rational actors, it is impossible to have any predictive or explanatory model whatsoever. Irrational decisions are inherently unpredictable. It is important to note, however, that rational does not denote a quality but rather a function; rational decisions in this sense are not necessarily perfect or even logical, only consistently self- interested. B. Nash Equilibrium While the work of Von Neumann and Morgenstern was revolutionary, its initial application was limited. The first theory of games was based upon “two person cooperative games” (cooperative meaning binding agreement and not working together) that have zero-sum results.47 As in chess, an advantage or gain by one player results in a corresponding detriment to the other. A zero-sum game could be simply illustrated as follows: Beginning of Game: a = 1, b = 1 Result of Game: if a = 2, then b must = 0 As most real life situations do not neatly correspond to defined zero-sum situations, the limits of cooperative games are obvious. A more applicable model may be found in 45 John Von Neumann & Oskar Morgenstern, THE THEORY OF GAMES AND ECONOMIC BEHAVIOR 47 (1994). 46 Scott Gates & Brian D. Humes, GAMES, INFORMATION, AND POLITICS 8 (1997). 47 Id. at 2-3; see also Alex Talbot Coram, STATE ANARCHY AND COLLECTIVE DECISIONS (2001). 52 noncooperative games that have n players (where n>2), as these games have no binding agreements and recognize multiple players. John Nash introduced the distinction between cooperative and noncooperative games, which is a central concept behind analyzing the strategic complexity of competition among multiple participants.48 Without binding agreements dictating the course of the game, players’ decisions are more flexible, less predictable, and more realistic. Unlike two person games such as chess, which have alternating sequences, games such as poker require that multiple players simultaneously determine their play. The requirement of simultaneously determined strategies is arguably the most interesting facet of games, for it demands that players choose their strategies in anticipation of their opponents’ strategies. Put simply, a player’s best strategy is based upon the anticipation of others’ best strategies. Nash Equilibrium is the point when all of the best strategies converge, namely when no player’s best strategy can be bettered without a change in the strategies of others. C. Nash Equilibrium Versus Pareto Optimum The concept of Nash Equilibrium transformed economic theory and has been applied to fields as diverse as trade negotiations and evolutionary biology.49 While Nash Equilibrium is a concept that has had undeniable prescriptive success, it is also illustrative of the potential inefficiencies of individual strategies. This introduces a sort of paradox of rationality in which there is a dichotomy between optimal strategies and optimal effects. The theory of Pareto Optimum, which represents the point at which 48 Nash, supra note 7, 24; see also John F. Nash Jr., The Bargaining Problem, in CLASSICS IN GAME THEORY, supra note 7. 49 Eric Talley, Interdisciplinary Gap Filling: Game Theory and the Law, 22 Law & Soc. Inquiry 1055 (1997). 53 “there is no other feasible alternative allocation which makes everyone better off,”50 contrasts with the Nash Equilibrium of strategies. There are situations, or games, that find the best competitive strategy for each individual — Nash — which is a different point than the strategy that would have realized the best result — Pareto. That is, the situation is suboptimal as the best rational strategy does not translate into the best possible outcome. The well-known Prisoner’s Dilemma is a classic example of when the rational strategy of each individual leads to a suboptimal result.51 The game generally describes two accomplices to a crime who face the temptation to inform on each other. An interrogator addresses each detainee in isolation and offers them a similar deal. The deal is that if one confesses and informs on their partner they receive a light sentence. If they do not confess and their partner informs on them they receive the maximum sentence. Fearing that the other will inform, and that they will suffer by receiving the maximum sentence, each prisoner predictably informs on the other. The best result for both individuals would occur if neither informed, and yet the best independent strategy for both would be to inform. Implicit in game situations is the idea that individuals must hedge against the potential costs of the other’s strategy. Ideal or optimal outcomes are unlikely to occur for fear that other players will free-ride and not restrain their strategies for the benefit of everyone. Distrust or skepticism of others informs our decisions, which informs the decisions of others, which further informs our decisions, and so on. 50 Dasgupta, supra note 8, at 25. 51 Binmore & Binmore, supra note 6, at 32-33; see Alex Talbot Coram, supra note 46 at 26-29, (describing the Prisoner’s Dilemma). 54 D. Game Theory and the Environment Game theory models of global environmental issues provide some of the clearest examples of rational contradictions within the market system of rational self-interest. The market produces results that are contrary to the longstanding doctrine of individual self- interest by producing results that are best for everyone.52 Resembling the Prisoner’s Dilemma is the tragedy of the commons articulated by Hardin, where “[e]ach man is locked into a system that compels him to increase his herd without limit—in a world that is limited.”53 In the context of game theory, Hardin’s use of “compel” may be seen as an example of Nash Equilibrium in that each herdsman’s best strategy would be to graze more and more cattle. The figure that follows is a hypothetical illustration of the relationship between economic competition and environmental resources. Drawing upon a model constructed by the economist Partha Dasgupta in his work The Control of Resources,54 this article uses the example of an international fishery to discuss problems at common resources and market failures.55 It is not difficult to discern an analogy to Hardin’s pastoral commons, or for that matter, the case of the atmosphere and the climate change regime. Simply exchanging the hypothetical fishing waters for the atmosphere would achieve the desired result. The tendency illustrated in Dasgupta’s international fishery is analogous to the case of greenhouse gas emissions, as each country conducts an internal cost-benefit analysis in which the benefit from a minimal increase in pollution outweighs the damage 52 Adam Smith’s famous “invisible hand of the market” postulates that the best results for society as a whole occur when everyone pursues their own self-interest. Adam Smith, THE WEALTH OF NATIONS 572 (Edward Cannan ed., Modern Library 1994) (1776). 53 Hardin, supra note 5, at 1244. 54 Dasgupta, supra note 8, at 19-24. 55 Id. at 19-20. 55 incurred. Indeed this national cost-benefit analysis is explicitly mentioned in Barrett’s article on the Montreal and Kyoto Protocols.56 Figure 1.1 A Representation of Commons Competition Legend: X axis—Amount of Pollution. Y axis—Amount of Fish. A—Marginal Damage; the pollution that each offloads into the commons. B—Mutual Benefit; the mutual benefit from common resource. N—Nash Equilibrium; the most rational strategy for each individual. P—Pareto Optimum; the optimal strategy for mutual benefit. S—Distance between N and P. H—Highest Point of Resource. The above illustration represents economic strategies and their results; it does not represent the environment itself. The figure illustrates a visual display of the underlying method of game theory. The game theory method predicts rational strategies and 56 Barrett, supra note 9, at 202. 1 10 100 1000 1 2 3 4 5 6 7 8 9 10 11 * P * N S1 A B Y X H 56 compares them to corresponding outcomes. The idea of correspondence is central to predicting and interpreting competitive games. For example, the Prisoner’s Dilemma has two strategies, “inform” and “not inform,” with a hypothetical correspondence of 0, 5, and 15 years. When strategies are combined they find their corresponding outcome. Therefore, if both players choose “inform” the result is that each receive 5 years. If player one chooses “inform” and player two “not inform,” player one receives five years and player two receives fifteen. If neither player informs, both are set free. When considering an environmental commons the potential strategies are more numerous than the Prisoner’s Dilemma; Figure 1 attempts to represent these options along a continuum that is line A. As the Prisoner’s Dilemma had the options of “inform” and “not inform,” this international fishery model would have options that represent the pollution that each emits into the water, “1 unit,” “2 units,” “3 units,” and so on. The countries consider how much effluent to discharge into the commons in view of the potential detriment that results.57 Each level of pollution along line A, or marginal damage committed by each country, corresponds with a point on line B of mutual benefit. The strategies of pollution are an economic consideration and not merely a byproduct of competition.58 Pollution is a cost that countries may offload into the commons, thereby avoiding the expense of recycling or waste management. The reasoning of each country involves considering how much economic benefit is available through their marginal damage before the value of their share in the mutual benefit is diminished. Dasgupta’s calculations reveal a Nash Equilibrium of N, at which point each actor has concluded that polluting any more would be offset by their subsequent loss in 57 Dasgupta, supra note 8, at 19-24. 58 Id. 57 fish catch.59 The difficulty, however, is that each strategy is contemplated independently while the results are dependent upon the strategies of all others considered together. When all strategies are combined the result is that the Nash Equilibrium point is suboptimal. Each player would have been better off choosing the point P, where the number of fish caught is maximized by restraining marginal damage. With no regulation of the commons, the intuitive sense to restrain pollution is lost to the competitive fear that others will cheat first. The strategy to cheat, or “free-ride,” becomes more rational as a player becomes less competitive compared to those able to offload more of their pollution costs into the commons. Recalling the dynamic of dependent strategies (discussed infra Part III.A.) helps illustrate how a rational independent strategy considered in isolation may nevertheless lead to an irrational or suboptimal result when the strategies of everyone are combined. If a single country determines that it would be beneficial to increase its marginal output of pollution, every other player is certain to operate under the same assumptions. Comparing N with that of the optimal point P shows the predictable result that best strategies will not equal best outcome. The best solution for each country would have occurred if each country had opted for restraint. As with the Prisoner’s Dilemma, the inefficiency of the economic commons is a result of competitive necessity rather than pure information. Both prisoners could easily envision that two strategies of “not inform” would result in zero penalties, and countries in the hypothetical fishery could equally infer that if all restrained their marginal damage their fish catch would be maximized. Restraint does not occur in either game for fear that 59 Id. at 22. 58 others will benefit by surrendering restraint. This creates a suboptimal equilibrium: the strategy that none find ideal but that each fears another will choose. I.IV PARADIGM CHANGE Third Postulate: If common benefit is associated with developing knowledge then it is possible to mathematically represent the social acceptance of a new paradigm of thought. A. Environmental Economics Environmental Economics is generally regarded as a branch of the economics of externalities. [internal citations omitted] More particularly, environmental problems are commonly associated with the failure of market institutions. The starting point of this literature is the observation that in many cases the malfunctioning of market forces can be ascribed to the fact that for certain commodities and services, competitive prices simply do not exist.60 Essentially, the environment is one of the major domains that have yet to be successfully given significant value. Environmental economic theory advocates attempting to modify maladjusted market institutions by giving the environment an economic price.61 The most common suggestions for adjusting the market inevitably involve giving environmental degradation a monetary value.62 For example, tradable emission permits (in essence tradable licenses to pollute) are a popular proposal.63 Some of these programs have been successful; however, this Article considers situations in which emission permits may be ineffective. 60 Partha Dasgupta et al., INTRODUCTION TO THE ECONOMIC OF TRANSNATION COMMONS (1997). 61 Id. at 1-2. 62 See Barret, supra note 2, at 374. 63 See Grubb et al., supra note 12, at 89-90; see also Schelling, supra note 31, at 5. 59 The traditional challenge of the environment as an externality needs to be addressed if answers to fundamental challenges are to be offered. There is a value ascribed to the environment, and it is located directly beneath the point of the suboptimal economic equilibrium. The problem is not that the environment lacks an economic value, but rather that individual strategies irrationally prioritize short-term economic gain at the expense of both environmental value and long-term individual welfare. B. Theories of Change Let us consider two different forms of societal change. The first is developmental or endogenous, and it involves incremental legal adjustments to the changing perceptions of society and its members. In the endogenous model, law is a reflection of the ideas that already permeate society. The second form of change, called revolutionary or exogenous, occurs when the law encourages the acceptance of new ideas. Revolutionary does not imply political upheaval or bloodshed, but rather an idea that offers a break with the previous paradigm. A new idea emerges, for instance Svante Arrhenius’ prediction regarding CO2 emissions and climate change, but does not initially take hold.64 The dominant paradigm of economic exploitation continues on for decades despite this small blip of a discovery. However, more and more anomalies arise which the dominant paradigm cannot explain. The question then becomes what to do with this new information? 64 Barrett, supra note 9, at 196 (discussion on Svante Arrhenius calculation regarding climate change due to fossil fuel burning). 60 C. Solving the Commons Problem? Recent scholarship in several fields has explored how cooperation can be explained as a product of self-interested competition.65 The premise of self-interested cooperation or “reciprocal altruism” generally holds that while individuals are inherently self-interested, the best strategy for each individual need not necessarily be aggressive or antagonistic.66 Instead of one basic strategy of competition like zero-sum rivalry, there are instances when the most self-interested strategy would lead to cooperation. If individuals are persuaded that others will cooperate with a measure aimed at furthering collective benefit, then their own self-interest will direct them to do likewise. This is an interesting perspective that contains a measure of both cynicism and optimism. If an altruistic quality of human nature is being discounted, so too are notions of a predetermined form of self- interest. Self-interest is assumed to be the primary impulse of humans, one that remains open to the possibility of individuals cooperating to solve collective problems. Game theory methods are obviously signaled in the language above, and indeed game theory has informed much of the literature on self-interested cooperation. As always, the Prisoner’s Dilemma is a central example of this interdisciplinary approach, helping to illustrate how suboptimality is a feature of communication rather than a predetermined outcome of human nature. “If the rules for exacting confessions from apprehended suspects are structured differently, then isolated prisoners have very different optimal strategies and there is no dominance of individual (Pareto inferior) 65 See Richard Dawkins, THE SELFISH GENE (1976); John Maynard Smith, EVOLUTION AND THE THEORY OF GAMES (1982); see also Robert Axelrod, THE EVOLUTION OF COOPERATION (1984). 66 Barret, supra note 2, at 55. 61 strategies.”67 The argument is that the tendency of individuals to “snitch” within the Prisoner’s Dilemma should not be viewed as an inevitable result of human selfishness but rather as the structure of the game itself.68 Therefore, changing the rules of the game may then lead individuals to prefer different strategies. As with the Prisoner’s Dilemma, the tragedy of the commons has been rejected by many for not accurately reflecting the varying possibilities of self-interested human nature. Elinor Ostrom is at the forefront of a school of interdisciplinary scholars who have criticized Hardin’s famous tragedy of commons with the aid of empirical counterexamples.69 As opposed to Hardin’s description of common pastures before the enclosure movement and the shift to private ownership of those lands, Ostrom and others have pointed to communities that have solved the “tragedy” without having to resort to private property or other forms of centralized governance.70 This has been called the “middle-way approach” as it sits between two poles: that of unchecked self-interested competition, as in the tragedy of the commons, and the imposition of legal institutions.71 As Ostrom writes, these cases “illustrate situations in which individuals do talk with one another about the long-term condition of their shared resource and take account of one another’s actions when deciding on their own.”72 67 Daniel Bromley, The Commons, Property, and Common-Property Regime, in MAKING THE COMMONS WORK 5 (Daniel Bromley ed., 1992). 68 Id. 69 See, e.g., Elinor Ostram, Rudiments of a Theory of the Origins, Survival, and Performance of Common- Property Institutions, in MAKING THE COMMONS WORK, supra note 67 at 293; Nives Dolsak & Elinor Ostrom, The Challenges of the Commons, in THE COMMONS IN THE NEW MILLENIUM 3 (Nives Dolsak & Elinor Ostram eds., 2003). 70 See, e.g., Ostrom, Id., at 5-8; Bromley, supra note 67, at 2-3. 71 Matt Ridley & Bobbi S. Low, Can Selfishness Save the Environment?, Atlantic Monthly, Sept. 1993, at 76-86. 72 Ostrom, supra note 69, at 297. 62 Essentially, the middle-way approach argues that there is evidence that individuals have been able communicate to establish norms of restraint and enforcement within the community itself. In terms of the Prisoner’s Dilemma, a community of accused individuals comes together to agree upon the suboptimality of “informing” and then organizes penalties for those who transgress this norm. The significance lies in change arising from within the community membership, as opposed to without, which may be identified with the imposition of legal institutions that either organize or divide up the resource.73 This distinction between intrinsic and extrinsic is equivalent to the concept of endogeneous and exogeneous change proposed earlier. The examples of communities able to orchestrate a solution to the problem of commonly held resources are generally small and rural, ranging across time and geographic space. For example, Margaret McKean chronicles the case of various medieval Japanese villages between the thirteenth and sixteenth centuries.74 The village inhabitants, dependent upon the same common resources for a variety of their everyday needs and sustenance, came to develop highly effective social norms of restraint.75 Beyond the simple recognition of the need to protect the common resource, the villagers ostracized those found cheating, and further instituted schemes of alternating patrols drawn from the ranks of the community’s young men to ensure compliance.76 McKean details how the character of each village was itself a substantial mechanism of enforcement, since “all potential violators of rules knew that those near them had strong incentives to advocate compliance as a general rule—or, when 73 Dolsak and Ostram , supra note 69, at 5-8. 74 Margaret A. McKean, Management of Traditional Common Lands (Iriaichi) in Japan, in MAKING THE COMMONS WORK, supra note 67, at 65-90. 75 Id. at 63. 76 Id. at 81. 63 persuasion failed, to snitch on one’s colleagues rather than be implicated with them.”77 Although living in such an observant community might seem oppressive, the point is that individual self-interest is directed toward furthering the benefits of the collective. Although articulated differently, the principle used in the middle-way approach is the same as in the Prisoner’s Dilemma; its tendencies have neither been solved nor overcome, but have been steered toward a different goal. The Prisoner’s Dilemma is optimal for society at the expense of the individuals accused: the accused receive greater sentences than if they had acted with restraint and society increases the odds of gaining confessions and convictions.78 Similarly, the individual who “snitched” on their neighbor in the medieval Japanese village may have done better by keeping quiet, as they could have received more goods by colluding with or blackmailing the person they caught cheating. Thus a tragedy of the commons situation is avoided by invoking the Prisoner’s Dilemma to ensure that the competitive insecurity of each individual serves the collective. The middle-way approach acknowledges self-interest and argues that communities take advantage of it for the benefit of society as whole. Despite the promise displayed by the middle-way approach, questions remain as to whether it can stand as a coherent theory. Two substantial problems exist: scale and indeterminacy. Dealing first with the issue of scale, it appears that a few isolated examples of rural responses to the problem of common resources may not translate to global environmental problems like the atmosphere. As Dolsak and Ostrom explain, “[g]roups with longer traditions of mutual trust and close knit communities that enable 77 Id. at 81. 78 This of course assumes that a greater conviction rate is a desirable social good. Those living under despotic government, for example, would certainly disagree. The middle-way approach necessarily contains an aspect of paternalism or communitarianism, for it is the social good that individual self-interest is made to serve. 