Specific contributions: Bohm’s influence on German and European antitrust law and codetermination legislation

Bohm not only elevated law and economics to an academic programme. As a politician, he also put forward practical proposals for framing laws which were consciously geared to the economic functions of law.

Although Bohm’s proposals were never implemented in their pristine form, they exerted a very strong influence on German antitrust legislation (Moschel, 1985, p. 37), and since German antitrust law had a strong influence on Euro­pean law we can say that Bohm has had an impact on European antitrust law, thereby inhibiting economic processes that might lead to cartellization at the European level.

Antitrust authorities are regulatory bodies, and as such they risk being infiltrated by pressure groups or exposed to the influence of politicians whose activities are oriented towards personal profit rather than the common good. Whenever such vested interests gain the upper hand, they induce grave infir­mities in the body politic. Bohm sought to avert such dangers by framing new institutions with great dexterity. In order to illustrate his modus operandi, I shall give a brief summary of his proposals concerning the organization of the Federal Cartel Office (Bohm, 1950, p.

The function of the Federal Cartel Office (Bohm uses the term Monopolamt: Monopolies Office) was to be strictly defined and formulated in a law con­taining both an injunction and a prohibition: the injunction concerned the elimination of avoidable and the control of unavoidable economic power, while the prohibition was to ensure that the powers conferred upon the office would not be used for any other purposes such as the implementation of industrial policies.

Since the function of the office was thus clearly predetermined with regard to goals and means, Bohm believed that it could and ought to be separated from the rest of the administration with a status comparable to that of the European Central Bank. Thus the office ‘is accountable neither to Parliament nor to the Government, but - like a law court - it has no discretionary powers of a political nature. As far as its measures are concerned, it is subject [only] to the law’.

Consequently, the Monopolies Office ought to be subject to the same kinds of control as the law courts. Firstly, it ought to be obliged to justify all its decisions in writing, and its justificatory legal analysis should furnish proof that it has abided strictly by the law. Secondly, it should be required to make its decisions in collegial divisions. This is primarily to ensure that the Monopolies Office fulfils its function properly, resisting lobbyists and influential politicians who might try to pressurize officials into showing leniency to powerful business groups.

In the same passage, Bohm goes on to say that ‘this kind of body adapts itself to the conditions of political democracy and (in particular) to the tenet of the Rechtsstaat, which acts in conformity with issue-related principles established by law’. Speaking from a present-day vantage point, one might add that this type of organization is in accordance with the maxims of new public management, which aims at drawing a clear-cut distinction between two species of decision: (i) political decisions about objectives and (ii) op­erative decisions about the means by which these objectives are to be attained in particular cases.

Bohm was less successful in framing labour legislation in general and codetermination legislation in particular. This statement holds at any rate for the political upshot of his efforts and for the acceptability or completeness of the arguments he put forward. But not so with his methodology, which in this domain was fully in accordance with the law and economics approach.

Little in the restricted space here available can be said about the intricacies of German labour and codetermination legislation. This body of laws is based on the idea of social partnership, and most of the statutes in question were enacted between 1951 and 1976. The statutes contain a catalogue of rights: rights to obtain information and rights to share in policy decisions. These fall into two categories: (i) rights which depend on the decision-making level (political, managerial, and shop-floor levels), and (ii) rights which depend on company size and the economic sectors concerned. A certain number of gen­eral trends can be observed. As a rule, workers’ representatives have more rights at the lower decision-making levels and fewer at the higher levels; in big firms, they have more to say than in small and medium-sized businesses; and in the coal, iron and steel industries they wield much more influence than in other sectors. It should also be noted that codetermination rights at the managerial level were and - to a certain extent - still are the subject of much controversy.

Bohm commented on the codetermination problem in a number of publica­tions,⁷ particularly in a more than 200-page article in the journal ORDO (Bohm, 1951). In this essay, his modus operandi is more or less the same as in his discussion of questions relating to antitrust law: he begins by discuss­ing the history of relevant property rights. However, the focus of attention is not on the history of the rights which were then enjoyed by German workers. Bohm’s main concern is with the history of proposals concerning the grant­ing of codetermination rights (proposals that date back to the Weimar Republic).

