Category Archives: Blog

Blog, World Justice Project Rule of Law Index

How Low Can You Go?

Last April I looked at how the 2016 World Justice Project Rule of Law Index ranked the United States with respect to four specific sub-factors relating to civil and criminal justice and the guarantee of labor rights.

The World Justice Project has just released a new Rule of Law Index, for 2017-18.

Many have already commented on the Index (for example here and here) and I expect many more will. It contains a wealth of data and there are many (many) things that can be said about that data.

In this post I’d like to focus on two of the Index’s 44 indicators, or sub-factors:

Accessible and Affordable Civil Justice

Sub-factor 7.1 is “people can access and afford civil justice. The 2017-18 Index describes this factor as measuring the accessibility and affordability of civil courts, “including whether people are aware of available remedies, can access and afford legal advice and representation, and can access the court system without incurring unreasonable fees, encountering unreasonable procedural hurdles, or experiencing physical or linguistic barriers.” In sum, this sub-factor measures the ability of a citizenry to effectively protect their civil (as opposed to criminal) rights and obtain redress for their civil grievances.

Focusing specifically on this sub-factor, in both 2014 and 2015, the US ranked 65th. with a  score of 0.46 and 0.47, respectively (scores are normalized on a scale of 0 to 1, where 0 is the lowest and 1 is the highest). Then, in 2016, even though it maintained a score of 0.47, its ranking plummeted to 94th.

What about the 2017-18 Index? This time the US has fallen again, with a score of 0.42 and a ranking of 96th out of 113 countries.

Think about that. Ninety-five countries in the world offer more accessible and affordable justice to their citizens than the United States does.

What countries are we talking about? Countries like Liberia (0.43), Afghanistan (0.46), Philippines (0.48), Russia (0.52), Venezuela (0.54), El Salvador (0.54), and Bulgaria (0.68). Those countries all have better civil justice systems than the United States.

The United States is not the only country to have suffered a fall with respect to this sub-factor. In the 2016 Index, the United Kingdom had a score of 0.56 and a ranking of 46th. In the 2017 Index, its score has fallen to 0.52 and its ranking has plummeted to 60th. This places the UK on par with Russia, who, with a just slightly higher score, ranks 59th.

Freedom from Discrimination in Criminal Justice

Sub-factor 8.4 measures the extent to which a country’s “criminal justice system is impartial” and non-discriminatory. Notably, its measures the extent to which a country’s criminal justice system discriminates based on socio-economic status, gender, ethnicity, religion, national origin, sexual orientation, or gender identity. In sum, this sub-factor measures the extent to which a country’s citizens are treated fairly and equally by the country’s criminal justice system.

For this sub-factor, in 2012-13, the US ranked a low 76th out of 97 countries (score of 0.38). In 2014, its rank jumped up to 47th out of 99 countries (score of 0.47). However, in 2015 it fell again, to 64th out of 102 countries (score of 0.42), and 2016 showed little improvement with a rank of 61st out of 113 countries (score of 0.46).

In the 2017-18 Index the US’s rank and score plummet again: to 78th and 0.37, respectively.

Compare this rank and score to Russia—a country notorious for the extreme partiality of its criminal justice system: it ranks 84th, with a score of 0.35, only slightly lower than the US. 

Countries that rank higher than the US include Belarus, Burkina Faso, South Africa, Zimbabwe, Egypt, and Iran. Those countries all have criminal justice systems that are more impartial and less discriminatory than that of the United States.

Download Rankings for Five Sub-Factors (All Countries Indexed)

Below you can view as well as download an excel file that contains the full rankings for these two sub-factors as well as three others, from 2012-13 through 2017-18. The data in this excel file was obtained from the World Justice website “Current & Historical Data Download.” The file includes all the countries indexed by the WJP for the year in question. For ease of analysis and comparison, the file below highlights data for these five countries: United States, United Kingdom, Canada, Australia and France.