64 resource users to reciprocate in behavior are more likely than other groups to succeed in devising and sustaining successful institutions.”79 And as Ostrom further acknowledges, “[f]or large and amorphous resources, such as ocean fisheries . . . it is extremely difficult, both technically and economically, to exclude potential beneficiaries from obtaining benefits from them.”80 When considering these statements it is difficult to see how the middle-way approach would yield answers to sophisticated atmospheric issues that exist on a level where people do not physically see those who are degrading the commons, and are not in connected relationships with those needed to help enforce a solution. The middle-way approach finds its strongest connection with the international realm in the work of Robert Keohane.81 Keohane’s work in international regime theory, unsurprisingly, sits between two diametrical theoretical positions: realism and cognitivism.82 While the realist school believes that states are self-interested and only concerned with survival and their relative strength in relation to other states, the cognitivist school places a priority on learning, as state interests are thought to be formed through social interaction.83 Keohane’s “neo-liberal” theory assumes that each state is self-interested, and that this self-interest can sometimes lead to cooperation and coordination through agreements of mutual benefit.84 Analogous to the middle-way approach, Keohane claims that an international membership of states can develop means 79 Dolsak & Ostram, supra note 73, at 6. 80 Dolsak & Ostrom, supra note 69, at 295-96. 81 See, e.g., Robert O. Keohane, AFTER HEGEMONY: COOPERATION AND DISCORND IN THE WORLD POLITICAL ECONOMY 1 (1984) (arguing that in the international realm, discord, rather than cooperation, is scarce because the interdependence of international economies has created more points of friction). 82 Andreas Hasenclever et al., THEORIES OF INTERNATIONAL REGIMES 3 (1997). 83 Id. at 3-5. 84 Reciprocity, in the fashion of Robert Axelrod’s initial articulation, supra notes 6, 39, & 65, is central to Keohane’s theory of international cooperation. Keohane, supra note 81, at 75-78; see Keohane, supra note 39, at 12-13; see also Axelrod & Keohane, supra note 39, at 234-38. 65 of communication and enforcement when it is in their best interest to cooperate within a given subject area.85 Self-interest causes states to agree upon certain norms and the sanctions for violating these norms, thereby imposing a cost to “free-riding” in the absence of sovereign authority.86 While Keohane’s regime theory may provide a transition to the international level that is arguably missing with the empirical work of Ostrom and others, the more substantial question of indeterminacy remains. The middle-way illustrates that there are different possibilities for effective social organization without providing a notion of how these possibilities come about. The middle-way ardently claims that the tragedy of the commons is not a monolithic constant, which is easy to concede, but the empirical evidence that it raises does not give us a new rule, only the rare exception to it. For every obscure example of an ancient fishing village that was able to enforce economic restraint through community observance, there remain myriad cases that do conform to the tragedy of the commons. As Ostrom writes, “[t]hree broad forms of ownership can govern a common-pool resource: government, private, or common-property ownership. . . there is no consistent evidence that any one of these regimes is best suited for all types of common-pool resources.”87 As often happens with models designed upon explaining human behavior, each theory is destined to remain an incomplete picture. While Keohane’s neo-liberal regime theory explains certain endeavors of international cooperation, other aspects of his model manifest the characteristics of real-politick and the aggressive self-interest of the state. 85 Keohane, supra note 81, at 63. 86 Id. at 150. 87 Dolsak & Ostram, supra note 73, at 8. 66 Although Keohane’s theory may explain why environmental agreements like Montreal have succeeded, but it remains silent on why Kyoto has not. The insights and inconsistencies of various contrasting theories are assumed to be inevitable to covering diffuse situations of widely varying scale; rendering the object of this approach as determining whether failure or coordination best characterize interest perception and competition within a given case. I have proposed that through the measurement of rational strategies over time we may judge which model of common resources most accurately defines a specific system. In this way we may determine whether self-interest is developing new directions based upon membership communication, as if organically from within the game, or whether more ambitious legal reforms are needed to encourage new possibilities of communication and cooperation. D. Variations on Game Theory Having viewed the problem with the help of game theory, it is possible to gain the hint of a solution there as well. Figure 1.2 below is a hypothetical continuation of Figure 1.88 The two figures represent a repeating game, with Figure 2 showing a subsequent turn or later point in time. This notion of time is important for a game involving an environmental value in order to account for exhaustible and finite resources. The results of round one, N, P, and S1, have been included with those of the imagined second round for comparison. The results of round two contemplate a worsening situation, and as such the curve of mutual benefit has diminished (compare with the previous peak of H). This 88 It is important to note that this hypothetical continuation is not meant to imply scientific data or a reflection of reality. The selected points of the second figure show a worsening situation, but it may equally show an improvement. The point of this investigation is to explain the potential process for examining results, not produce the results. 67 reflects the fact that in the previous turns the players had a suboptimal equilibrium: they polluted too much and now there are fewer resources available. Figure 1.2 A Representation of Commons Competition – The Second Round Legend: X axis– Amount of Pollution. Y axis– Amount of Fish. A—Marginal Damage; the pollution that each offloads into the commons. B—Mutual Benefit; the mutual benefit from common resource. H—Highest Point of Resource; in this instance, found in round one. Current Round: N2—Nash Equilibrium; the most rational strategy, current round. P2—Pareto Optimum; the optimal strategy, current round. S2—Distance between N and P; current round. Previous Round: N—Nash Equilibrium; the most rational strategy, from round one. P—Pareto Optimum; the optimal strategy, round one. S1—Distance between N and P; round one. Comparing the equilibrium and optimum points for multiple rounds in time provides an interesting perspective for viewing systemic developments. For instance, 1 10 100 1000 1 2 3 4 5 6 7 8 9 10 11 P N *H S1 P2 N2 S2 A B 68 contrasting P and P2 shows how an exhaustible resource may be depleted to the point where a reduction in use is needed to simply maintain the already suboptimal condition. Recall the IPCC findings which estimated that emissions of CO2 would have to be reduced by more than sixty percent just to stabilize current concentrations.89 The value H, representing the point of highest resource abundance from the previous figure, is also worth noting. Perhaps the most intriguing idea contained within this theoretical example is the value of S. Quite simply, S is the distance between the equilibrium and optimum points. In and of itself S may be insignificant; but when considering the potential normative implications of a social game, the impact increases. With respect to the first turn of the game, the equilibrium is suboptimal to the value of S1, the distance from the optimum point. Suboptimal means only that the collective strategies resulted in an equilibrium that was not ideal, but it says nothing about how far from ideal the course of action was. Therefore, S is a measurement of how near individual strategies were to the best for the whole. Taken over time the value of S becomes increasingly significant. Suppose in turn one: N = 10 and P = 6, therefore S = 4 In turn two: N1 = 13 and P1 = 5, therefore S1 = 8 End of game: S2 - S1 = S If S is a positive number the situation is deteriorating despite the previous turn. This implies that the players are not learning from their previous interaction. If the 89 Barrett, supra note 9, at 196. 69 distance is closing one could infer that the players are learning from previous suboptimal results. E. Systemic Observation By comparing equilibrium and optimum points we may gain insight into how a system of rules reconciles the competing rationalities of individual and collective interest. As demonstrated above, the dilemma of rationalities present in a commons is not a competition among equally viable options, but rather a competition between perceived and actual benefit. Both the individual and the entire collective are served by behavior commonly employed. The task of a legal system is to mitigate against the tendency of actors to profit from behavior that, if taken by others, would be detrimental to everyone. In essence, the object is to promote restraint and engender a way of thinking that makes individuals elevate their concerns above the immediate pay-off from cheating the whole. The value of S is thus a hypothetical measurement of social learning, or the cognitive development triggered by social forms and the awareness of interconnected consequences arising from behavior. If game theory models give us a theoretical vantage of rational strategies and collective benefit, then the value of S is merely a simplistic attachment added to highlight the dynamics of systemic inputs. In essence, S is a measurement of the distance between two figures over a series of landscape snapshots. If picture one shows a suboptimal relationship between two figures or points, then the following pictures show us whether or not surrounding forces are bringing the two figures together. By measuring the fluid relationship between knowledge and behavior we may objectively view when the conditions for radical paradigmatic change are in place, and ultimately necessary. 70 F. Montreal and Kyoto The Kyoto and Montreal Protocols are similar in their atmospheric focus but differ significantly in their actual effect. Where the Montreal agreement has encouraged an alteration in behavior, and made a significant advance toward the elimination of CFCs, the Kyoto Protocol has not had a discernible impact upon climate change. To place Kyoto and Montreal into the theoretical framework developed above, Kyoto would have an increasing S value while Montreal a decreasing figure. Essentially, CFC usage would be seen to be declining toward the collective or social optimum and away from the Nash Equilibrium point, and thus the declining amount for S is a signal of social learning. Conversely, the likely increase in S value under Kyoto illustrates that individual actors are not learning from past suboptimal results; despite the evidence of collective harm, individual maximization continues. There has been much criticism of the science of climate change and the uncertainty that necessarily surrounds future estimates of environmental decline.90 Fundamental advancements in knowledge must be open to future qualification, as Newtonian governing dynamics was to Einstein’s theories of relativity. Uncertainty need not bar conservative human action for the sake of future security. Consider the words of Richard Benedick, the chief U.S. negotiator at the Montreal Protocol talks: We seem to have forgotten that [the case for the Montreal Protocol] was completely theoretical. Measurements did not in fact record any thinning of the ozone layer, except over Antarctica, a seasonal occurrence which scientists at the time considered a special case, and for which there were 90 Dennee A. Diluigi, Kyoto’s So-Called “Fatal Flaws”: A Potential Springboard for Domestic Greenhouse Gas Regulation, 32 Golden Gate U. L. Rev. 693, 697 (2002) (summarizing the combination of a broad consensus on observable effects with intense debate of the causes. “While scientists generally agree that global warming is occurring, some hotly debate the cause of global warming, as well as its potential impacts on the planet.”) 71 numerous theories. There was, moreover, no evidence that CFCs were responsible. Finally, there was no sign of increased ultraviolet radiation actually reaching the Earth.91 Assuming a similar level of objective knowledge for both climate change and ozone depletion, we may infer that dissimilar implementation is not based on a scientific or logical method but rather the pragmatic realities of maintaining the status quo. There are times when a legal system may quite admirably incorporate new information into social norms of behavior. What is less clear, however, is the capacity of a system to regulate away problems that go to the heart of how economic competition is defined. While Montreal involves a single replaceable component in the economic process (CFCs), Kyoto, by addressing the burning of fossil fuels, involves far greater implications for society’s functioning. For instance, consider the differing impact of replacing an ingredient in production (CFCs) with the lifestyle implications of reducing our dependence on fossil fuels. Kyoto involves such great costs compared to the relatively unremarkable replacement costs of CFCs, that bearing these costs will inevitably undermine the social fictions under which we currently live. Solving climate change requires acknowledging a global issue and, most importantly, acting fully on the knowledge that the world’s divisions are social creations not fixed in nature. If Montreal and Kyoto pose problems of comparable form, it is the breadth and intensity of a required response that reveals the inability of systemic development. 91 Barrett, supra note 9, at 193. 72 G. A New Paradigm? The measure of behavior that is implicit in the value of S helps illustrate the state of a paradigm. By contrasting collective action with that of collective benefit it is possible to interpret the extent to which new ideas are either taking hold or simply ignored. The essential quality is that of an idea, an extension of knowledge which is not compatible with the existing paradigm. As the detriment to society increases by maintaining traditional assumptions, it becomes clear that those assumptions must be altered if the best interest of everyone is a desired result. The pattern of individual choice is an indication of how fundamental a solution needs to be. If the distance between the equilibrium of strategies and the optimal outcome for all is closing over time, it follows that the new form of knowledge is being incorporated into the existing paradigm. This endogenous form of change exhibits the existence of a developing consensus and does not require a dramatic solution. In this instance law may be used to augment the impetus already present within society so as to minimize the gap between knowledge and behavior. Where ambitious endeavors are not demanded, environmental issues may be regulated as an economic accessory with such measures as tradable emissions permits. In contrast, a dramatic break with tradition will be required in the face of impeded knowledge. Without consensus, endogenous legal change cannot occur, and the incorporation of environmental protection into the existing game remains fruitless if the players refuse to acknowledge any added dimensions. In cases such as these, the desired knowledge must precede the playing of the game itself. To illustrate the difference between endogenous change and a paradigm shift, consider the differing implications of 73 tradable emissions permits compared with requiring each country to satisfy high levels of environmental protection before gaining access to the benefits of international trade. Rather than a regulatory footnote to competition, a paradigm shift would require that environmental protection precede the market itself. Recognizing the need for paradigmatic change is discussed in the following section, with international state competition as the system under consideration. I.V DECLINE & LOST MEANING Fourth Postulate: In circumstances where there is no authority for imposing change, logic may nonetheless indicate when a system’s underlying principles have been undermined. A. Assumptions and Perception A system breaks down when its underlying assumptions are premised upon patterns that cannot adapt to new information. Game theory helps illustrate the incongruence between developing perception and the rules left over from a previous way of viewing the world. A system may contain assumptions in combination that remain logically sound so long as new patterns are not perceived. The sequence 1, 2, 3, 4, 5, 6, appears to be a minimal progression if as we do not know of prime numbers, which automatically differentiates 2, 3, 5, as belonging to a separate category. Once we possess the knowledge of prime numbers, a new pattern appears within the previous assumption and the sequence is not as simple as it first appears. As with prime numbers, climate change is a pattern found within a previously complete system. It is as if our sight has suddenly become three-dimensional while the world’s organization remains two-dimensional. 74 The awareness of damage to a global commons like the atmosphere goes beyond differing levels of perspective, it can undermine an entire edifice that is built on false assumptions. Developing knowledge of the surrounding world has the dual effect of initiating new information structures while simultaneously undermining the old. In keeping with the simplistic numerical sequence mentioned above, environmental awareness has not only revealed a pattern previously unseen, but as with the introduction of prime numbers, operations developed upon past patterns and assumptions are shown to be inconsistent. B. The Minimizing Game Territorial divisions are now unable to protect against despoiling the commons because they are now part of the problem. Just as the one-dimensional level of ownership of cattle created an open imperative for individuals to impose ceaselessly upon the commons, the state is now the means for one directional impositions upon the global environment. The state provides the impetus for individual conduct and then precludes accountability for that same behavior. While assimilating the various social progressions from previous commons, the state is now the greatest manifestation of that first level of ownership without responsibility; it encourages wasteful use of resources without answer. Considering the second theoretical figure again reveals that continuing suboptimal outcomes not only represent a lack of cognitive learning, but also reveal a game’s uppermost imperatives. With new information, previously consistent objectives separate and one course of action must be chosen at the expense of another. As mentioned before, the environment is not without economic value, for we may infer that its deemed value is below that of the chosen alternative. When S is an increasing value, players’ best 75 strategies are neither best for the group nor themselves; and competitive motives squeeze group concerns out of the game. The concept of state sovereignty has evolved through time and it may need to evolve further to be able to maintain the demands of democratic representation. Even the most minimal definitions of liberal democratic government, such as Locke’s famous “night-watchman” state, are premised upon the protection of the individual.92 When the state itself is an impediment to realizing an end to harm, serious questions of future legitimacy may be triggered. The state has regressed to a one-dimensional organization like that of the herdsman on the open pasture. Without collective authority or individual restraint to protect the commons, each actor operates without accountability. When there is no balance between the freedom of autonomy and the freedom from the acts of others, the process of wealth creation is no longer promoting individual liberty. I.VI CONCLUSION The Kyoto Protocol does not conform to what many would think of as a law. But the fact that Kyoto is without express authority does not necessarily mean as much as we have been led to believe. Kyoto tells us what definitely cannot be, and it does so as unequivocally as many other traditional laws. Kyoto is like the law of contradiction, wherein both a and b cannot simultaneously be true. A state makes a statement just as loudly by ignoring Kyoto as by ratifying it. In representing new information, Kyoto is fundamentally an issue of change. Because awareness of atmospheric degradation has an impact on the world, the question becomes how organizations will respond to this change. Organizations must either adopt 92 For a modern expression of libertarian political philosophy, see Robert Nozick, ANARCHY, STATE, AND UTOPIA (1974). 