Viewed from our present-day vantage point, Bohm’s contributions appear somewhat one-sided. To begin with, when Bohm studies the history of the origins of the proposals concerning codetermination, he underestimates the importance of the fact that employers and employees joined forces in the battle to stop the dismantling of industrial plants, particularly in the Ruhr coal basin. The dismantling of these plants was part of a plan devised by the Allies - a plan to cripple the German economy after the end of the war. Even after the Federal Republic of Germany had been established, the dismantling continued for a while. As a result, capital and labour made a united stand against their common foe. This greatly increased the German people’s will­ingness to adopt proposals relating to codetermination, and it subsequently made it much easier for politicians to push through legislation on the subject (Backhaus, 1996b, pp. 369f.).

Second, Bohm’s assessment of the impact of codetermination on the coor- dinative efficiency of the pricing mechanism now appears somewhat unsatisfactory. He resisted demands for the establishment of an ‘economic democracy’, which were first made in Germany in the 1920s, and reiterated during the discussion about codetermination. Bohm objected that employers do not reign over their employees as monarchs reign over states. He said that employers should be considered as parties to a contract under civil law. As suppliers of goods or working hours, employers and employees ought to heed those price signals whose economic function is to ensure that production is geared to consumers’ wishes. This, he said, also necessitates modifications in capacity and job structures.

1. Human capital is a plastic resource whose productivity is determined not only by wage incentives, but also by the organization of human relations.

2. Employment contracts are normally incomplete long-term contracts which must be drafted in such a way that they can be adapted to changes in collateral circumstances. Hence the need for adjustment mechanisms which have to be devised by institutions.

3. There are informational asymmetries between employers and employ­ees.

4. It is also necessary to take account of the fact that highly specific human capital is often developed only when it is protected against the dangers of exploitation. The acquisition of such know-how is in the interests of employers and employees alike.

These are all research findings which Bohm did not yet have at his disposal in this form, and which now lead us to take a more optimistic view of the efficiency of rules for codetermination. However, what this reveals is not a problem peculiar to Bohm’s way of thinking; it is a general problem posed by the relationship between law and economics. Judgements concerning effi­ciency can be formed only on the basis of available economic knowledge, and the knowledge that economists had in 1951 was different from what we have now.

Notes

1. The CDU is the German Conservative Party.

2. This was the German Supreme Court (established in 1879), which in 1897 declared cartels to be legal.

3. These are guiding principles for drafting and administering laws.

4. The term ‘economic order’ denotes all the institutions that regulate the allocation of rights and duties, open channels of information, and create incentives (Bohm, 1946, pp. 146f.; Neuberger and Duffy, 1976).

5. ‘Economic freedom’ here means liberty to establish and carry on any trade or industry.

6. On this point and related questions, see Grossekettler (1997, pp. 44-52 and pp. 111-15; 2002, pp. 33-67).

7. Meijer (1996) offers a broad survey of these publications.

References

Backhaus, J.G. (1996a), ‘Good economics, bad economics, and European economics’, Kyklos, 49, 449-63.

Backhaus, J.G. (1996b), ‘Co-determination in Germany 1949-1956’, European Journal of Law and Economics, 3, 369-72.

Bohm, F. (1933), Wettbewerb und Monopolkampf. Eine Untersuchung zur Frage des wirtschaftlichen Kampfrechts und zur Frage der rechtlichen Struktur der geltenden Wirtschaftsordnung (Competition and the struggle for monopoly), Berlin: C. Heymann.

Bohm, F. (1937), Die Ordnung der Wirtschaft als geschichtliche Aufgabe und rechtsschopferische Leistung. Nebst Einleitung der Herausgeber (Economic order as a historic task and a law creating achievement. With an introduction by the editors), Stuttgart/ Berlin: Kohlhammer.

