Theoretical Implications for Law and Development, Looking at the Work of Douglas North, Brian Tamanaha, David Trubek

Most mainstream critics have pointed out imprecision in Good Governance indi­cators (WGIs) making comparison between contexts difficult. It has also been noted that the indicators have a bias towards the views of the business elite.

6.2.1 Douglas North

The neglect of distributive aspect of governance goes to the core issue of prob­lematic understanding of the state and politics in WGIs and New Institutionalism as seen in the work of Nobel Prize winning economist, Douglas North. He emphasizes out the importance of institutional structures for the performance of economic system as were neglected by the economic historians.^[1397] He particularly emphasized the importance of rules of the game (institutions) for property rights enforced by the state and these, for him, are essential for economic growth. These may be formal (constitution, statutes, by laws, etc.) or informal (culture, religion).^[1398] Here state acts as a third party, developing an impersonal body of law and enforcement and lowers the cost of transactions.^[1399] Connected and relevant to this for our study in this book is North’s clear statement about Third World countries that they have poorly defined and/or ineffective property rights and lack formal structure (and enforcement).

Apart from a critique which can be levelled against North for its theoretical positions in new and old economics, new institutionalism and transactional cost economics,^[1401] a few relevant critical points from the point of view of study in this book are as follows. In Chap. 1 it was discussed that there is no separation of state from civil society and there is no separation of political from the economic in Pakistan like other postcolonial countries. State itself is composed of big land­holding classes and business elite connecting it with international capital through centre-periphery dependency relations. This metropolitan bourgeoisie acting as a hegemonic class historically used juridico-bureaucratic structure as a seat of power. Defining property rights through state (and laws related to trade, tariff, foreign investment, etc.) means strengthening biased dependency relations and unequal distribution of land and wealth. Taking property rights as a prerequisite for eco­nomic growth may be problematic as they may themselves be a hindrance on the path of political and economic development. This disconnection of institutions (legal, property law) and state from politics is very particular to Douglas North. In his basic model of studying Europe in 1973, he ignores the effects of crusades, technological innovations and accumulation of capital.^[1402] For him, efficient economic organization is the prerequisite of growth to whom individual respond. He ignores the inequality of strategic actors in new rules of the game. That is, who will benefit from the change of rules is missing in his formation. Furthermore, he expects individual to obey the rules of the game on utilitarian principles.

The problematic nature of this understanding of state, which lay behind gov­ernance interventions of financial institutions, became evident in transitional economies as soon as the local ruling elite started misappropriating state controlled assets during deregulation and privatization of early 1990s.

Now governance interventions began to give a central role to the judiciary to fix this corrupt elite and the stubborn bureaucrats, adding in another problematic prescription in the legal remedies for developing countries. This book rather argues for a class-based understanding of the state rather than a perception of an unfortunate ‘capture’ of a neutral set of institutions. This study presented state formation as political practice (‘hegemony’ as nuanced concept of this phenomenon in Gramscian tradition). Through a detailed historical and empirical study of postcolonial judiciary in Pakistan it argued for its role in the reproduction of state and political inequality, indicating the limits of the reliance on judiciary to fix problems of governance in developing countries.

6.2.2 Brian Tamanaha

The lack of a critical understanding of law and state theory can be seen in the writings of Brian Z.

Subsequently disillusioned with the instrumentalism within legal realism he sought ‘values’, or law as an asset of ideals, and law as the common good. Tamanaha criticizes the instrumental approach to law in the Rule of Law project of the World Bank, tracing its historical trajectory through the Legal Realists, ‘the social’ in law, pragmatism and cause litigation. He reveals how instrumentalism has a class orientation.^[1405] He regrets the deprivation of two ideals in US legal system, law as an asset of ideals and law as the common good for public welfare, over the last 200 years.^[1406] He draws on E. P. Thompson who rejected the Marxist notion of law as an instrument in the hands of the dominating elite.^[1407] Thompson believed that even though the law did not live up to its idealized characterizations, to give up the traditional non-instrumental views of law as rhetoric would be an error and Tamanaha concurs.^[1408] He challenges “anyone who doubts Thompson’s conclusion about the benefits offered by the rule of law” for they “must merely examine the situation in those countries around the world where it is lacking—at blighted societies in which power has its way with scant restraint, and the powerless have little protection^[1409]”.

Tamanaha’s move from a ‘pragmatic-realist approach’ to quest for ‘non-instrumental’ view of law required filling gaps in theories of law. He tried to bring harmony between formalism and realism. His justification was that the legal formalists lawyers and judges found law as autonomous, comprehensive, logically ordered and determinate. This shows judges can judge by pure mechanical deduction. On the other hand in 1920s and 1930s, Roscoe Pound and Benjamin Cardozo gave a legal realist view where law was filled with gaps and contradic­tions, indeterminate, with exceptions to all legal rules, principles, precedents and hence judges decide according to their personal preferences and construct desired outcomes. For Tamanaha, there was no division between formalism and realism and he joined ‘values’ as formal with judging according to politics.^[1410] But the inde­pendent role of politics affects judges, courts and the art of judging is absent from Tamanaha. His writings lack a nuanced understanding of state theory, the place of judiciary within the state and the state’s relation to social whole. Furthermore, Tamanaha’s lack of any substantive position within liberal thinking, that is, instrumentalism of pragmatism-realism to formalism (moral ground for law) to finally somewhere in between, makes his critique of critical thinking, like on CLS and legal pluralism, highly incoherent.^[1411] E.P. Thompson’s position about rule of law as an ‘unqualified good’ turns to a ‘qualified human good’ in Tamanaha. This ignores the complexity of Marxist analysis of law and debates within tradition (we have discussed the problematics of Thompson’s position in Chap. 1).