76 to meet modern realities or these organizations simply cannot be what they claim. The state must grow or decline; it is not permitted the luxury of remaining the same. The recognition of a new commons produces a situation in which the assumptions that underlie state sovereignty are not possibly consistent. In essence, the harmony of a social division is disrupted by the revelation of contradictory information. If institutions such as the state are to retain the social legitimacy that comes from controlling the market, the state structure will have to be reconnected with a means of accountability. Kyoto thus signals whether the direction of state movement is toward accountability or toward continued decline into mere economic agency. Too often what has been is taken for granted as currently being. The attempt here has been to illustrate how information may allow us to logically deconstruct a system. While there is an unfortunate tendency to conceive of social fictions as social truths, using more objective tools from other fields can help demystify our legal structures. Regardless of our faith in longstanding legal fictions, scientific discoveries may reveal our way of looking at the world is flawed. And as with scientific theories, new knowledge may prove previously seamless legal principles to be suddenly inconsistent. CHAPTER TWO LEGAL AND ECONOMIC EVOLUTION MEETS THE ENCOURAGEMENT OF PROGRESS The second chapter of this dissertation continues on with the concept of systemic unpredictability introduced above to engage the question how international regulation may most effectively meet the challenge of change. A hypothetical assumption underlying this project is that a majority of international actors have realized a serious situation of physical harm joined with economic suboptimality, with the aid of the procedure noted in part one, and have entered into negotiations to alter their rules of competition to meet these realized challenges. The initial stage, conducted with a view to hypothetical negotiation, seeks to provide the ideal organization method of progress: of contemplating unexpectedness and having rule design promote the greatest number of viable solutions to future problems. Subsequent parts and sections of this project then seek to justify, and add social content to, this method of progress in a form of individual choice, interest, and rights. The type of unpredictability introduced in part one involves an altered interconnectedness of impact, with the external effects and individual agency undergoing a change that undermines previous conceptions on what characterizes beneficial competition. This unpredictability of interaction and changed modes of success finds a ready and oft used metaphor in evolutionary biology, in which the environmental selects out from variations in individual agency to favour some over others. This evolutionary metaphor has influenced theories of law and especially economics, favouring the notion that the system will eventually promote the most efficient or persuasive idea for overall 78 success. While this recognition of changing interaction between system and agency is arguably necessary and useful, a neutral view that assumes system selection may obscure the extent to which social order may unduly favour the status and prevent true variation to occur. Evolutionary concepts in legal and economic theory, of legal pragmatism and classical economics respectively, remain descriptive as to the past and neutral as to the future, meaning that competive struggle resulted in the status quo forms having defeated others to assume ascendency, and that the next form will have to similarly have to defeat the present. Until such time as a complete change in social persuasion occurs, however, such theoretical views on evolution have the de facto effect of endorsing the status quo at the expense of potential variation. The following chapter proceeds through an examination of evolutionary thought in legal and economic theory and with the aid of the theory of path dependence will concentrate upon the potential for past efficient solutions to no longer meet future demands, and may indeed stand in the way of adopting to a more beneficial scheme of organization. The concern of past assumptions standing in the way of improved techniques and variations gains much credence in light of the market failure discussed above, with rational strategies becoming irrational and self-defeating because of systemic circumstance. Furthermore, the tendency of competitive insecurity indicates that the systemic prevention of genuine individual choice must also prevent the variation potential required to test present assumptions and offer potential improvements. The central argument of the following chapter accordingly places the means of innovation in individuality, and advocates that systemic regulation must become a method for encouraging variation in competitive attempts as a primary principle. 79 In addition to elaborating the central method of diversity, the following chapter also addresses the question of convergence; of when it is efficient for many to follow the same successful strategy. In keeping with the When radical systemic change is called for in response to worsening suboptimality and conditions of competitive insecurity, then diversity may be thought of as guiding the redesign of an entire system of competition. However, the principles of diversity, and the premise of differentiation as the best response to future problems, remain sound even in face of homogenous strategies that are efficient currently. Therefore, though the scale of the problem may indicate the scale of the application, diversity may serve as a useful guide whether the concern be system redesign or improved oversight within stability or limited ambition. This difference in ambition is considered with reference to brief examples. The example of ambitious redesign, however, will later be elaborated upon as the main hypothetical application and use of diversity as this dissertation is premised upon the recognition and response to suboptimal system failure. II.I INTRODUCTION The recognition of unforeseen consequences of economic competition may trigger descriptive questions on the past’s influence on the present. Specifically, what explains status-quo arrangements and distributions as the best approach? The mainstream, economic approach has been to assume an evolving competitive process, whereby present economic forms and actors have ‘won’ their way into continued existence. Opposed to this convergence view - in which the most efficient form is the point converged to - is the theory of path dependence, a variant within evolutionary and economic theories. The 80 theory of path dependence offers the lesson that past successes were often the result of specific and chance circumstances that have no rational connection with fitness or ability in meeting current challenges. The competing visions of past success are an apt concern for the promotion of competitive diversity, for despite the general appeal of differentiation it remains that surely are instances in which uniformity, or convergence, should be encouraged. Rather than encourage individuals to follow divergent paths despite the undeniable success found by another, there must be a clipping point when all should follow and build upon a new practice. The object is distinguishing between convergence based on improvement and convergence based upon a minimal race to the bottom. This will indicate the ambition for encouraging variation in competition. Competitive insecurity characterizes situations in which an actor must defect to a sub-optimal position for fear that their competitor will achieve an advantage in doing so first. Solving competitive insecurity, and relieving competitors of its minimizing impulses, should be the first objective of an equitable international theory. A regulatory system should not impose successful outcomes or strategies upon its members, but should promote the ability of each to offer up their own attempt at success. Accordingly, individuality and the potential for differentiation should offer a potential key to evaluating the qualities of convergence by allowing for individuals to compete differently if they choose. The role of individuality in social development may be drawn out to advantage with legal pragmatism as an example of mainstream thinking on legal evolution. Legal pragmatism, a longstanding school that found inspiration in early American philosophy 81 and Darwinism, is premised on the rejection of absolute truths and universal ideals in exchange for what is useful currently and believed by most. Legal pragmatism tends to incorporate a progress narrative with similarities to both evolutionary biology and classical economics, in which social developments are thought to be determined by competition amongst techniques and ideas. The difficulty with such competitive views of social change is that they obscure the extent to which successful solutions of the past – now the status quo – may be less adept at meeting new and future problems. Drawing on the evolutionary and economic variant theory of path dependence, it is argued that an assumption that the best, most efficient technique always wins out unduly sanctifies the present and inhibits awareness of unmet challenges. Ultimately, the encouragement of social change and advancement would be more securely located in the legal promotion of individual attempts at originality, rather than an assumption that competition is constantly moving toward perfection. II.II EVOLUTIONARY METAPHOR ACROSS DISCIPLINES Arguably not since Newton’s Principa Mathematica has a scientific text captured the imagination of social scientists to the extent of Darwin’s The Origin of Species. Initially used to justify all manner of inequality and depravation with the hackneyed claim of ‘survival of the fittest,’ evolutionary metaphors also came to symbolize a liberating receptiveness to change. When taken up by the early pragmatists, evolution would inspire a uniquely American philosophy, and an optimistic view to the open-ended social possibilities of American life. Under pragmatism, the practical expediencies required in the here and now were to take priority over the ancient dilemmas and fixed 82 assumptions of the old world philosophies. The prospect of loosening the hold of the past over the present provided by pragmatism has been an appealing one for legal theorists. In addressing a profession normally and willfully bound to the rule of the past, or the government of the living by dead in Holmes famous words, legal pragmatism has often contained an element of radicalism. Modern neo-pragmatists who call for the approach to be used to challenge oppressive legal institutions may be seen as continuing a radical strand that reaches back through CLS and legal realism to the early legal pragmatists. This chapter advises caution in these modern pragmatic hopes. Legal pragmatism, though it may often glorify social change, can never instigate it nor protect its possibility. In lacking a principled foundation apart from what most people currently believe, legal pragmatism tends to impose status quo beliefs in a Panglossian view that what exists must be the best of all possibilities. The latest legal re-acquaintance with pragmatism is limited in the same fashion as Holmes early celebration of the ‘marketplace of ideas.’ As demonstrated by an impasse in the work of Richard Rorty, who has arguably done more than anyone to breath new life into pragmatism,1 the pragmatic vision of law as competing social beliefs endorses all change in the past while remaining silent on whether or how new change is to occur. No matter how enlightened or well-meaning a pragmatist may be, and as Rorty surely is, there is no independent key for triggering or encouraging development. Of course people may eventually believe differently, but until that time the present is unduly sanctified by having won out over all that came before. In drawing an analogy between legal pragmatism and economic theory, perhaps the field most given to evolutionary metaphor, 1 See Joan C. Williams, Rorty, Radicalism, Romanticism: The Politics of the Gaze, 1992 Wis. L. Rev. 133 (1992). 83 I wish to accentuate the tendency of theories of competitive change to end up as an apologia for biases of the status quo. Past change is embraced as the precursor to what is now, for having providing the present through competitive struggle, evolving to perfection. Seen in this light, the threat is that a victorious practice of the past may easily become an unquestioned ought in the present. The danger in a pragmatic endorsement of evolution to perfection is that solutions to old problems configure our thoughts so that new problems, and their potential solutions, are not even contemplated. These dangers of evolution to perfection are well illustrated by the theory of path dependence, a radical variant in evolutionary and economic thought. The theory of path dependence offers the lesson that past successes were often the result of specific and chance circumstances that have no rational connection with fitness or ability in meeting current challenges. Evolution to perfection celebrates this past variation at the expense of questioning whether a new, or even previously defeated, technique may not serve better. There are times when it may be impossible to undo the advantages given to past techniques, but we need not revel in the inevitable perfection of all the paths that led to where we presently are. Between the caution deserved by evolution to perfection and the simultaneous need to have others adopt around a better solution, lies a difficulty of how to balance the growth of new ideas while remaining neutral as to the ends of the system. Though path dependence warns against assumptions of the present as perfection, it remains that there are times when a certain path should be followed over others by most competitors. Rather than encourage the majority to follow divergent paths despite the undeniable success found by another, there must be a momentum point when many 84 should follow and build upon a new practice while space for a creative few to diverge is encouraged. The object is distinguishing between convergence based on improvement and convergence based upon a minimal race to the bottom so as to provide for the scale of diversity’s ambition of use. A regulatory system should not impose success or strategies upon its members, but it should promote the ability of each to offer up their own attempt at success. On the more radical evolutionary level, in response to competitive insecurity and suboptimality, it is the entire competitive system that must be reconsidered. When convergence is still efficient for the group, then regulation should adopt a less ambition approach, and encourage individual innovation for the sake of diversity and future difference, but it remains that only few individuals will be able to translate a specific and time limited incentive toward a far out competitive goal post into competitive advantage in the long- term. A potential bridge across the gulf between pragmatic convergence and path dependence, and thereby indicate the scale of diversity solution, may be found, perhaps ironically, in a pragmatic source. Throughout his work, Rorty joins his pragmatic philosophy with a fascination with the strong poet.2 Such prophetic figures as the strong poet are the individual agents of social change, who rise up and offer up their unique personality and ideas to society as models of what ought to be. These individuals are the motivators, the providers of new content, in a marketplace of ideas. Rorty’s pragmatism is purposively neutral: a method for viewing what works best by way of popular belief. But why limit it so? If change arises from individuals, prophetic or otherwise, why not 2 “In my view,” Rorty explains, “an ideally liberal polity would be one whose culture hero is [Harold] Bloom’s ‘strong poet’ rather than the warrior, the priest, the sage, or the truth-seeking, ‘logical,’ ‘objective’ scientist.” Richard Rorty, CONTINGENCY, IRONY, AND SOLIDARITY 53 (1989). 85 encourage the supply of ideas rather than assume that the market will determine the best automatically? For if the pragmatic description of legal change is correct, then followed to its logical conclusion, the promotion of the greatest number of contributions should be the legal pragmatist’s constant goal. Assuming an efficient market for ideas is a descriptive story of limited value when compared with a method for actively encouraging the supply of what this market is supposedly to choose between. With a progressive evolutionary system, the focus would rest on alleviating the impediments to individuals contributing their own vision of success. In constraining visions of new possibilities, evolution to perfection becomes an impediment to progress, not its pinnacle. Future solutions may well come from those who are currently excluded, ignored in the congratulatory noise surrounding what exists presently. II.III LEGAL PRAGMATISM The great American jurist and legal philosopher Oliver Wendell Holmes Jr. is usually credited with giving pragmatism its earliest and most articulate introduction to the law. Holmes’ work challenged traditional assumptions on the law as an independent system connected through time and guided by reason. It was an ambitious deconstruction. In tearing down and clarifying the structures of the past it was hoped that the law could become a straightforward practice of the present. Prophetically, in an article from 1895 entitled Learning and Science, Holmes states that “the law, so far as it depends on 86 learning, is indeed, as it has been called, the government of the living by the dead. But the present has a right to govern itself so far as it can.”3 In a bold statement at the outset of The Common Law, Holmes claims that “The life of the law has not been logic: it has been experience.”4 Although modern eyes may find nothing revolutionary in this statement, that which has been made commonplace through the extent of its influence should not lose its proper place in legal history. The belief that the law was primarily an exercise in logical reasoning had gone unquestioned for centuries, allowing Sir William Blackstone to state authoritatively in 1765: What the law is, every subject knows, or may know, if he pleases; for it depends not upon the arbitrary will of any judge, but is permanent, fixed, and unchangeable… The judgment, though pronounced or awarded by the judges, is not their determination or sentence, but the determination and sentence of the law. It is the conclusion that naturally and regularly follows from the premises of law fact… which judgment or conclusion depends therefore on the arbitrary caprice of the judge, but on the settled and invariable principles of justice.5 The longstanding ideals of judicial objectivity and neutrality may be seen to follow directly from a conception of law as logical system. If legal principles act as logical axioms, judicial interpretation is constrained in a manner consistent with the conclusion that judges discover rather create the law.6 Logic contains the past flow of legal decision, and new fact situations are placed via analogy within this developing stream of precedent. Thus the law is discovered; as the natural development of its inherent logic is uncovered and extended in each new circumstance. 3 Oliver Wendell Holmes, Jr., Collected Legal Papers 138-139 (1921). 4 Oliver Wendell Holmes, Jr., THE COMMON LAW 1 (1948). 5 William Blackstone, COMMENTARIES ON THE LAWS OF ENGLAND, Vol. I, 151, Vol. III, 434 (1821). 6 Gary J. Aichele, LEGAL REALISM AND TWENTIETH-CENTURY AMERICAN JURISPRUDENCE 3 (1990). 87 Though expressed in practical terms, Holmes’ priority of experience over logic undermined dramatically the theoretical connection of law and higher principle. In the monumental article The Path of the Law, Holmes states a simple enough definition of the law: “The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law.”7 Interesting aspects of Holmes’ definition of the law are to be found in the limitations on where judges are supposed to find guidance. Most especially, Holmes is intent on undoing the belief “that a given system, ours, for instance, can be worked out like mathematics from some general axioms of conduct.”8 Holmes then deigned to relieve students of the law of their well-intended, but ultimately misguided delusions: “And the logical method and form flatter that longing for certainty and repose which is in every human mind. But certainty generally is illusion and repose is not the destiny of man.”9 Holmes’ assault upon the law as a logical system corresponds well with the pragmatic rejection of objective and absolute truth. But there is, and must be, more to pragmatism than a void of foundation, and the tearing down of a previous era’s philosophical monuments. If legal pragmatism rejects theory, as an anti-theory as it were, but does not replace old methods with the new, it still must offer a location of value. Truth may not be objective in the pragmatic view, but it has a place in social usage nonetheless. The founding American pragmatists, such as Pierce, James, and Dewey, were quite focused upon the physical sciences, and in an evolutionary sense were 7 Oliver Wendell Holmes, Jr., The Path of the Law, Harv. L. Rev. Vol. X No. 8 (March 25, 1897) 461. 8 Ibid., 465. 9 Ibid., 466. 88 observant of the changing nature of knowledge.10 This evolutionary process of knowledge, wherein new ideas and assumptions are seen to replace old certainties, came to influence an instrumental view of truth in pragmatic thought. A priority of social usage may be discerned in William James’ oft quoted sentiment: “The true is the name of whatever proves itself to be good in the way of belief, and good, too, for definite, assignable reasons.”11 A philosophy of truth defined by what is good by way of belief is uniquely open- ended, allowing for what works presently to be true regardless of the past assumptions and certainties. While Holmes’ call for the future to determine itself may be seen to echo the pragmatist’s rejection of past truths, his work would also contain hints on how this present social usage was to be located or found. The first element of Holmes’ prescriptive pragmatism (as I term it) was the claim that the law was to be found not in logical discovery, but simply in the person of judges. Hence the later and now well-known claim of legal pragmatists that the law is merely what ‘judges say it is.’12 This liberation from logical legal aspirations was not perceived to be without danger, however. The renowned analytical legal philosopher H.L.A. Hart, for instance, chastised the legal realists for ignoring the extent to which the ‘rule’ – always paramount for Hart – of the law usually proceeded upon a following of clear precedents, and without the need for judicial creation or legislating.13 10 Alan Wolfe, The Missing Pragmatic Revival in American Social Science, in THE REVIVAL OF PRAGMATISM: NEW ESSAYS ON SOCIAL THOUGHT, LAW, AND CULTURE 199 (Morris Dickstein, ed., 1998). 11 William James, WHAT PRAGMATISM MEANS, 63 (1906). 12 Michael Brint & William Weaver, Introduction, in PRAGMATISM IN LAW AND SOCIETY 1 (Michael Brint & William G. Weaver, eds, 1991). 