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Blog, Nova Scotia, Voices of Modern Regulation

Nova Scotia’s Stealth Revolution

If you’re not paying attention, you’ll miss it for sure:

On November 17, 2017 the Nova Scotia Barristers’ Society (NSBS) made a series of decisions that move the Canadian province considerably closer to the adoption of alternative business structures.

The decisions implement in part the NSBS’s 19-point Policy Framework, which the NSBS Council approved in November, 2015. More specifically, the decisions implement these elements of the Policy:

  • The regulation of the delivery of legal services by lawyers as well as by legal entities, “which include lawyers, law firms, law corporations, law departments and other similar entities,” and
  • Each such law firm and other legal entity will be required: (i) to designate an individual who will be responsible for the entity’s compliance with its regulatory requirements, (ii) to establish and maintain a management system that promotes competent and ethical legal practice, and (iii) to undertake self-assessment and report to the NSBS on its management system.

The first decision requires that, as of January 1, 2018, newly established law firms must register with the NSBS before beginning to deliver legal services to the public. The NSBS explains this decision as allowing “us to work with new practices to ensure they have an effective management system for ethical legal practice in place and appreciate the complexities of running a law firm and their regulatory obligations.”

As regards existing firms—and this is the second decision—they are now required to file with the NSBS an expanded Annual Report that includes the names of “support staff” (that is, persons who are not lawyers) who “assist or on their own” deliver legal services to clients. The NSBS explains that this requirement comes in preparation for amendments to the Legal Profession Act that will “allow more staff in law firms to deliver supervised legal services.”

The third decision requires that individual lawyers as well as law firms obtain the permission of the Executive Director of the NSBS before operating a client trust account. This permission will not be granted automatically; instead, the applicant must first successfully complete an assessment and demonstrate that the lawyer or the firm “has the infrastructure in place to safely and appropriately operate a trust account.”

The fourth decision requires all firms, over the course of a three year period, to undergo a self-assessment process and submit to the NSBS a completed self-assessment form. The process and the form itself are reminiscent of the self-assessment process and form pioneered in New South Wales, Australia and in place today in Queensland.

Finally, the fifth decision expands the role of a law firm’s “designated lawyer.” In the past, this role was merely administrative—it was the lawyer identified to receive correspondence from the NSBS. The fifth decision adds to the designated lawyer’s responsibility by making he/she responsible both for the submission of the firm’s Annual Report as well as for the performance of the firm’s self-assessment. In this manner, Nova Scotia’s designated lawyer can be compared to the role of Legal Practitioner Director, also pioneered in New South Wales and in place today in Queensland.

With these decisions, Nova Scotia has gone beyond the theory of its Policy Framework in order to implement both entity regulation and compliance-based regulation in a concrete manner. While Nova Scotia’s regulations in this regard will continue to evolve, and in all likelihood evolve considerably, that does not detract from the significance of these initial, ground breaking decisions. Admittedly, from the perspective of England & Wales and Australia, there is nothing ground breaking about them, given that those countries adopted entity regulation as well as “outcomes focused regulation” (England & Wales) and “proactive, management based regulation” (or “PMBR,” a term Ted Schneyer coined for Australia) quite some time ago. However, from the perspective of Canada and the United States, the NSBS decisions are ground breaking indeed. No other Canadian province or US state has even come close to adopting entity regulation or compliance-based regulation to this extent. Not yet, anyway. (Illinois and Colorado have taken tentative first steps).

What does all this have to do with alternative structures? At first glance, the response may appear to be nothing at all. Further, if you peruse the NSBS website and its supporting documentation, such as the Council meeting minutes, you would be very hard pressed to find references to alternative structures, “alternative business structures” or “ABS.” For the NSBS, it’s as if alternative structures were beside the point.