An application of Tamanaha’s ‘moralist’ and ‘pragmatic-realist’ approach to rule of law projects in developing countries is more illustrative. He ‘bridged the gaps’ (though gulfs in developing countries) between scholars and practitioners of the World Bank with an approach which is ‘pragmatic one^[1412]’.

6.2.3 David Trubek

Moving on to the heart of law and development scholarship, David Trubek and his collective published two books in the last decade connecting legal changes with economic development under neoliberalism, calling them ‘experiments’^[1416]. These books also do not provide a rigorous and proper critique of the new institutionalism behind the current phase of law and development, unlike Trubek’s critical rigour of the 1970s against Critical Legal Studies and Law & Society.^[1417] While the first wave of law and development in 1970s was in crisis, Trubek tried to develop the ‘so­ciology of law’ as a response and its height is his 1974 article, “Scholars in Self-estrangement”, co-written with Marc Galanter.^[1418] The crux of Trubek’s works is pointing out the importance of ‘scientific method’ used by Weber to study the relation of capitalist development and law. Trubek found that the economy and polity merged together to some extent in the developmental state in developing countries, as opposed to western capitalist societies. Trubek concluded that Weber cannot be applied to developing countries. But how should the postcolonial state, and the ‘developmental state’ of postcolonies in this case, be understood? Disavowing any theoretical position currently, Trubek has not been in a position to answer this.

While Trubek was busy in developing a theory of sociology of law, the deductive school of thought in new institutional economics brought back the use­fulness of institutions as the ‘Ideal Type’ in the vein of Max Weber.^[1419] Trubek merely saw all of the interest in law in new institutionalism as “economists inter­ested in development discover[ing] law”. For Trubek this was different than in the 1950s and 1960s when legal institutions were available as needed. Now “all of a sudden development economists began to focus on law”^[1420]. For him this focus on law as an institution was to facilitate market transactions and to constrain unde­sirable state intervention. This statement is not only descriptive but is in line with the theoretical premises of new institutionalism.

While new institutionalism was taking the shape of ‘Good Governance’, Trubek engaged with its pragmatic-realist layer in the name of ‘New Governance’. These for him were mechanisms designed to increase flexibility, improve participation, foster experimentation and deliberation, and accommodate complex multilevel systems using examples drawn from the European Union and the United States.^[1421] These are alternative approaches to governance are opposed to traditional, top down, command and control governance,^[1422] and involve use of soft law along with hard law.^[1423] Here law is problem-solving through networks, experimentation, standards and deliberations, that is, multilevel networks which are ‘law-like pro­cesses’ developed and based on the empirical study of three cases: EU’s Water Framework Directive, the Tuna-Dolphin case and the WTO Council and Committee system.^[1424] These transnational arenas, institutions and processes create ‘opportunity structures’ and suggest transnational solutions as a supplement to national systems.^[1425] In a nutshell, new institutional experiments are a process where IFIs are changing and are more permissive to developing countries.^[1426] So for Trubek, we should not out rightly oppose^[1427] or accept IFIs but rather engage with the processes.

At the same time, quite in line with the failures of neoliberalism at the end of 1990s, Trubek's collective was able to reach ‘New Critical Practice'. This critique involves challenging commonly held assumptions about the neutrality of private law, unrestricted market fundamentalism, gaps between rhetoric and reality, prob­lematic efficiency doctrines and false universalism. Most important of this new critical practice was a reminder of the forgotten issues of distribution and hegemony of the economic order in third moment of law and development.^[1428] But how Trubek's proposed ‘New Governance' could realize distribution is unclear, nor is it clear how the hegemony of the economic order would permit such distribution. Finally, I believe the ‘new critical practice' has found refuge in the ‘New Developmental State' as an exemplar of pragmatism.

The ‘New Developmental State'^[1429] in Trubek's analysis is the legacy of twenty-first century complexity where three forces shape local law, namely IFIs, local policy makers and international law. In this situation only governments, academics, judges and leaders of the bar and some ‘elite' law schools in places like Brazil, China and India have taken up the challenge of building a body of knowledge about law and development appropriate for our times.^[1430] This new developmental state recognized the elements of the new political economy of development, namely imperfect markets, market failure, strategic trade theory, networks, technological capacity, innovation, etc. and domestically developed a kind of private-public partnership approach.^[1431] There is no general theory of law that might allow for institutions capable of managing the complex needs of the new developmental state, but rather such management requires ‘new governance', democratic experimentalism and hybridity.

Trubek misses the theoretical underpinnings of the legal state in this third wave of law and development under new institutionalism. The countries of the Global South and the people of these countries are tied into extensive new legal and institutional arrangements, such as the WTO and other global legal regimes. As global actors, Southern countries are disadvantaged in these systems as the insti­tutional arrangements that are promoted are a restraining factor for any independent and alternate path of political and economic development. In that sense, too much law is antithetical to development for the marginalized. Above all, legalism can be a distraction from the needed political and economic development (devoid of development defined broad or narrowly) for these global marginalized countries and the marginalized peoples therein. Trubek missed this point 40 years ago while evaluating first wave of law and development and this left him uncritical or mildly critical of second and third wave of law and development in 1990s and 2000s. I suggest any new wave of law and development should concretely engage with development of the marginalized of the global subaltern countries. This means reviewing the legal global regimes promoted in the 1990s-2000s as well as local legal amendments, repeals and legislature under this global thrust. This way, my position is different than uncritical or mildly critical embrace of legal arrangements under new institutionalism by Trubek.

6.3