13 See, E. Hunter Jr. Taylor, H.L.A. Hart’s Concept of Law in the Perspective of American Legal Realism, 35 Mod. L. Rev. 606; (comparing the relationship between Hart and the American legal realists, and arguing that Hart overstates their differences in order to further extenuate his own theory - a ‘staw-man’ 89 In a different vein, a danger welcomed by many amongst the early legal realists and the subsequent CLS school, was the demystification of law invoked by reducing law from principle to actual individuals. A more politicized view of law would emerge, which concentrated on the perceived biases that longstanding legal doctrines had come to enshrine as principle. Articulated mainly from a liberal basis, the early legal realists would challenge the sense of legal creations like the corporation, and in doing so connect the notion of a legal fiction with the political and economic preferences which underlie the status quo. Apart from the legal political activism engendered by pragmatism, much of which would probably have been distasteful to Holmes had he known the course of his influence, it remains that this judge based focus lies at the heart of pragmatism to this day.14 As Posner, for one, has detailed, legal progress occurs as individual judges pick and choose from surrounding ideas to find what society currently requires.15 Judges, in this interpretation, may be seen to be the individual representatives of social usage; the arbiters of what works best by way of belief. If judges are to be the ones selecting amongst social ideas, the provision of these ideas are addressed in the second, and arguably more significant, element of Holmes prescriptive pragmatism. Though judges are the repository of so much selective power, in version of legal realism as it were. Though beginning from a similar basis, specifically a dissatisfaction with the moral claims of natural law and ‘syllogistic’ assumptions of law as derived from logic, it is the third element of legal realism/pragmatism that Hart cannot accept. Namely, the pragmatic view that lawyers are engaged in the art of predicting what judges – as individuals – are likely to do. This third element is antithetical to Hart’s priority of rules, and the surrounding political, institutional structure that gives the law an authority beyond the individual bureaucrat or legal decision-maker. 14 Aichele, supra note 5 at 14. As Aichele observes of Holmes: “Aloof, removed from the social upheavals of the day, Holmes showed little concern for the improvement of American society. Any support of specific programs for reform was more coincidental than intentional.” 15 Posner recounts Cardozo’s theory of adjudication, which is said to elaborate upon Holmes basic philosophy, as the obligation of legal decision-makers to find solutions that further the “welfare of society.” Richard A. Posner, What Has Pragmatism to Offer Law?, 63 S. Cal. L. Rev. 1656. In Cardozo’s words, “the thing that counts is not what I believe to be right. It is what I may reasonably believe that some other man of normal intellect and conscience might reasonably look upon as right.” Benjamin Cardozo, THE NATURE OF THE JUDICIAL PROCESS 88-89 (1921). 90 a largely undemocratic fashion, Holmes was ultimately concerned with the restraint of judicial interference in the social forces beyond the law. In Holmes’ vision, the legal arbitration over social usage should allow ideas to compete for ascendancy in the ‘marketplace of ideas’ - perhaps the most well-known concept within legal pragmatism. As Cass Sunstein has observed in an often cited article on the seminal Lochner case, Holmes famous dissent seemed to exude personal forbearance, and the suppression of his personal predilections, for the sake of allowing social forces to contest each other in the safe confines of the law.16 What might seem more personally compelling to Holmes was secondary to the systemic need to provide the space for ideas and factions to battle it out in the private realm for supremacy.17 The undemocratic nature of judicial selection is thus balanced against a pluralistic need to let competing interests and ideas clash. Holmes’ legal pragmatism joined three elements consistent with the American pragmatists: 1) rejecting past absolutes, in favour of 2) social usage, and 3) competitive valuations of truth. While the work of Holmes occurred over the years surrounding the exchange of the 19th for the 20th Century, according to Richard Posner, legal pragmatism has not advanced significantly since.18 In its essence, pragmatism remains an anti-theory, a method against methodological certainty, or certainty of any kind. As Posner observes perceptively, pragmatism “clears the underbrush; it does not clear the forest.”19 While most pragmatists agree that the approach does not offer solutions, a hallmark of pragmatism remains its attempted receptivity to change. As Stanley Fish states: “Pragmatism is the philosophy not of grand ambitions but of little steps; and although it 16 Cass R. Sunstein, Lochner’s Legacy, 87 Colum. L. Rev. 879 (1987). 17 Ibid. 18 Posner, supra note 15 at 1653. 19 Posner, supra note 15 at 1670. 91 cannot help us to take those steps or tell us what they are, it can offer the reassurance that they are possible…”20 For those who find reassurance on the availability of change preferable to its active promotion, a legal pragmatism consistent since Holmes is no doubt comforting. II.IV RORTY AND PRAGMATISM Modern pragmatism as defined by the likes of Posner and Fish may be representative of the current parameters or mainstream of the approach, but it is not conclusive of the attempts to make it otherwise. Pragmatism by its very definition remains without content, without a theory as to what is correct or preferable. Unsurprisingly, there have been legal scholars of late who have tried to make pragmatism more socially active – a tool to be used against oppressive assumptions that exist within the current legal regime. The potential for new legal truths is understandably appealing to those who are reform minded. That the assumptions of the past, in this case viewed as oppressive, have no claim to objective truth or social priority is a potential recipe for radical change, and newfound equalities. And though this appeal for new beginnings may be undeniable, to understand pragmatism as a philosophy is to realize that such radical or equitable claims have no special place within it. That the attempt at such radical solutions has even made is no doubt a testament to the modern influence of Richard Rorty and his revival of the Romantic tradition within pragmatism. Yet, whatever Rorty’s influence, it remains that the basis of pragmatism is a method less view to social change, located in what people currently believe. The inability of radical approaches to be reconciled within 20 Stanley Fish, Truth and Toilets: Pragmatism and the Practices of Life in Dickstein, supra note 9 at 433. 92 pragmatism in a meaningful way is an inevitable lesson that the Romantic strand of pragmatic influence must lose out to the core belief of evolutionary competition. The evolutionary influence upon American pragmatism is well-known. Darwin provided not only a scientific theory to replace old assumptions; he did so in a way particularly well suited for absorption into social theories. Darwin’s theory of natural selection indicated that one’s environment was determinate, selecting out variations as better fit for success, leaving these genetic advantages to be handed down to subsequent generations. The environment is thus the field against which competition is measured, providing the fuel of reward, while internal variation provides the diverse and divergent attempts at attaining this goal. It is not a far leap conceptually from Darwin’s environmental selection to that of pragmatism, whereby what works best in the present is good enough by way of belief and usage, and the marketplace of ideas selects the most fit idea for survival. The Romantic strand of pragmatism, on the other hand, concentrates more on the possibility to construct the social world anew, and forge ahead despite the preferences of the past. Though rejected by such prominent pragmatists as Fish for an undue amount of glorification, aspirational content, this Romantic strand is precisely that which has inspired many modern legal neo-pragmatists. Authors associated with the radical Left, in the words of William Weaver, tend to “believe the influence of philosophy has provided intellectual cover for unjust power arrangements perpetuated by law.”21 A large number of reform minded authors have taken up an activist use of pragmatism.22 The initial 21 William G. Weaver, Richard Rorty and the Radical Left 78 Va. L. Rev. 742 1992. 22 E.g., Mari J. Matsuda, Pragmatism Modified and the False Consciousness Problem, 63 S. Cal. L. Rev. 1763 (1990); Martha Minnow & Elizabeth V. Spelman, In Context, 63 Cal. L. Rev. 1597 (1990); Margaret Jane Radin, The Pragmatist and the Feminist, 63 S. Cal. L. Rev. 1699 (1990); Joseph W. Singer, Property 93 inspiration given by Rorty is not difficult to understand when considering the reformists goals these neo-pragmatists have in view. As Weaver observes, “The radical Left sees in pragmatism what it needs to cut law free from philosophy, thereby facilitating the attack on traditional legal justification. Many on the radical Left see the pragmatist’s assault on foundationalist philosophy as preparing the ground for a new politics.”23 When considering this second, aspirational goal of neo-pragmatists it is perhaps unsurprising that many find Rorty somewhat uninspiring.24 While many modern pragmatists of an activist bent have been influenced by Rorty, there is also within these modern pieces a pronounced criticism of a perceived conservatism in Rorty’s acceptance of liberal democracy and its economic institutions. For example, Rorty has in turn been called a “complacent pragmatist,”25 and charged with “reinforce(ing) existing power relations that illegitimately oppress and exclude large segments of the population.”26 Although Rorty’s work is replete with fair-sounding pronouncements and expressed hopes that would be appealing to an egalitarian ear, this optimism is attached to no method or philosophical claim radical enough to support actual change, nor appease his more radical followers. The degree to which these neo- pragmatists remain both indebted to and dissatisfied with Rorty’s position is a testament to the often appealing, enticing failings of legal pragmatism. As Lynn Baker notes perceptively, the dissatisfaction with Rorty on the part of those on the Radical Left is due and Coercion in Federal Indian Law: The Conflict Between Critical and Complacent Pragmatism, 63 Cal. L. Rev. 1821 (1990); Joan C. Williams, Rorty, Radicalism, Romanticism: the Politics of the Gaze, in Brint and Weaver, supra note 11 at 155. 23 Ibid. 24 E.g., Cornel West, The Limits of Neopragmatism, 63 S. Cal. L. Rev. 1747 (1990); Minow & Spelman, supra note 22 at 1597; Joseph W. Singer, Should Lawyers Care About Philosophy?, Duke L. J. 1989 (Dec. 1990), at 1752. 25 See Radin, supra note 22 at 1710. This criticism is also mirrored by Minow & Spelman, supra note 19 at 1612. 26 Singer, supra note 24 at 1759. 94 to an essential distinction in Rorty’s work between pragmatism as his central method and his personal, aspirational hopes for that same method.27 Rorty, in his work, is a pragmatist first, and a liberal second. What appealing principles extend from Rorty as liberal should not be confused with the philosophy, theory, he espouses.28 And those who generally espouse change as a social good should not be confused the possibility of change with its active, principled promotion. A relatively easy entry point into Rorty’s distinction between method and belief may be found in addressing his well-known strong poet ideal. Like the early American pragmatist philosophers, and such later legal pragmatists as Richard Posner, Rorty embraces a negative view of philosophy. Accordingly, truth is not absolute, knowledge is not objective, and legal decision-making is not bound to or explained by abstract principle. In the space provided by these negations, practical and new solutions are thought to thrive. Rorty goes further than this pragmatic foundation, however, to envision the actual motivators in this social movement of change. In keeping with his literary perspective, Rorty equates the motivation of social change with the individual, or the individual archetype, of the strong poet.29 The ‘prophetic’ individual represented by the strong poet draws on the “anxiety of influence” characterized by Harold Bloom, the renowned literary critic, who observed that the Romantic poetics were motivated by an obsession to escape the thought that were but a “copy or replica.”30 The desire of Romantic poets to fashion themselves as unique and autonomous individuals through 27 See, Lynn A. Baker, “Just Do It”: Pragmatism and Progressive Social Change, 78 Va. L. Rev. 697 (1992). 28 Ibid. 706. 29 See, e.g., Rorty, supra note 2 at 26, 20, 53. 30 Ibid., 26. 95 artistic expression, an outward claim of uniqueness, Rorty extends to social change in general. Thomas Grey, another noted legal pragmatist, has written to emphasize and remind that early pragmatism was inspired by not only empiricism, but also the Romantics of art and literature.31 While this Romantic feature of pragmatism has been rejected by some, most notably Stanley Fish,32 as being outside of pragmatism’s neutral foundation of simply equating truth as social usage, I believe Rorty’s balance across this fissure within pragmatism is emblematic of his theoretical limits. So long as Romantic aspiration remains tied to a notion of truth as social usage, the supposed originality of constant change and redefinition does not escape the social, majoritarian measure of value. An initial claim of uniqueness, and the outward manifestation of one singular poetic personality, is inevitably met and judged by an audience. Social progress, and the idealized march of revolutionary ideals, is thus a product of individual expression meeting the wider society. While each radical new idiom of thought may issue from a solitary individual, the acceptance and implementation of this new idiom must be endorsed by a wider group of individuals. For no matter how much we may glorify the lone prophet, poet, revolutionary, it is the following herd which sanctifies a revolutionary idea through the act of belief. Without this essential element of engaging the belief of others, of convincing them of the coming rightness of an idea, a revolutionary notion remains an unrealized hope, drifting in a historical void like so many before it. So where does this notion of the strong poet leave us – the theoretical, academic observer? Exactly where it leaves Rorty. Either we as individuals become strong poets, 31 Thomas Grey, What Good Is Legal Pragmatism? in Brint and Weaver, supra note 12 at 9. 32 Stanley Fish, Almost Pragmatism: The Jurisprudence of Richard Posner, Richard Rorty, and Ronald Dworkin, in Brint and Weaver, supra note 12 at 47. 96 prophetic persons trying to convince others of our enlightened designs, or we are bound to watch on the sidelines. Rorty himself is an overly modest intellectual, inhabitant of the sidelines, who acknowledges that society’s new ideas lie beyond him; a result of his own lack of prophetic imagination.33 Without explicitly offering a new ideal or method for reorganizing society, without a revolutionary or poetic ideal, Rorty is content to reside in his pragmatic belief that such ideals will be offered by others. Seen in this light, the radical left’s dissatisfaction with Rorty’s perceived conservatism is both inevitable and unfair. Rorty’s well-known and well-liked liberal stands are simply his personal hopes of how future developments might occur; he is not offering the answers himself. In one of Rorty’s few articles explicitly about law, he states: “I think of Brown [v. Board of Education] as saying that, like it or not, black children are children too. I think of Roe [v. Wade] as saying that, like it or not, women get to make hard decisions too, and some hypothetical future reversal of Bowers v. Hardwick as saying that, like it or not gays are grown-ups too.34 Again this is an admiral position to be sure, but it must be stated that Rorty is not offering a guide to this final goal. Instead, Rorty is simply offering commentary on how the practical language of pragmatism explains change, with an added ingredient of personal hope and valuation. The added valuation, expectation contained in the hypothetical reversal of Bowers should not be confused with what Rorty’s, or pragmatism’s, neutral method can yield alone. Open to change but never demanding of it may be an accurate assessment of Rorty’s position, placing him firmly within the pragmatist mainstream. 33 See, Baker, supra note 27 at 707; Richard Rorty, Two Cheers for the Cultural Left, 89 S. Atlantic Q. 227, 299 (1990); Richard Rorty, Feminism and Pragmatism, 30 Mich. Q. Rev. 231, 242 (1990). 34 Richard Rorty, The Banality of Pragmatism and the Poetry of Justice, 63 S. Cal. L. Rev. 1818 (1990). 97 When shorn of the often pleasing and admirable personal hopes that flavour his work, Rorty’s criticized acceptance of the status quo may seen as the result of his philosophical, not his personal choices.35 Placed within the two extremes of prophet, the convincer, and the market of ideas, the people to be convinced, is Rorty’s neutrality toward what currently exists. Rorty must necessarily embrace present beliefs as what was most recently convinced into being: the most recent victor in the marketplace of ideas. Despite his liberal personal views, Rorty’s theoretical hands are tied by his pragmatic method: he can no more reject what currently is as endorse what was once before. Pragmatism is bound to a competitive and majoritarian vision of truth, and until such time as a new vision is offered and accepted, Rorty the pragmatist must equally acknowledge these current beliefs as what works best by way of belief and practice. II.V ECONOMIC EVOLUTION While the claims of Rorty’s conservatism are normally leveled against an acquiescence in the legal and economic institutions of the status quo, there is a deeper, arguably more substantial, concept of evolutionary knowledge at stake. In true pragmatic style, legal structures may be viewed as merely the most noticeable points of reference or outcroppings in a wider debate over fundamental social concepts and ideas. Therefore, when Rorty is criticized for favouring what exists by way of belief in legal institutions that are thought to promote unjust power relations, he might be criticized equally for accepting a certain economic, western world view. The extent to which our current systems, institutions, prejudices, and their supporting legal rules, are alterable is dependent upon our wider social view of knowledge. Assuming a pragmatic view to a 35 See, Baker, supra note 27 at 706. 98 competition amongst ideas on the grandest stage possible, it is an economic definition of thought that is currently ascendant within western, and increasingly world society. It is this economic vision of thought that not only flavors and informs current conceptions of individuality, it also plays a substantial role in defining how thought is translated into social acceptance. Much has been made of the economic definition of individuality, and of how the economic model of rational maximization has come to dominate social science and legal studies of individual behavior.36 In these brief pages, I instead concentrate on the influence of economic thinking on the prevalent view to social knowledge as an evolving system. If Rorty’s Romantic pragmatism may be said to fall into the perennial pragmatic trap of endorsing what is best by way of current economic institutions and distributions, it is an economic worldview that underlies, and gives life to these current preferences. The economic view of evolution is by definition simple, perhaps deceptively and enticingly so. A brief and excellent statement on the qualities of classical economic evolution is given by Mark Roe: The classical evolutionary paradigm has a strong grip on law and economics scholarship. What survives is presumptively efficient: if it were inefficient, the practice, the law, or the custom would be challenged by its more efficient competitors. The success of the more efficient practice or law allows it to prosper, while its less efficient competitors wither and die. Entrepreneurs without a clear understanding of what they are doing can stumble on an efficient practice. They make money and their firms grow at the expense of firms that failed through bad luck or poor skill to adopt the efficient practice…37 Notice the prominence of the word efficient in the selection above, now an almost hallowed legal concept thanks to the modern ascendance of law and economics. But what 36 See, generally, Amadae, S.M., RATIONALIZING CAPITALIST DEMOCRACY: THE COLD WAR ORIGINS OF RATIONAL CHOICE LIBERALISM (2003). 37 Mark Roe, Chaos and Evolution in Law and Economics, 109 Harv. L. Rev. 641 (1995-1996). 99 does efficiency mean beyond the realm of the entrepreneur? One may readily imagine a new baking or candle-making technique leading to a better, cheaper good produced. But is law-making an efficient system? Public Choice theory would tell us that this is not always the case. And the law and economics claim that the common law has always been evolving toward economic efficiency, even if judges did not know they were doing so, has been rejected as hopelessly improvable or even fanciful.38 Yet, even should legal evolution rest solely upon private market assumptions absorbed from microeconomics, this is still a formidable basis. And perhaps no more evolutionary symbolism is needed for classical economics than individuals competing for the recognition and reward given by their peers, with the invisible hand of the market rewarding each according to the worth of their activity as determined by others. Apart from any historical lineage linking economic thought with Darwin or pragmatism, it remains that economics contains a certain connection with evolution.39 As with Darwinian natural selection, economics is based upon the environment selecting, determining success. The market, arguably the central concept in modern economics, is a powerful environmental equivalent or symbol, wherein others assign value to an individuals’ activity by their willingness to trade their own output for it. Further, an evolutionary quality of individual variation is displayed in the economic attempts that each individual contributes, providing the activity which the market environment then selects between. While this is no doubt a persuasive combination, with democratic 38 Mark Kelman, “Legal Economists and Normative Social Theory”, in A GUIDE TO CRITICAL LEGAL STUDIES 115-116 (1987). 39 The influence of economics, particularly the work of Thomas Malthus, upon Darwin is well-known. See, e.g., Hardy Hannappi, EVOLUTIONARY ECONOMICS 7 (1994). 