Don’t be fooled by appearances, though. The NSBS’s silence with respect to alternative structures is deafening. Entity regulation and compliance-based regulation have everything to do with alternative structures. This is because these two kinds of regulation are necessary before the NSBS—or any other legal regulator—can be in a position to adopt alternative structures. The successes of England & Wales and of Australia in adopting alternative structures demonstrate this. The failures of Ontario as well as the United States in adopting them equally demonstrate this. These two kinds of regulation (entity regulation and compliance-based regulation) are the response to the very common objection to alternative structures that is raised in Canada and the United States, which is: “but there is no way to regulate them.” There definitely are ways to regulate them. England & Wales and Australia have proven this, and Nova Scotia is well along the path of doing the same. With so few paying attention—at least outside Nova Scotia—it is a stealth revolution. And it is well underway.

Related posts on this site:

Chapter 9: And in This Corner: New South Wales and Victoria

Chapter 12: Nova Scotia: The Road is Made by Walking

Chapter 15: Ontario: A False Start But On Its Way

Chapter 21: The Two Commissions: Different or the Same?

Chapter 25: Final Assessment

Darrel Pink, Executive Director, Nova Scotia Barristers’ Society

James Coyle, Attorney Regulation Counsel, Colorado Supreme Court

James J. Grogan, Illinois Attorney Registration & Disciplinary Commission

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Blog, Law and economics, Privatization

The Privatization of “Legal Infrastructure,” the End of Net Neutrality, and the Steady Erosion of Constitutional Protections

You’ve likely heard by now of the recent decision by the Federal Communications Commission (FCC) to end net neutrality. In case you haven’t, in a nutshell, on December 14, 2017 the FCC decided to end rules prohibiting internet service providers (ISPs) from discriminating among customers or among the content they carry. By ending these rules, ISPs can now slow down or entirely block access to one or more internet sites and can also charge internet users more money in order to have access to certain sites with high speed internet, creating what have been described as internet “fast lanes” and “slow lanes.”

Setting aside the huge unpopularity of the FCC’s decision (more than 80% of voters opposed it), the decision has been heavily criticized for a number of reasons. For example, Scott Galloway, the founder of L2, stated:

This is the worst thing that’s slipping under the radar in a long time…If net neutrality goes away, you can see small companies not being able to compete or have access to the pipes that bigger guys have…The idea that we don’t have equal, unfettered access to what has become the mother’s milk of all innovation, of all online shareholder creation, and that is data into our lives and into our phones. This could be probably one of the biggest errors in one of the slow moving train wrecks we’ve seen in a while. The threat to undermine net neutrality is the most underreported news story of our day right now.

In particular, the FCC’s decision to end net neutrality has been criticized as an attack on first amendment rights of freedom of speech. The US Supreme Court has described social media websites as providing “perhaps the most powerful mechanisms available to a private citizen to make his or her voice heard.” Further, today the internet plays an indispensable role in political expression and organizing. By ending net neutrality, both access to social media sites and, more largely, the use of the internet for political speech and organization will be subject to the mercy of ISPs, each of which is a private (not state owned or controlled) company, and so not required to respect first amendment rights.

Writing in the New York Times just before the FCC decision, Nick Frisch set up a particularly disturbing scenario:

To taste a future without net neutrality, try browsing the web in Beijing. China’s internet, provided through telecom giants aligned with the Communist Party, is a digital dystopia, filtered by the vast censorship apparatus known as China’s Great Firewall. Some sites load with soul-withering slowness, or not at all. Others appear instantly. Content vanishes without warning or explanation. The culprit is rarely knowable. A faulty Wi-Fi router? A neighborhood power failure? Commercial sabotage? A clampdown on political dissent? To most Chinese netizens, the reason matters little. They simply gravitate to the few sites that aren’t slowed or blocked entirely: the Chinese counterparts of Facebook, Google, and Twitter. But these Chinese platforms come with heavy government surveillance and censorship by corporate and party apparatchiks. For the Communist Party and its commercial allies, this is win-win, cementing respective monopolies on political markets and consumer power.