Bohm, F. (1946), ‘Die Bedeutung der Wirtschaftsordnung fur die politische Verfas sung’ (The importance of the economic order for the political constitution), Suddeutsche Juristenzeitung, 1, 141-9.

Bohm, F. (1950), Wirtschaftsordnung und Staatsverfassung (Economic order and national con­stitution), Tubingen: Mohr.

Bohm, F. (1951), ‘Das wirtschaftliche Mitbestimmungsrecht der Arbeiter im Betrieb’ (The Co­determination Right of the Workers in an Enterprise), ORDO, 4, 21-250.

Bohm, F. (1955), ‘Entwurf eines Gesetzes gegen Wettbewerbsbeschrankungen der Abgeordneten Dr. Bohm, Dr. Dresbach, Ruf und Genossen' (Draft of the German Act against Restraints on Competition by the Members of Parliament Dr. Bohm, Dr. Dresbach, Ruf and others), Bundestagsdrucksache 2/1269, 16 March.

Bohm, F. (1957), ‘Die Forschungs- und Lehrgemeinschaft zwischen Juristen und Volkswirten an der Universitat Freiburg in den dreiβiger und vierziger Jahren des 20. Jahrhunderts' (Joint research and teaching of jurists and economists at the University of Freiburg in the 1930s and 1940s), in H.J. Wolff (ed.), Aus der Geschichte der Rechts- und Staatswissenschaften in Freiburg i.Br. (On the history of the Faculty of Law and Economics in Freiburg), Freiburg: Albert, pp. 95-113.

Grossekettler, H. (1997), Die Wirtschaftsordnung als Gestaltungsaufgabe. Entstehungsgeschichte undEntwicklungsperspektiven des Ordoliberalismus nach 50 Jahren Soizialer Marktwirtschaft (Economic order as creative task. Origins and perspectives of Ordoliberalism after 50 years of social market economy), Hamburg: Lit-Verlag.

Grossekettler, H. (2002), ‘Die osterreichische Finanzverfassung vor dem Hintergrund des internationalen Standortwettbewerbs' [The Austrian economic order of public finance facing global competition], in E. Theurl, H. Winner and R. Sausgruber (eds), Kompendium der Osterreichischer Finanzpolitik [Handbook of Austrian Public Finance], Vienna and New York: Springer, pp. 32-89.

Josten, P., F. Bohm, W. Bauer, C. Fischer, W. Koppel, W. Kromphardt and B. Pfister (1949), Entwurf zu einem Gesetz zur Sicherung des Leistungswettbewerbs und zu einem Gesetz uber das Monopolamt (Draft of laws concerning antitrust and the Monopolies Office), submitted to the administration of economic affairs, Herrn Prof. Dr. Erhard, 5 July.

Meijer, G. (1996), ‘Co-determination and the market economy', European Journal of Law and Economics, 3, 361-8.

Moschel, W. (1985), ‘Das Kartellgesetz heute - aus ordoliberaler Sicht' (The antitrust law today - comments from an Ordoliberal point of view), in Ludwig-Erhard-Stiftung (ed.), Recht und Gesittung in einer freien Gesellschaft. Zur Erinnerung an Franz Bohm aus Anlaβ des 90. Geburtstages (Right and civilized behaviour in a free society), Bonn: Ludwig- Erhard-Stiftung, pp. 35-48.

Neuberger, E. and E.J. Duffy (1976), Comparative Economic Systems: A Decision-Making Approach, Boston, MA: Allyn & Bacon.

Norr, K.W. (1994), Die Leiden des Privatrechts. Kartelle in Deutschland von der Holzstoffkartellentscheidung zum Gesetz gegen Wettbewerbsbeschrankungen (Complaints of civil law. Cartels in Germany from the ‘Holzstoffkartell' decision to the Act against Re­straints on Competition), Tubingen: Mohr.

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