100 allusions of choice throughout, there remain significant difficulties this evolutionary view of knowledge. While there is a voluminous number of criticisms of classical economic assumptions on the equation with markets and democratic choice, the focus here, shall be on the shortcomings of classical economics as evolutionary theory of knowledge. When viewed through an evolutionary lens, it appears that a classical joining of the market and individual capitalist will not necessarily further a comprehensive theory of change. This is not to say that a theory must be appropriately evolutionary, nor consistent with Darwinian biology, to be valid. Rather, the limitations revealed here through an evolutionary lens indicate detriments that also lie at the heart of such modern societal requirements as progress and individuality. To understand how such apparent tenets and provisions of classical economics may be limiting requires a two stage analysis, divided thematically by environment and individual. Environmental and individual issues within economic evolution will be discussed in the following sections, en route to the proposal of a pragmatic solution based upon individual rights. II.VI PATH DEPENDENCE Classical economics tends to entail an imperial view to the past. That which now exists, must exist because it has succeeded to this point. The present practice, technique or strategy, has won out over others to assume its rightful place as the dominant solution. Echoing the above words of Mark Roe, were the present practice not the most efficient solution it would already have been supplanted by something else. Evolution to perfection thus equates with classical economics, endorsing a competitive view to history 101 within which that what is now has won its way to ascendancy. I should clarify that I refer to evolution to perfection as a Panglossian tendency, not a literal imputation of belief unto scholars associated with either legal pragmatism or classical economics. I do not mean to imply that the present is deemed to be perfect, but am instead concerned with how the process of advancement is viewed: it is the to perfection that is my focus here. Specifically, the receptiveness of a particular theory – or anti-theory – to change may be found to extend in part from how the past itself is considered. A competitive view of the past, in which techniques or ideas battle it out for supremacy, tends to sanctify what currently exists for having won this past battle. However, as the theory of path dependence cautions, the techniques that have won out in the race to solve past problems may be less adept at meeting new or future ones. Not only does path dependence raise the prospect that previously vanquished techniques may actually be better at solving a newer problem than the dominant technique of the present, what is seemingly of far greater import, is that faith in this dominance may impede our very recognition of new problems and challenges. Path dependence is a radical strand within mainstream economics, growing in prominence of late. As with all evolutionary thought, path dependence begins with the banal assumption that the past determines the present. Why path dependence is a radical variant in economics, and why it is different from the evolutionary model of classical economics, is a matter of historical interpretation. Path dependence, simply, argues that past circumstances – such as pure chance or initial advantages – are often determinative of what is the currently dominant practice. Whereas classical economics assumes evolution to perfection, path dependence elevates the vicissitudes of life and competition 102 that may result in random and initial advantages. Once locked in, these initial and random advantages can become so ingrained, and invested in, that they continue in prominence long after new and more efficient practices are identified. A common example of path dependence is that of the QWERTY keyboard – named after the uppermost left row of letters, illogically placed to slow early typists who were too fast for the early, crude mechanisms that would jam repeatedly when pressed.40 Word processing having obviously surpassed this mechanical impediment, the debilitating delay designed into the keyboard is no longer necessary or efficient. Yet the old form remains, a sign of an initial economic advantage long since having worn out its rationale. The cost of retraining, and of retooling, replacing hardware and software is so exorbitant, prohibitive, as to make any short-term efficiency gains of modernization beyond realization. As another example consider a physical allegory of path dependence.41 A road winds through a hilly landscape, a dark strip appearing and disappearing through green fields until the far off horizon. Your car out of fuel, and forced for once to exchange walking for driving, you notice the distances of this inefficient, bending road. You need to reach point B, and wonder why the area between there and your starting point of A contains so many bends unexplained by the landscape or any observable features. What you do not see is the trapper, who, two and a half centuries ago, had to make his way through the same terrain while having to avoid wolves’ dens spotted throughout. 40 The Qwerty example was first used by Paul David to demonstrate the tendencies of path dependence. Paul A. David, Clio and the Economics of QWERTY, 75 Amer. Econ. Rev. 332, 335. The accuracy of the Qwerty example has, however, been question, see: S.J. Liebowitz & Stephen E. Margolis, The Fable of the Keys, 33 J.L. & Econ. 1,3 (1990). Yet, as Oona Hathaway notes, “Despite the debate over its accuracy, the example continues to be considered one of the early illustrations of path dependence theory’s central insights.” Oona A. Hathaway, Path Dependence in the Law: The Course and Pattern of Legal Change in a Common Law System, 86 Iowa L. Rev. 111, at note 39, (2001). 41 The metaphor I describe is modeled on the one found in Roe, supra note 37 at 643-644. 103 A trader followed the trapper, now able to hunt perhaps, but unwilling to break a new path even though he need not fear the wolves. It was easier to follow a winding path in the woods than to break a new one. Travelers and then merchants found this same path, following the same reasoning as the trader before them. The trader’s path came to be the established route, with settlements and towns spotted along it long after the wolves had been eliminated from the surroundings. In the subsequent century, industry and cities solidified themselves in concrete along the way. Skipping forward to modern times, local authorities would have been faced with many budgetary questions and strategies regarding the road. At each stage they could have resurfaced the worn road or built it more efficiently – kept the winding path, now inefficient, or pave in a straight line between A and B, leaving ghost-towns and empty factories along the way. The choice of each succeeding municipal administration would have been clear, and hence the winding path you now find yourself meandering along. The immediate lesson of path dependence, as indicated by the simple example above, is that past chance is often a greater factor in present forms than evolution as perfection implies. It is a lesson that goes to the heart of modern economic theory, for without the certainty that the competitive environment selects out the most efficient practice, the mysteries of the invisible hand of the market may no longer be assumed to yield the best results.42 The flow of market competition, usually idealized to hold that each pursing their own self-interest is produces the best result, may instead follow arbitrary routes, and favour arbitrary advantages that solidify the success of practices which are not necessarily the most efficient for present needs. In a general, path 42 And modern microeconomic theory would seemingly have its claims to scientific predictability weakened. 104 dependence questions the environmental determination of success that is the private market. Beyond issues of explanatory or historical analysis, path dependence questions our assumptions on the ability of our present solutions to meet new and future demands. The more significant issue raised by path dependence, however, is the potential for solutions to become locked in, constricting our ability for envision the widest array of answers to meet future problems. The winding path example above is more than simply a metaphor for the historical vicissitudes that have led to the present, and often remain beyond their usefulness, it should inspire caution for how current and past practices limit our adaptability and imagination. For what may matter more than the investment given to a practice, whether infrastructure of the physical or political, is the ingrained quality these practices assume within the contemplation of what remains to be done, attempted to progress. As Mark Roe notes in relation to the winding road metaphor: “Once society reached that summit, the next – a straight road through the forest that is easy to travel – can be reached only by going down the evolutionary hill, by going backwards and re-making the road.”43 The hill analogy of Roe’s is well-chosen, for it captures the limiting nature of past success. The practice that is the most efficient and fit for its time may quickly achieve its purpose and then plateau by way of usefulness. What worked well enough before to succeed may not be able to evolve further than the tip of its particular hill. And while Roe’s hill analogy is apt in describing locked in advantages, and the costliness of undoing the 43 Roe, supra note 37 at 644. 105 infrastructure of past techniques, I believe the greatest detriment lies in the hills that remain still unseen.44 The clouded mountain top of evolution to perfection may be in reality but a small hill, with greater challenges and possibilities hidden by our unquestioned embrace of the current pinnacle. In my telling of the winding road example above I implied that municipal administrations made a conscious decision to remain with the existing road rather than opt for the cost of the most efficient solution in making a new road in a straight line. But what local administration is likely to even consider such a grand redesign when faced with more pressing and less abstract demands for expenditure? Much more likely, is that the road’s path is taken for granted, an assumption firmly held in the subconscious of local inhabitants, as part of the natural course of things as the landscape itself. It may well be that given an overt cost benefit analysis that the result would be the same, and that dramatic reinvestment for present efficiency would not be undertaken. The difficulty, however, is when such an analysis and such possibilities are not even considered. This is why a pragmatic view of truth defined as what is currently believed is limiting to our vision of new hills to be climbed. The environment in question, whether it is defined socially as the market or the marketplace of ideas, becomes static under such a pragmatic, myopic vision. The competitive environment is more fickle and fluid, requiring that we keep offering new techniques to meet the demand of what works best. Assuming mastery at any point is not conducive to an ongoing process for renewing possible solutions. 44 As Roe notes, “If society cannot think effectively about the alternative path because it lacks the vocabulary, concepts, or even belief that the other path could exist, they that society cannot consciously either to return to the branch point of the two paths (and then go down the other path) or jump to the other path.” Roe, supra note 37 at 651. 106 II.VII BIOLOGY AS METAPHOR As the environment selects for success, the second essential ingredient in evolution is the individual variation to be selected between. Under Darwinian evolution, as under modern refinements and alternative theories such as punctuated equilibrium, genetic variation is the essential mechanism of increasing group fitness.45 Whereas Darwin posited that evolution occurred in a long slow process, the theory of punctuated equilibrium claims that it occurs in sporadic bursts of activity fueled by the isolation of fragments from a species.46 Regardless of these nuances in modern biology, evolutionary theory remains tied securely to the chance permutations that arise within individuals to give selected advantages. Economic theory, however, in keeping with a pragmatic view to evolution as perfection, adopts an inherited view of advantage. A brief example of this theoretical difference between biological and economic conceptions follows, which will hopefully indicate the troubling implications for individual potential that is entailed by the economic perspective. Obviously business firms and individuals maintain their built-up advantages long after an individual life span. Corporations are legal persons that never die, which possess assets, trademarks, techniques, and managers that are not contained in any one living person. Similarly, individuals may pass down their inherited wealth through inheritances. To account for the built up advantages that firms maintain over time has led economic 45 See, Niles Eldredge, TIME FRAMES: THE RETHINKING OF DARWINIAN EVOLUTION AND THE THEORY OF PUNCTUATED EQUILIBRIA 118-122 (1985): (describing the emergence of punctuated equilibrium). 46 Ibid. See also, Stephen Jay Gould, THE PANDA’S THUMB 182 (1982). The theory of punctuated equilibrium remains hotly contested, however, with such notable biologists as Richard Dawkins asserting that, contrary to punctuated equilibrium, evolution remains a gradual process. 107 theory to adopt a Lamarkian view of evolution.47 An early evolutionary theorist, Lamark theorized that advantages amongst individuals were both inherited and the result of activity.48 Darwin, more famously, proposed that while individual advantages were inherited, these advantages were the result initially of random variations, permutations on a preexisting genetic pattern.49 Imagine the giraffe for instance, existing upon leaves and foliage found high in trees. Lamarkian evolution claimed that the long-necked giraffe was the ancestor of previous giraffes who strove harder, higher, for sustenance. The fruits of these efforts, in the form of longer necks, were inherited by individuals who were thus more advantaged in the competition over scarce foliage - who were better able to reach food over the ancestors of lazier or less inspired giraffes. Darwinian evolution, alternatively, proceeds by way of the idea that an initial genetic permutation, being born with a longer neck, translates into a greater ability to achieve sustenance. This greater advantage thus gives the longer neck giraffe a higher likelihood of survival, and a greater chance that it will procreate and have this genetic advantage handed down to later generations, while less adept, short-necked, individuals struggle and are eventually superseded. Though crude, this summary of differing evolutionary theories may be illustrative of the divergent potential of legal norms on change. When thinking of normative views of 47 Though evolutionary metaphors have long been evident in economics, and vice versa, the systemic use of evolutionary concepts in economic analysis was most recently revitalized with the publication of Richard R. Nelson and Sidney G. Winter, AN EVOLUTIONARY THEORY OF ECONOMIC CHANGE 7 (1982); (Nelson and Winter adopt a Lamarkian view of evolution, making the metaphor of evolution serve economic needs, not the other way around). 48 Geoffrey M. Hodgson, Evolution and Institutions: On Evolutionary Economics and the Evolution of Economics 165 (1999). 49 See, e.g., Richard Langlois & Michael Everett, What is Evolutionary Economics, 31 in EVOLUTIONARY AND NEO-SCHUMPERTERIAN Evolutionary and Neo-Schumperterian Approaches to Economics (Lars Magnusson, ed., 1993), (detailing how Darwinian evolution is premised upon variation and diversity within groups of individuals. Therefore, the focus is on individual organisms as the location of variation, and change within species.); Hodgson, supra note 48 at 164-165 (describing the centrality of variation and genes in Darwian evolution). 108 progress, of how it is identified and promoted, the location of change in individual variation has two key aspects. First, the inherited or Lamarkian view of efficient advantages endorses what is as the best for a reason validated by history. What is currently best by way of belief, or of efficiency, is best because it has succeeded to this point – meaning that its ancestor path was successful and has yet to be supplanted by another. Even should this theory be often accurate as to historical circumstances of economics – with the important caveats and exceptions provided by path dependence – it remains that this says nothing of future needs. Second, the great metaphorical device provided by Darwinian evolution is that individuals each equally possess the potential for providing the unpredictable solutions to future demands. The essential element of Darwinian metaphor is that the universal potential of new developments lies in each individual, in ways that we cannot predict or foresee.50 Our social environment does not produce linear goals consistent through time, and neither do individuals produce the answers for all time. A system based upon the constant promotion and renewal of individual potential would not only be consistent with liberal ideals of individuality, it could also produce social benefits not as yet contemplated, and reveal unknown hills to be climbed. II.VIII THE INDIVIDUAL AS AGENT OF CHANGE Although the strand of legal neo-pragmatism influenced by the Romantics may celebrate the possibilities and qualities of change, it is passively silent on its actual motivation. Neo-pragmatists in the radical fashion argue for a change of circumstances, but it is decidedly results, or ends oriented. A goal, again admirable, is firmly in mind, 50 See, Langlois & Everett, supra note 49 at 31-31. 109 but the pragmatic means of getting there are elusive, perhaps hopelessly so. Pragmatism is treated as a mechanism for change, a call to a certain goal, while it more aptly resembles a method for viewing how change does, and has, occurred. As Rorty’s theoretical ideal of the strong poet illustrates, innovations most often arise in opposition to what the majority believes to be true. Indeed, history may well bare Rorty out in this regard, imprecise or unverifiable as this must be. For example, Einstein was once said to remark that he would not have had the audacity to challenge Newton’s gravitational system had he not been influenced by Hume’s philosophical skepticism of accepted truths.51 Unfortunately, the waited for result of neo-pragmatism cannot be more than an expressed wish that someone will theorize a new and better system, convincing others out of their oppressive current beliefs. By concentrating on the individual motivators of change, rather than descriptive analysis of how change might or does occur a legal theory would be more open to adaptation, and fluid alteration. The purpose in returning now to Romantic pragmatism, after an evolutionary discussion, is to connect these two together in an approach to evolutionary pragmatism based on individual rights. Allow me to align the disparate threads running up to this point in a sequence. First, pragmatism argues that truth is socially defined and evolving, based upon what most currently need or believe as best by way of belief. Second, the view to evolution as perfection endorsed by pragmatism and classical economics is flawed in its assumption of a predictable and linear environmental selection of success. 51 As Hume eloquently put it, he offered “sceptical doubts about the operations of the understanding,” not as “discouragement, but rather an incitement...to attempt something more full and satisfactory;” ENQUIRIES CONCERNING HUMAN UNDERSTANDING AND CONCERNING THE PRINCIPLES OF MORALS 26 (edited by L. A. Selby-Bigge, 3rd edition revised by P. H. Nidditch)(1975). See also, e.g., John Stachel, John et al. (eds.) THE COLLECTED PAPERS OF ALBERT EINSTEIN: VOL. TWO: THE SWISS YEARS 253-74 (1989); Gerald Holton, Einstein, Mach, and the Search for Reality, 219-59 in THEMATIC ORIGINS OF SCIENTIFIC THOGHT: KEPLER TO EINSTEIN 219-59 (1973). 110 Third, a metaphor of Darwinian evolution indicates that an essential feature of systemic evolution arises from individual agents themselves, as they contain the inherently unpredictable variations against the environment will select from. Without this final step of individual unpredictably, social progress would be as static as evolution to perfection assumes, leaving us on our small hill-top of ignorance forever. The fourth point is that individual rights are the best means of ensuring the future of pragmatic progress. Drawing upon Rorty’s strong poet ideal initially, it then remains to make this ideal a more widespread, universal call for individual participation in the act/art of convincing others. In this way, with this embrace of individual rights, it is possible to encourage both Rorty’s pragmatic method of change and his personal hopes of radical change. The before-mentioned liberal content of Rorty’s aspirations may be open to debate, but for the purposes here it is only necessary to concentrate on the method and possibility, not the content of change. Let us first assume that knowledge is evolving, that truth is only what is best by way of practice and belief, and that law is simply what judges say it is. Surrounded in these pragmatic tenants, let us then imagine encouraging an active motivator within these belief structures. Rather than waiting for a strong poet to come along and convince others of the next great ideal -and admittedly unable to produce the idea ourselves - why would we not, as hypothetical system designers, encourage the greatest availability of strong poets? In a sense, the argument for evolutionary individual rights proceeds by way of an argument that pragmatism is unfulfilled logically. Whether through the strong, Romantic version of pragmatism, with individuals as the motivators of revolutionary change, or the minimal market version, with the marketplace of ideas determining the social winner, it 111 remains that ideas of change originate with individuals. Followed to its logical conclusion, pragmatism should embrace the greatest number of possible contributions to the competition over social direction. Therefore, were pragmatism to be more than a apologia for what currently exists, it would actively need to promote the elements of change that it has consistently indicated. The exact qualities of a marketplace of ideas may still be endorsed under such an individual rights approach to evolutionary progress. Ideas may compete in the same fashion for ascendancy in Holmes competitive vision of society, but the object of rules and governance is to ensure that individuals are not unduly restricted from participating. The shift within a rights based view to pragmatic competition and evolution thus occurs in the measure of market supply. Whereas so much of pragmatic and economic thought has concentrated on the notion that the competition produces the best possibilities, an evolutionary system premised on individual rights would shift the focus to access to this exalted marketplace. As individuals are originators of new contributions and ideas, there are far too many waiting to have their say on what works best. In general, an advance needs to be made beyond the recognition on the changing nature of truth yielded by pragmatism, to engage with the production and increased likelihood of the ideas that constitute new truths. Rorty, for one, has commented approvingly on legal pragmatism’s rejection of Euclidean, axiomatic legal principle. Unfortunately, after this initial, now century’s old realization on changeable knowledge, nothing more has developed.52 As Rorty has further noted, the insights of legal pragmatism have become essentially banal, so widespread in acceptance has the approach become. However, it may foolish to assume a century’s long plateau with no advance in 52 Posner, supra note 15 at 1670. 112 methodology. Posner is undoubtedly correct that pragmatism clears the underbrush without planting new trees,53 but what of the qualities of the soil, its fertility, and receptiveness to new growth? The notion that Einstein’s revolution in relativity (an appealing metaphor for pragmatism no doubt) has undermined the possibility of absolute certainty does nothing to promote another instance of an Einstein like insight or revolution. Pragmatism’s fixation on the systemic possibility of change has detracted from its actual promotion. Extending a scientific metaphor, a university administrator must be concerned with the environment of intellectual pursuit in a way that the individual researcher need not on an everyday basis. Most scientists may proceed in their research oblivious to pragmatism, as most do, working to extend and test the established truths of their field as if they were absolute and fixed.54 These researchers and scientists may either confirm or reject these established truths, but pragmatism will tell nothing on how to go about either. A good administrator, on the other hand, arguably should be concerned with pragmatic notions, and the systemic tendencies that may either support or detract from an individual researcher’s ability to advance new ideas. In short, academic freedom as engine to new knowledge is premised upon the possibility of each individual to pursue ideas independently. Similarly, returning to wider thoughts on social knowledge, so too may progress be identified with the independent potential of individuals. While it should necessarily not be the place of law or government to actively promote the content of knowledge, the general pursuit of knowledge itself can be a firm 53 Ibid. 54 Wolfe, supra note 10 at 199. Wolfe observes that despites its warm reception in literature departments, “modern science continue to function as if pragmatism never happened. Biologists and chemists are blithely unaware of the differences between pragmatism, postmodernism, ethnomethodology, and science studies; for them, all efforts to render natural reality tentative are equally absurd.” 113 basis of individual liberty and potential. In this regard, an individual’s need to actualization of themselves through competition is joined by social concern, as others benefit from a diversity of ideas on offer to be selected from. Therefore, every individual who is prohibited from participating is potentially a new idea, solution, left out of the current pragmatic mix. The penultimate and concluding sections which follow address this promotion of individual potential. First, individual potential is addressed through a basic liberal concept of autonomy, which is extended to consider the competitive dynamics that may impinge upon a basic entitlement to express oneself. The second and final point is more speculative, touching on the distributive issues that inhibit individual potential and participation in the marketplace of ideas. Though as significant as the first section on autonomous choice, and probably more so, these distributive issues are far beyond international norms, and entail a measure of socio-economic rights and entitlements that have yet to be given serious consideration for implementation. II.IX IDENTIFYING POINTS FOR NON-CONVERGENCE Until this point I have concentrated on the connection between individual differentiation and the furtherance of possibilities for progress. I wish now to pause and stress that individuals often must, and should follow others. Though I will affirm readily that evolution to perfection, and the modern realities of economic liberalism unduly impose a singular world-view, or way of competing, upon everyone, it is oftentimes desirable that others should adopt the successes of others. A progressive system could hardly be advanced should it require that individuals pursue different paths to their own detriment in the face of other’s success. But individuals also deserve the chance to offer 114 up their own solutions to society, free from the closed possibilities of what most people currently believe. For this reason, it is arguably appealing to identify strong and weak versions of the encouragement of differentiation, with suboptimality indicating a more ambitious, radical reworking a of an entire competitive system. A difficult, perhaps inescapable, tension may thus be seen to exist between the need to have innovators both convince the wider society and act in opposition to its dominant belief. This conflict may be placed within wider intellectual trends that encourage us to either accept the economic world as essentially linear and predictably, or variable and indeterminate. In terms of economic theory, the dilemma may be placed between a belief in convergence, the economic liberalism of evolution to perfection, and path dependence. As evolution to perfection embraces market beliefs as having selected out the fittest practice, path dependence challenges these assumptions on certainty. Though the classical economic theory is currently ascendant, neither it nor path dependence alone provide a persuasive holistic picture of how competition advances. If there are clearly times when the majority of individuals should follow the success of others, it is less clear when the possibility of difference for solitary individuals should be encouraged to a greater degree and on a systemic scale. Path dependence, though persuasive as to past imperfections economic evolution, cannot indicate when current beliefs will lead to future inefficiencies and locked in perspectives. At most, then, path dependence illustrates that the social environment is an evolving landscape, with achieved goals not always remaining the answer to changing problems. As noted above, a static environment is combined with an inherited view of individuality in classical economics. To approach a balanced position between convergence and path dependence, 115 therefore, requires addressing the second aspect of evolutionary thought, that of individual variation. An evolutionary, progressive system should not impose solutions in a supply side fashion without limitations. Competition must still select out winners and losers. Regulation should simply select out tendencies for alleviation. The primary tendency to be avoided, with great institutional force and design, is that of competitive insecurity and suboptimality. Convergence should be encouraged against as a matter of diversity policy, but with much more limited ambition and institutional alteration of market rewards. The tendencies of competition to be alleviated are those which infringe individual potential, and a legitimate opportunity for individual choice. While the market environment should not be imposed upon to the extent that the state is selecting winners, individuals must also be given the chance to escape harmful cycles of competition in which they have no real choice. The fine balance between copying an admirable competitor and racing to the bottom toward a base instinct is a gray area that may be enlightened by the availability of choice. The case for government intervention in competition is often a difficult case to make, but the space to behave, compete freely in the first instance should be an entry point into this closed off realm. For example, if one has no choice but to follow a competitor or risk competitive suicide, this should not alone be a good claim to intervention. Too many variables might explain the disparities of success. The claimant might, after all, be horribly inept, or unable to recognize a competitor’s superior technique or productivity. However, should the competitive race lead to both being be worse off, in a cycle of competitive insecurity, then there is surely cause to address rule 116 change and an alteration of incentives. Similarly, the strategy of one competitor may make all other players worse off, as they then must in turn adopt the harmful strategy that the forerunner to the bottom benefits from first. Autonomy, if it is to have a political meaning connected to a higher ideal, such as individual liberty, must at least guarantee a basic chance to promote an individuality of expression. The world need not be forced into difference, but what may be done to relieve the imposition of competitive, individual homogeneity should be attempted. Competitive insecurity is a quality of systemic methods, representing a break-down in economic precepts, which should be overcome to allow greater potential. Alleviating competitive insecurity is but a first, essential, step in moving toward ever increasing competitive voices. Competitive insecurity, as with the theory of path dependence, signals that the present certainties of pragmatism and economics are susceptible to stagnation. In the space of these pragmatic omissions, a new theory might hopefully develop, which embraces optimistic and open-ended social possibilities of modern life. Believing in the pragmatic view to a competitive history should also trigger an attempt to ensure that our generation is not unreceptive to that same ideal of change - ensconced in a smug belief that our ideas mark the end of history, leaving it to later generations to finally overcome our intransigence. A. Encouraging the Few Out of Convergence While instances of competitive insecurity and systemic suboptimality indicate when convergence is to be avoided absolutely, it remains that systemic encouragement may always favour a view to competitive differentiation. It must be kept in mind that 117 suboptimality describes competitive problems of the present only, with the unpredictability of system and agent interaction having vested already in current shortcomings and failures. In keeping with the evolutionary metaphor introduced above, however, the best answer to future system needs is as yet unknown, and therefore best met in the provision of diversity and the widest possible number of answers to future problems. Even absent a finding of suboptimality, it may be the most prudent policy approach to reward difference as a matter of principle independent of current affairs. Suboptimality thus may be seen as the more serious consequences of a past inability to predict coming change. Diversity provides for both relief to present competitive insecurity, and a method for avoiding similar constraints in the future even when convergence is presently efficient. To illustrate the less radical level of diversity regulatory design consider the example of an agricultural community who have gradually come to adopt a single agricultural crop, say wheat. This may be efficient in that the community has a comparative advantage, whether by way of soil content or local techniques, over other competing communities in this crop selection. But it is a situation that should arguably be avoided in that it may provide neither innovation as to the community’s attempts at other crops or techniques, nor, more importantly, variation to account for future system change. Should a certain virus strand affect the wheat produced homogenously, the community would have no production alternatives to rely upon. Present efficiency is achieved at the expense of systemic responsiveness and adaptability. Now assuming that institution or government involved is conceived in a non- intrusive manner, as opposed to mandated economic value, then systemic intervention 118 may safely extend evolutionary norms to operate for more than the most straightened circumstances of competitive insecurity and suboptimality. As diversity seeks to encourage competitive difference, by definition this type of regulatory scheme must necessarily retain an element of individual chance, of gambling on a new technique that may achieve success under a new avenue of reward opened by regulatory reward. Were systemic incentive to promote a straightforward incentive for an alteration in competition behaviour then all competitors would adopt immediately around this new baseline of strategy, and thereby defeating the very purpose of competitive differentiation. Unlike critical situations of competitive insecurity, wherein any reward incentive away from the suboptimal baseline is beneficial, the futureminded instances of responsiveness must be constrained to offering new goals for reward at the fringes of the currently efficient homogeneity. In such situations of current efficient convergence, reward must placed be placed at the edges of current possibility so that variation exists as a matter of future prudence and the unexpected insight of new and even present improvement. Only in this way will incentive correspond with the gambling instincts needed for dramatic change in competitive techniques and strategies, with an innovative individual able to capitalize upon the slim possibility of fitting their new approach within the window of regulatory reward. Returning to the example of agricultural monoculture, community governance may hold out reward for a small group of competitors to attempt new crop developments in areas of poor to no wheat crops, even as the current preponderance of farmers remains engaged in efficient wheat production. This may serve to give incentive for the random individual improvement in an unexpected area, and thereby provide the community with 119 a further answer to unexpected changes in the future. The hypothetical incentive may take the form of a time limited tax break for investment in new cultivation techniques or crop design in poor soil areas that is to be combined with a potential windfall of an advantageous future tax treatment for any crop that is made supportable in the harsh region. Strategies of investment are altered as the attempt is cheaper in the short-term, and the long-term benefit of success is also defined. Though the best case scenario is that one individual arrives at a new technique that is viable, increasing society’s agriculture base reliance to two crops, at worst a few individuals waste the tax break without future gain; or that the reward sits unanswered. But this would be a wasted gambit without wasted public expenditure. The above reference to community decision-making was a conscious one, and is intended to denote varying conceptions of individual competitors. A system of diversity premised upon individuality and its differentiation may seem, at first instance, to leave no legitimate space for organization that is communal in nature. But, the community’s ability to set policies in line with a system of diversity would enable the community to take advantage of social improvements regardless of how those improvements are achieved; so long as the community is able to operate at a decision-making level within an international system and that the community contains means to be exported. B. Encouraging the Many out of Competitive Insecurity An example of the more ambitious level of evolutionary incentive is made here initially (with a more detailed elaboration of this main example of diversity to come in chapter seven) in terms of re-conceiving the international trade regime. A danger with the 120 brand of economic liberalism that currently holds sway over the international system is the extent to which it has attained the status of dogma. Organizations such as the WTO and the IMF stridently impose one model of growth, facilitating a binary debate that is cast as pro-growth and anti-globalization. International institutions, and other instruments within the present game, should allow for different conceptions of progress and different patterns of competition. The ‘race to bottom’ is adequately named, for the result is a homogeneity along the base line of limited social policy. Instead of governments being encouraged to eliminate all barriers to trade simply for the sake of trade, could not barriers to trade be eliminated to encourage social goals? Facing a starting point of universally high tariffs, states would gain preferential access to markets by meeting general conditions agreed upon and indexed by the membership. In this manner competition will continue to function as a rational instrument while at the same time opening strategic possibilities to include various social goals. Imagining a new beginning to international trade regulation premised upon dramatically higher presumptive trade barriers, albeit with the aim of reduction as reward for advancing social goals, might appear antithetical to the liberalizing project of trade advocates. But this conflict is more apparent than real when considering the principles of taxing international exchange. As trade proponents seek correctly to eliminate the distorting effects of state interference and subsidization, a system of diversity may be deemed to be consistent fundamentally with the trade premise of equal treatment of foreign producers. Under diversity, states are not given the discretion to arbitrarily disfavour foreign producers save for prearranged and internationally set priorities. Efficiency and growth, 121 the general objectives of trade liberalization, are furthered similarly by diversity, only that the scope of efficient competition is widened. Indeed, diversity places constraints on state imposed barriers to trade so as to mitigate against arbitrariness, as the WTO is intended, but may be seen to go further by including state regulation as a potential instrument of economic growth, and holding it to a standard of economic efficiency. Not only is efficiency to be encouraged by delimiting state interference, but on a more ambitious level, states are also evaluated on their ability to encourage social goals so as to give their national actors competitive advantage. The environment is an excellent and straightforward example of how social incentives may benefit the international system. The developed world has the advantage of having already attained economic gains and political liberalism. The developing world seemingly requires economic viability above all else. The current trade regime only rewards those who most efficiently eliminate regulation so as to attract fluid capital. The race to the bottom thus ensues, with the environment, labour standards, health, and other features of social policy an insignificant afterthought. By inverting the trade reward system it may be possible to move beyond competitive insecurity toward a more social operation of reason. The developed world has advantages that should be encouraged and rewarded, namely the political freedoms that many parts of the world are not fortunate enough to share. However, with the political liberalism of the developed nations comes a history of economic progress that has exacted a heavy cost upon the rest of the world. The state of the environment is such that it is simply impossible for developing countries to follow the historical course of resource driven industrialization. It seems hardly fair though for the 122 developed world to expect starving populations to forgo industrialization for the sake of a restraint that that the west has never itself displayed. The political freedoms enjoyed in the developed world must be balanced against the economic consequences that detract from the autonomy of everyone else. Inversely, a developing country should not be given access to freer trade without having satisfied certain political developments and guaranteeing basic freedoms. And neither should it be ignored that the developing country has probably not damaged the environment or the autonomy of others to nearly the same extent as western nations. By inverting the economic and political through the lens of autonomy the developing world would be rewarded for what it has not done to the environment. Both the physical and political are aspects of autonomy, and the market should reward creative approaches that provide freedom to individuals regardless of national borders. A system of social reason would engender a competitive system of striving toward the elimination of trade barriers. For instance, instead of China simply being admitted into the WTO membership, and thereby achieving the exact same status as other members, it may have been more beneficial had China been admitted into a process that rewarded each degree of increasing openness and tolerance. In a system of degrees each member would be vying to achieve a higher ranking so as to lessen the taxation that is imposed upon its goods. The underlying purpose of social reason is altering interest perception to account for non-economic social goals while internalizing those costs that are explicitly economic. Regulation should be not automatically dismissed as inefficient but considered a potential competition advantage. 123 Considering two hypothetical states under an indexed trade system may help to illustrate the potential for social reason. Suppose a developed state currently enjoys the same trade status of a developing country that has little industrial production and relies upon agricultural exports. If environmental damage is afforded forty percent of the index, representing the autonomy of others, the developing country would then have decidedly different possibilities for growth. Two competitive impulses immediately appear for the developing country. One, it is important that agricultural production be optimized so that a maximum output is based upon sustainability. If overproduction leads to environmental degradation, in the form of soil erosion or water pollution for instance, the added output becomes contradictory. Second, it becomes apparent that further economic diversification for the developing country would be subject to individual rights, or internal autonomy. Drawing in foreign capital would, as ever, be contingent upon advantageous economic regulations. Unlike the past, however, regulations that are advantageous for promoting exports and production would be dependent upon the holistic considerations represented in the index. It would be illogical to eliminate labour standards to attract foreign capital if it subsequently leads to a lesser index ranking and higher export taxation. A unique situation may develop that sees multinationals enticed to poor countries that have robust legal regimes, encouraging various liberties such as property rights or freedom of assembly, rather than those states that do not. The best climate for business investment would thus reflect the factors an individual might consider in choosing the best society to live in. The initial inflow of capital that goes with deregulation, or a complete lack of it, would be an admitted short-term loss, but one that would lead to 124 stronger social institutions for future growth. In this way, if growth occurs citizens are at least given some guarantee that they may participate in it. Our hypothetical developed country would face challenges of a different sort. Under social reason the developed country would have an advantage over much of the world because of the political liberty its citizens enjoy. Yet apart from the substantial portion of the index that is internal, sixty percent as chosen here, developed countries could for the first time be hampered by trade rules that benefit the developing world. Although domestic autonomy is given priority in this hypothetical, it is important to note that it would most likely be easier to attain. It is arguably easier to provide political freedoms than to alter the economic structure of society. Developing countries would easily outpace developed countries in lessening their taxation rates by encouraging or maintaining civil liberties and individual autonomy. Most pertinent to the hypothetical developed country is how the index would significantly alter the competition between developed states. The environment would now be a cost that is internalized within the country that outputs harm. Specifically, the manner in which goods are produced is a matter in determining the valuation of all goods that a society exports. A country that has been more forceful in promoting clean economic practices would now realize trade advantages across the spectrum of its economy. A steel industry that has been sustained through cheap but ‘dirty’ energy sources such as coal, and a general lack of pollution control, would now be a cost upon a national economy and not the global commons alone. Policy makers in developed countries would need to think of ways to compete with rivals that are racing to eliminate the external outputs of their economic practices. 125 The labels of developed and developing countries are obviously imprecise. It is important to note, therefore, that the procedural nature of a system of diversity provides for, and covers, a responding diversity of social and national circumstances. Simply put, there is certainly a wide divergence in both situation and concerns between the societies of, for instance, India and Bolivia. The advantage of a system of diversity is that such divergent societies have a standard evaluation based on improvement from their specific and previous status quo. And as between developed and developing countries in general, it is conceivable that India might begin the new competitive system with an advantage based upon education or political representation levels (though this is not necessarily the case), while Bolivia might have an advantage as to a lesser pollution output per person. Despite minor variations in beginning position advantage, in which some degree must be assumed, the main systemic advantages under diversity are to occur with the next turn of indexed reward – so that Bolivian firms may gain new found advantage because the Bolivian government has made improvements on the level of education, for example. Therefore, procedure allows for national difference as it is the reward for a percentage gain within a democratically selected field of importance that counts, independent of the relative economic positions of India and Bolivia on entering the new system of diversity. The benefits of the free market would be given to those who are competing within the enlightened dictates of autonomy. The most competitive players become those who respect the space of others and creatively foster choice. In sum, diversity offers significant gains through and in individual competitive expression with a minimum of institutional direction. 126 II.X A METHOD IN SEARCH OF DIRECTION When diversity is conceived in its less ambitious guise, policy direction may gain the benefit of a method that is forward-looking and open to future challenges that may upend the efficiency assumptions of the status quo, but the full prospect of the theory’s potential is left apart, and speaks nothing of the response to systemic failure to which this dissertation is occupied with. As such, the ambitious type example of trade system redesign, indeed recreation, serves as the main hypothetical illustration within this project, and will be elaborated upon later in the fashion of steps to ideal system design. And yet when such ambitious system reform is contemplated, it becomes more apparent that the method of diversity must find its second aspect in a theory rights. Following sections and parts accordingly address diversity as an ideal product of agreement, both as a means to justify diversity as the optimal system choice for a forming membership and to provide the social content which may input into the greater method. Significantly, these elements of social content not only direct diversity, but they allow that diversity will function to promote important social goals as a means to, and en route to, personal success in market competition. And so while the primary focus of diversity is upon future response, the needed addition of social content to serve as direction to differentiation has the added benefit of addressing social goals of the present that are otherwise not alleviated by status quo market competition. CHAPTER THREE EXAMINING THE RIGHT AND GOOD IN MODERN CONTEXT A theory of diversity has thus far been offered as the ideal method for encouraging progress through regulation, and it now remains to consider the hypothetical point of international response, in which international actors come together to coordinate a response to demonstrated systemic failings. So while an ideal method has been proposed independently, it remains to consider how individual actors might design their system in response to joined physical harm and market failure. Before a theory of diversity is further built upon to achieve an international legal theory, it may be more appropriate to consider the most obvious regulatory themes available under traditional liberal thought, the ideas that are most appropriate to organized rules combining social goals with individuals who are minded to independence. To this end, the following chapter provides an examination of competing visions of social priority, of whether the individual right or the social good of political philosophy ought to take precedence and compares each vision against its potential receptiveness to changing knowledge. The distinction between the right and the good is not only a fundamental division within liberal thought, it also represents a broader division between individual and group that this project will engage with, between self-interest and fairness, or efficiency and social equity, with the aim that a theory of diversity will transcend the divide and in doing incorporate advantages from either side. 128 III.I LIBERAL THEMES & SYSTEM RESPONSIVENESS When a radical approach to systemic variation is indicated by worsening sub- optimality, with greater losses to individual and group, such a variation may arise in reconsideration of the legal relationship between individual and group, and how it affects the democratic construction of legal and social priority. The divorce between individual action and group concern is a modern dilemma, especially apparent on the international level of common resources, as the means of economic activity are dislocated by private rights and legal divisions from more ambitious and accountable regulation. At the heart of this modern dilemma is the public private dichotomy inherent to liberal democracy, supporting autonomous individual rights and free market preferences. The market is and has been historically an undeniably effective mechanism of social welfare and efficiency; but this realization or faith alone should not limit the formation of more ambitious and socially accountable regulation. Attempting a potential solution to a public private dichotomy may necessarily involve engaging with perennial debate between the right and the good that exists in political philosophy and legal theory. In the absence of a unitary legal order, a view to a developing political agreement need involve the question of social priority: the ideal or centre out from which other subsequent and subsidiary social rules will spring out of and be justified by. The agreement may be hypothetical and applicable to any regulatory attempt to develop out of disorder, though particular thematic focus will here be paid to the international system as the most obvious case of anarchy. In summary fashion, the right, or a contractarian theory, defines rules and social obligations as extending out of the individual. As individuals are held to contract into 129 their respective society, individual rights are an inviolable aspect of that society’s future operation. What individuals bring to society, themselves, must be a measure that is always paramount: as if society cannot impinge upon what lead to its very creation by contract. The good focuses, on the other hand, on the collective vision of society as an organic whole. No preceding myth of pre-society is needed, for the imperative, and subsequent priorities, of society are of societal definition. Lending itself to democratic forms of agreement and governance, the good is an ideal to which a society chooses to direct itself. All further rights and obligations of individuals are then later features of pursuing this social ideal. In examining the respective sides of the right versus good, the object is to observe how each alone is an insufficient basis for meeting modern challenges of international scope. Indeed, it is the binary and oppositional debate between the right and good that is in and of itself counterproductive. For instance, the good is an excellent tool in revealing the short-comings of the right, and the presently dominant model of liberal rights, but the good is a flawed model for responding to modern dilemmas of sub-optimality and changing knowledge. If the good is utilitarian in nature, and concerned with a maximization of a good such as happiness or wealth, the difficulty is twofold. First, a utilitarian good is inescapably difficult to measure. The good remains forever elusive for want of a means to determine how exactly the preferences of individuals are counted fairly toward determining the objective which furthers the stated goal. How may one count happiness? Or if economic gain is the end, how are individual preferences to count when there is no direct equation between ability to purchase and the equal desires of each? The limits of 130 the good in this regard may be seen as the absence of a means for stepping beyond the ideal itself. A circular world may exist within a defined good, in which the stated goal is always sought without a means for determining the journey’s progress or continued relevance. Far worse than an inescapable lack of verification for the good, is the danger of not recognizing new knowledge, and the new social ideals that may need to come into ascendance. The unverifiable good will continue apace because the good itself contains no mechanism with which to alter course beyond itself if need be. Alternatively, if the communitarian model is to define the good in terms of political involvement in a republican, town hall style, the difficulty becomes modern circumstance. A communitarian good may speak eloquently of a democratic ideal no longer realized, and which is exacerbated by modern liberal rights, but it does not speak with solutions for the modern world. Forces of globalization have placed individual concerns beyond their local polis, and it is doubtful that a democratic ideal alone can return them. Instead what is necessary is a means with which to connect the social priorities expressed historically and locally with significant economic forces that are now of a global nature. Democratically chosen and changing social valuations are obviously desirable attributes to include in social direction, competitive or otherwise. And as indicated by the examination conducted in chapter two, these changing and variable social valuations may be present simultaneously within each individual. Translating these social values unto the international stage, however, requires an adaptive and universal mechanism not available with the good alone. The right does provide such a universal mechanism. By applying to each individual, as derived from each, the right provides a degree of universal protection and dignity not 131 automically provided by the good. Moreover, by locating the source of social priority in an unchanging and neutral basis of individuality, the right is a base that is open to changing social realities and new forms of knowledge: it need not be a closed world of the social ideal that only recognizes itself, for it is a mechanism open to a changing external world. The difficulty, however, is that the mechanism within the changing world is itself fixed and unchanging. The great promise of rights, with its protective basis in individual equality, also has its corollary limitation. For in centering upon individuality, rights theories tend to atomize individuals and ensure an autonomy that cannot be transcended by social purpose. Unfortunately, the right is necessarily neutral on social value. The difficulty of the right is not merely of forming social policy in which the wishes of the majority must not unduly harm the minority, but rather an inability to reconceive of the base element of social priority. If the place of individuals within society is dependent upon inexorable limits centered upon individuals themselves, then the flexible adaptation of society is not optimal. While the right may certainly be an appealing basis for human rights, when viewed in light of competitive design the inflexible nature of rights becomes most troubling. The inability to reconceive and redirect visions of individuality is endemic to rights theory in general, though is most clearly pronounced in relation to Lockean style property rights. The right, too often in competitive circumstances, is the bar to realizing outcomes that would be of greater benefit to individuals independently and as a whole. Essentially, for more fortunate economic goals to be realized requires an orchestration of legal priority that overcomes the obstacle of individual autonomy and separation. Modern economic problems will increasingly require individuality to be viewed within a wider 132 ideal than that of the isolated individual who acts as justification for the entire liberal democratic edifice. III.II DIVISIONS IN LEGAL THEORY AND POLITICAL PHILOSOPHY: Debates in legal theory often involve a tension over whether the individual or group ought to be afforded the priority of place in law. The fundamental norms for determining social rules emerge from this simple distinction between individual and group. At the heart of the matter is a question of whether rights and obligations arise from community or precede it. Contractarian theories concentrate on individuality, and the natural rights each person possesses before they contractually create a community. Conversely, teleological theories conceive of rights as extending out of the social good. Like conceptions of truth or beauty, the 'good' contained in law is an ideal that has value independently of each individual.1 Unfortunately, the potential benefits arising from theories of the social good and individual rights are lost through their current articulation. As both group concern and individuality are defined in terms of the wider economic system, normally contrasting concepts meet in a common space of contradiction. In sub-optimal situations, like that of the tragedy of the commons, both the individual and group are worse off from the exercise of individual self-interest. Even the most minimal social goal of economic maximization may go unrealized when organized around a conception of individuals as autonomous economic actors. The normative centre of each theory is therefore undermined by incompleteness. While economic market signals are universal in their 1 Contract theories, as well as other rights based theories, are also termed deontological. The distinction between teleological and rights based approaches uses the terminology of political philosophy: see, Patrick Hayden, JOHN RAWLS: TOWARD A JUST WORLD ORDER 8-12 ( 2002). 133 simple dictates of self-interest, the principles underlying social organization remain ineffectually tied to a division between individual and group. The environment is amongst the most obvious signs of the decaying philosophical justifications for the law. At a point of philosophical regression an opportunity for a new beginning emerges. Historically, an awareness of inconsistencies within the dominant philosophical framework has led to a reformulation of social norms. Thinkers dissatisfied with the moral implications of an established worldview have located social justifications in new theories of knowledge. If philosophical progress may be said to be occurring, it is the evolution of a primary discussion and not a constant expansion. In the past, as now, when an impasse is reached it becomes necessary to return to fundamentals and begin anew. Rather than an assumption of linear progress accumulating in greater and greater sums, legal philosophy may thus be seen as a constant reworking of the same essential formula. One of the most ambitious philosophical formulations ever attempted is found in the work of Immanuel Kant. Confronted with the deterministic universe of Newtonian science, Kant wished to recapture a central role for the individual and free will. Indeed, the present day conception of universal rights owes much to the influence of Kant's Critique of Pure Reason. As the Critique defined a scientific world as structured by the mind, Kant's subsequent moral theory could claim that individuals possess inalienable rights by nature of their rationality. The universal quality of individuality is justified by a theory of knowledge that explains perception as existing prior to society itself.2 Kant redefined the two major philosophical perspectives of his time, empiricism and rationality, so as to find the appropriate balance between the individual and scientific 2 Roger Scruton, KANT (1982). 134 discovery.3 This striking method may be applicable to the more modest discussion conducted here. A similar bridge between two opposing theoretical positions will be contemplated in order to redefine individuality within the greater background of developing knowledge. Whereas Kant tried to salvage the individual by making science dependent upon the internal structure of the mind, the following project shows how individuality is dependent upon responsiveness to external information. Scientific knowledge is not presumed to be a product of our mental structure but rather a test upon which our shared values are judged, and formed. Looking to the international system, instances of international market failure provide direction for a new beginning out of nothingness. The global nature of modern issues facing people requires that the individual protection of rights be combined with the flexibility of the social good. An ongoing process emerges, in which the sustenance of individual protection and group participation must be joined for either to have meaning. III.III TELEOLOGY A. Aristotle and the Good Aristotle was the first, and arguably most significant, philosopher to respond to Plato. Where Plato had used the literary technique of dialogue to hold forth on metaphysics, such as the search for knowledge or the nature of existence, Aristotle turned his focus to the nature of living in society. In the Ethics, Aristotle was to equate the ethical desire for good with politics and involvement in community. The ultimate good is said to be happiness, and society is the means of attaining this good. The famous remark that ‘man’ is a ‘political animal’ is a sign of Aristotle’s belief in the inherent virtue of 3 Ibid. 135 participating in the governance of society. Society is not about mere organization and convenience, but participation in an aspiration. For even if the good of the community coincides with that of the individual, it is clearly “a greater and more perfect thing to achieve and preserve that of a community; for while it is desirable to secure what is good in the case of an individual, to do so in the case of a people or a State is something finer and more sublime.”4 If individual virtue is found in the common pursuit of the good, it remains that the social good not only takes precedence over, but also precedes the individual.5 Teleology is a theory that builds upon the method of Aristotle by similarly defining an ultimate good for society. As with Aristotle, and regardless of the chosen ideal, the good is not dependent upon any single individual. “For a teleological theory, the right act to perform is that which maximizes the amount of intrinsic good in the consequences.”6 As society is the basis of pursuing an ideal, the normative basis of social organization is furthering the ends of the whole rather than its constitutive parts. Legal rights neither precede, nor take precedence over the collective, but instead are defined so as to further the collective pursuit of the good. It is not what individuals possess in autonomous abstraction that matters, but that which may be aspired to when all are considered together. International environmental degradation, the present instance of new knowledge, is a condition of harm that could show a teleological approach to be especially appealing. Recalling the tragedy of the commons, and the simple game theory models elaborated earlier, helps illustrate the need for a collective, common focus. It is the cumulative 4 Aristotle, ETHICA NICOMACHEA (John Warrington trans.) (1963). 5 Aristotle, POLITICS (Stephen Everson ed.) (1988). 6 Hayden, supra note 1 at page 9. 136 effects of individual behaviour that reveal the irrational results of self-interested strategies calculated in isolation. The distinct benefit of teleology is the holistic view to consequences, which most clearly corresponds to the level of environmental outcomes. However, the benefit of teleology may also contain its greatest shortcoming. The same flexibility that comes with a collective view to the good also results in a vagueness that prohibits the definition of new directions. This shortcoming is especially significant when considering the measure of changing knowledge, and the theory of diversity which will be offered in solution and in comparison. The issue, to reiterate, is designing a legal system of adaptive rights that reacts to a changing external world. To declare a new social good to be the priority based upon our immediate needs, such as environmental protection or fair trade, would be besides the point. A social good may be at once everything and nothing. Rights extend out of the good, but the good may remain indefinable; an assumption that remains hanging ineffectually in the air without the possibility of locating the ideal in events. Even if we assume that a social good is desirable in abstraction, the problem remains that the good may never be reformulated to account for change. The potential for recognizing change will be the lens of analysis for the following examination of two teleological views, communitarianism and utilitarianism. Assuming that it is possible to locate one truth or good as an ultimate value, the point will be to consider whether the articulation of that goal is adaptable. Can a theory of the good give rise to new rights and obligations in response to external change? If the good does not spark new organization, can it be universal, or the ultimate good? Even if dramatic systemic reform is disagreed upon, surely the capacity to contemplate change is an 137 essential requirement of an intellectual system. Without flexibility and the possibility of envisioning alternate forms, a defense of the status quo has the danger of becoming an intellectually empty response of just because. B. Maximizing the Good Utilitarianism combines a conception of the good with a fascination for calculation and the possibility of social measurement. From an original focus upon happiness, through various manifestations of the good that include economic efficiency, utilitarianism has appealed to those who would measure social phenomenon as with an instrument. A scientific attempt is then quite naturally joined by a skepticism for rational systems that define morality as existing prior to experience. Utilitarianism follows in the skeptical tradition of David Hume, who argues that moral values are set by the ‘passions’ and may only be discovered through an examination of what human beings, as a matter of fact, prefer.7 Unlike natural rights or universal human rights based theories that argue from an abstraction into practice, utilitarianism begins with empirical observation prior to systemic conclusions. Therefore, legal norms are not to be derived from ideas, but from observation. Instead of arguing what law should be, as justified by individual or spiritual morality, utilitarianism is unique in its neutral assumption that people are to be governed by what their behaviour indicates. The view of the good as scientifically measurable is found most clearly in the work of Jeremy Bentham, the founder of utilitarianism. The opening and declarative sentences of Bentham’s seminal work, An Introduction to the Principles of Morals and Legislation help define the utilitarian project: “Nature has placed mankind under the governance of 7 Jeffrey G. Murphy, KANT: THE PHILOSOPHY OF RIGHT 23 (1994). 138 two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do.”8 Individuals are seen to possess a fundamental preference for pleasure over pain, and it is the object of law to further this preference. And so if the good is first located in individual preference, it is individual preference that is then extended to society as a whole. As each individual calculates happiness, weighing pleasure over pain, societal governance would involve calculating each individual preference in reaching an aggregate of happiness. Or as Bentham succinctly terms it, the ‘greatest happiness of the greatest number’9. At first glance utilitarianism appears to embody democratic ideals, as it necessarily accumulates the wishes of the majority. Yet, upon further consideration it would seem that the application of the majority’s pleasure might possibly lead to the most distasteful consequences for those not aligned with that majority. As Michael Sandel illustrates: “If enough cheering Romans pack the Coliseum to watch the lion devour the Christian, the collective pleasure of the Romans will surely outweigh the pain of the Christian, intense though it be.”10 In view of such extreme circumstances, many would no doubt agree with Kant’s condemnation of utilitarianism for reaching unjust conclusions by not treating individuals as ‘ends in themselves’.11 The difficulty of course is that criticizing utilitarianism for not honouring the individual is hardly an argument at all. One might just as easily criticize rights based perspectives for not recognizing group concern, and the reality that each person is a dependent member of community and not a floating atom that 8 Jeremy Bentham, An Introduction to the Principles of Morals and Legislation, in John Ginglell et al. (eds.), MODERN POLITICAL THOUGHT: A READER (2000). 9It has been suggested that Bentham took this term from Beccaria; Ginglell supra note at page 227. 10 Michael Sandel, DEMOCRACY’S DISCONTENT: AMERICA IN SEARCH OF A PUBLIC PHILOSOPHY 9 (1996). 11 Murphy, supra note 7 at page 25. 139 possesses universal attributes in space. So instead of engaging in circular debates of political theory, the point here is to question the ability of utilitarianism to adapt to its changing environment - any environment, whether it be social, economic, or physical. C. The Good and Market Failure International market failure may reveal a potentially ruinous discrepancy between the independent strategies of individual perception and group consequence. Looking to group consequence would then address the problem by mandating responsibility for previously isolated and irresponsible individuals. Utilitarianism operates on the level of group concern, but it is doubtful whether it could ever respond to changing systemic information. The most obvious problem with utilitarianism is that is unclear how happiness could ever be quantified or measured. For how could a government or decision making body possibly measure the intricacies of individual perception, even if limited to the binary of distinction between pleasure and pain? The indeterminacy of the good leads to a still more significant defect for utilitarianism. Indeterminacy creates a dependence upon continuing definitions, and a cycle of utility that does not recognize new features. That is, if A currently defines the measure and variations of happiness, how will B ever be recognizable? The environment provides a clear example of this inability for new definition. If the deleterious effects of individual action become apparent when all individuals are considered, then it would follow that the utility of the majority would dictate that rules are changed so as to bring behaviour into accordance with majority benefit. The difficulty is that ‘benefit’ is not an absolute value, and that the imprecision of measurement equally leads to relativism. 140 Since it is a majority of individuals that is causing the harm, would it not equally follow that the majority has already chosen its preference? Individuals may well prefer the ability to consume and pollute over the benefit of being free from its harm. If they do not, utilitarianism will never tell us. Once a form of utility is assumed there is no way to radically challenge its articulation. A social good cannot possibly assess itself out of existence. If happiness is the measure for legal analysis how can one look through the lens of happiness and conclude that happiness is no longer a desirable social good? If it is efficiency, what would tell us to discard efficiency when it is efficiency that defines how we look at a situation? This circularity is the very essence of the difficulty, for there is no internal trigger in utilitarianism that changes the legal perspective. If a set of laws are supposedly set toward happiness how could one possibly prove otherwise? What begins a simple view to majority preference becomes an indecipherable imposition of what is probably happiness, and what is probably best. Whether suboptimal situations result from a competitive cycle of insecurity or a genuine demonstration of what people prefer will forever remain unclear as utilitarianism only propagates that which is currently assumed. In this sense, utilitarianism is form of governing upon already accepted dictums. Utilitarianism claims to proffer an empirical system for calculating a social good, yet its greatest defect is that it is not in truth tied to any empirical concept whatsoever. A supposed empirical observation begins the utility project, assuming that individuals calculate pleasure over pain or that efficiency makes society better, but then all empirical considerations are lost. There is no rule or principle within utilitarianism that clearly 141 demarcates when the founding conditions are not being met. A genuinely empirical system would define parameters to be observed; utilitarianism defines no measure of concern and instead sets in motion a cycle that is destined to remain nebulous. Despite its pretense of rigor and calculation, utilitarianism lacks any form of testability or scrutiny. Without a means of quantification that is external to a school of thought, its prescriptions are reduced to dogmatic pronouncements of an arbitrary social truth. Recalling Karl Popper’s critique of Marxist theorists, utilitarianism should be rejected for lacking any prospect of ‘falsification’.12 Absent a means of verification or challenge to its operating tenets, the good, and especially the utilitarian good, is ill equipped to answer changing knowledge – a failed solution to be compared with the theory of diversity offered in the following chapter. D. Involvement as the Good Communitarianism generally advocates the good of civic and political life once found in local communities. This ideal of civic republicanism draws its inspiration from direct democracy, where citizens are personally involved in making the decisions that affect their community. Looking to the Greek polis and the New England town hall meeting for its inspiration, democracy is seen as an activity rather than an abstraction of rights. Hannah Arendt drew an important distinction between Vita Contemplativa and Vita Activa that is illustrative of the communitarian focus. Where modern political thought has predominantly favoured Contemplativa and the qualities of individual 12 Popper was less scornful of Marx himself, for unlike his future disciples he had offered verifiable and testable predictions. 142 thought, Arendt argues that ideas require the engagement of Activa; that they be vocalized and put into action.13 The realities of present day society have increasingly made communitarianism appear as solely a critique of modernity. As Arendt writes, "What makes mass society so difficult to bear is not the number of people involved, or at least not primarily, but the fact that the world between them has lost its power to gather them together, to relate and to separate them."14 Communitarians claim that the law in liberal democracies has facilitated a dislocation of individuals from their community and the means of their active identification as citizens. It then follows that the “demise of democracy is a direct result of the triumph of liberal legalism and its underlying need to support the emerging dynamic of modern political economy.”15 The rise of bureaucratic and procedural state, it is argued, is directly enabled by a legal individualism that defines each person as an autonomous rights holder. As Sandel writes: The philosophical difficulty lies in the liberal conception of citizens as freely choosing independent selves, unencumbered by moral or civic ties antecedent to choice. This vision cannot account for a wide range of moral and political obligations that we commonly recognize, such as obligations of loyalty or solidarity. By insisting that we are bound only by the ends and roles we choose for themselves (sic), it denies that we can ever be claimed by ends that we have not chosen - ends given by nature or God, for example, or by our identities as members of families, peoples, cultures, or traditions.16 Communitarianism thus presents a critique of distance; individuals are separated from their community, and left isolated by a far off formalism that treats each as a private rights holder. 13 Leah Bradshaw, ACTING AND THINKING (1989). 14 Hannah Arendt, THE HUMAN CONDITION 52-53 (1958). 15 Ian Ward, AN INTRODUCTION TO CRITICAL LEGAL THEORY 70 (1998). 16 Sandel, supra note 10 at page 322. 143 The work of many communitarian theorists is situated in the American experience, with its inspirational tone set by the early civic ‘spirit of 1776’ and its current dissatisfaction found in what Sandel terms the ‘procedural republic’.17 Many communitarians find an ideal image in the work of Alexis de Tocqueville, who visited the New England townships in the newly independent nation: Town meetings are to liberty what primary schools are to science; they bring it within the people's reach, they teach men how to use and how to enjoy it. A nation may establish a free government, but without municipal institutions it cannot have the spirit of liberty.18 Tocqueville’s portrayal has attained an idyllic, almost mythical dimension, which has probably become more important than the actual political landscape of the time. While the town hall meeting conjures images of grassroots politics in an ideal form, the opportunity for the force of personality to dominate others remains troubling for democratic intent. Arendt at least is consistent in her view of civic virtue, even at the expense of democracy, claiming that some will naturally rise above the rest based upon their love and aptitude for politics.19 Leaving aside considerations on the proper democratic form, the issue of concern here is how the civic virtue witnessed by Tocqueville in the early American state may translate into a modern equivalent. If communitarianism raises distinct problems, does it equally offer distinct solutions? If a fascination with the ‘spirit of 1776’ leans toward the sentimental, it nevertheless contains a regard for the opportunity presented by a society ‘newly’ begun. For instance, in On Revolution, Arendt contends that revolutions are “the only political 17 Ibid., 4. 18 Alex de Tocqueville, DEMOCRACY IN AMERICA (Phillips Bradley ed., 1945), Vol. 1, 61 (1885). 19 Bradshaw, supra note 13. 144 events which confront us directly and inevitably with the problem of beginning.”20 So why is communitarianism not able to suggest a new beginning? The difficulty no doubt lies in the nature of modernity, and the expanding society that is continually thinning and lessening those matters that are purely local, or even national. The political force and Activa called for by Arendt simply has nothing to focus its force upon. The law has coincided with, and followed, the economic forces of concentration, but it did not create them. As Sandel acknowledges: The nationalizing of American political life occurred largely in response to industrial capitalism. The consolidation of economic power called forth the consolidation of political power. Present-day conservatives who rail against big government often ignore this fact. They wrongly assume that rolling back the power of the national government would liberate individuals to pursue their own ends instead of leaving them at the mercy of economic factors beyond their control.21 The legal ethic of liberal individualism is representative of a changing society, but the law cannot change society back to its idyllic form of yesteryear. Communitarianism results in an unfortunate standstill, in which a poignant argument of what has been lost is followed only by silence. Communitarians have not been so reactionary as to call for a ludite move away from technology, but neither have they articulated a response for society. There has been as yet no equivalent of Thomas Paine or Jean-Jacques Rousseau offering an embrace of world democracy through information technology, and there has been no clear articulation of how global issues are to be made response to individuals through local involvement. For example, at the end of his lengthy work on public philosophy, Democracy’s Discontent, Michael Sandel’s simple prognosis is that civic relationships of a local and regional nature should be 20 Hannah Arendt, ON REVOLUTION 21 (1965). 21 Sandel, supra note 10 at page 346. 145 encouraged with a simultaneous “strengthening and democratizing (of) transnational structures, such as the European Union.”22 Unfortunately, Sandel offers no precise notion of how this is to occur, or of how local involvement is to be strengthened while we simultaneously acknowledge that many of the forces that most concern us are no longer located in the local roles we inhabit. As Sandel admits, the law did not change the economic composition of society, and so it seems questionable to assume that the law may reinvigorate local affiliations to make these matters central to individuals once again. If community involvement is the ideal location of democracy, then we should let community involvement reinvigorate democracy instead of using the law to impose this individual focus. Looking to the law as a source of diminishing civic involvement is primarily a misdirected argument, logically similar to blaming Canada’s Charter of Rights and Freedoms for diminishing numbers of church attendance or union membership. The law should not be used to impose a reflection of individual association that is not supported by the concerns of individuals. Communitarianism remains tied to physical notions of community, of individual concerns defined by their nearness to our local identification, and in this way remain tied to the past. In the absence of answers communitarianism is left as simply a sign of the unsettling disconnection between modern international forces and local community. If people are reflective parts of a community, both defined by and helping to define a community, group interaction obviously remains salient. However, without articulating answers of how local involvement is to meet the challenge of global issues, communitarianism remains at best a commentary on the dangers of the social disconnection that we face. 22 Sandel, supra note at page 345. 146 Perhaps if individual rights could be redefined to account for an external good there could be less systemic accusation. If individual rights could be defined to propel the social good through the results of their choice, it would hopefully end accusations that the law is distorting community by not corresponding to the ‘spirit 1776’. At the very least, by concentrating on individuality it would be possible to consider reordering legal conceptions and orchestrating a break with a longing for the past. Having discussed the failings of the good in general terms – of a theoretical lack of internal challenge and of a modern international response – it remains to contrast such failings, along with admitted strengths, with those offered by the contra perspective of the right. III.IV THE SOCIAL CONTRACT Social upheaval without a principled end or justification is only violence. It is the attempt to develop a new normative foundation for society that distinguishes revolutionary movements from palace coups that merely rearrange a cast of characters. A revolutionary project assails not only who is in power, but also the theoretical basis of that power. The intellectual conflict of systemic change necessarily involves first undermining, and then replacing the raison d’etre of a regime. The entire edifice of government stands upon a central legal fiction that subsequently supports each other social right and obligation; and a new beginning must exchange one fiction for another. An idea must be developed so that it may be held up against the status quo, providing a new test of justification that the old order inevitably fails. The idea which justified the emergence of modern democracy was the social contract. 147 The legal legacy of the Enlightenment is the replacement of religion as the foundation of social order. Although liberal thinkers of the 17th and 18th Centuries were hardly fanatics calling for regicide or the overthrow of monarchial rule, the very notion of a social contract was revolutionary. Instead of an ecclesiastical basis of society, with the divine right of kings at its apogee, the social contract was based upon a historical agreement amongst individuals. Primarily a hypothetical device rather than a view to actual historical events, the social contract envisions the circumstances of society’s initial formation. As it is generally understood, the social contract is an agreement amongst individuals seeking to relieve the uncertainties and hazards of anarchy. Individuals surrender the freedom found in the ‘state of nature’ to escape being at the mercy of arbitrary force and to gain the benefits of organization by agreeing to form a society. The profound implication of the social contract is that individuals are free and autonomous before society. The social contract in this way became a powerful tool in undermining oppressive rule that claimed to represent a predestined society. A new manner of thinking had emerged, one that saw Jean-Jacques Rousseau make th
UBC Theses and Dissertations
The diversity and evolution of competition : an ideal proposed for regulatory design Ilg, Michael Peter 2008
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