The Trump administration’s plan to dismantle net neutrality regulations has brought this nightmare scenario to America’s digital doorstep. [The rollback of net neutrality rules] not only imperils fair play and free speech; [it also] also empower[s] foreign entities with substantial market-making power, like China’s government, to meddle in American public discourse on a scale dwarfing Russia’s recent cyber-chicanery. Worse, abolishing net neutrality gives American corporations the means, motive and opportunity to become accomplices in selling out our freedom of speech.

In sum, for Frisch as well as for many others, rolling back net neutrality means rolling back first amendment rights of free speech on the internet.

While it hasn’t gained the attention of the wider public, a comparable proposal—to privatize regulation—has attracted the attention as well as the wide acclaim of legal academia and a number of captains of industry, and has received an airing in the Financial Times. I describe this proposal in detail here and I discuss it at length here.

In a nutshell, the proposal, as it is detailed in Gillian Hadfield’s book Rules for a Flat World: Why Humans Invented Law and How to Reinvent It For a Complex Global Economy, is as follows: Our public institutions are woefully inadequate for many kinds of regulation. They are hamstrung by their propensity for high levels of complexity resulting in high costs for businesses. Further, and perhaps worse, they do not have the financial, technical, or human resources needed to develop the new “legal infrastructure” that we need today. For these reasons, much of the power to determine the rules that govern and deeply affect us as a society (such as those relating to contracts, health and safety, employment, data security), and that govern businesses in particular, should be removed from our current public intuitions (executive, legislature and judiciary) and instead be placed in the hands of privately-owned, for-profit companies (or privately operated non-profits) whose principal “customers” for such rules will be other companies. Once this is done, the role of the public institutions would be limited to regulating these private regulators.

As mentioned above and discussed further here, this proposal has been lauded by a number of captains of industry as well as thought leaders in academia. One commentator described it as “original” and “compelling” for “how to reconstruct the regulatory structures necessary for a complex global economy.”  Another described the proposal as a charter “for a more rational and inclusive legal system.” A third called the proposal “a blueprint for a more efficient, inclusive and accessible legal system.”

These references to “inclusive” and “accessible” are difficult to understand, at least in so far as they apply to the United States and other wealthy countries. As discussed here and here, recent research by NYU PhD candidate Hannah Simpson demonstrates that if a wealthy group—such as corporations—opts out of a state (that is, public) legal system in favor of a private one, it is more likely than not to have negative effects for the remaining population (that is, for those who are excluded from the private legal system). Further, Simpson’s research demonstrates that if a legal institution is used as a source of revenue (something a for-profit regulator would obviously use its institution for), this results in the denial of access to justice to those portions of the population that cannot access that institution because of inability to pay.

Indeed, even without Simpson’s research the descriptions of “inclusive” and “accessible” are difficult to understand. By its very definition, the privatization of any previously public good or service excludes many persons from that good or service—it excludes the public—and makes it less accessible to many people—again, it makes it less accessible to the public. Real property as well as physical infrastructure, such as roads and bridges, are obvious cases in point. When real property is privatized it becomes accessible only to its owner and to those the owner allows on to the property, sometimes as guests but often as rent-payers. The general public, which previously had free access, must stay off. When physical infrastructure such as a road or bridge is privatized, it becomes accessible only to its private owner(s) and those who are able to pay the fee the owners charge to use it. The general public, which previously had free access, must stay off. Seen from this perspective, the suggestion that the privatization of any previously public good or service makes it more “inclusive” or more “accessible” is absurd on its face. To the contrary, the inclusiveness and the accessibility of that good or service is shifted from a large number of persons—the general public—to a very small number—the new private owner(s).

Further, the proposal to privatize regulation shares essential characteristics with the repeal of net neutrality: it would mean that corporate entities—not democratically elected or controlled bodies such as an executive, legislature or judiciary (or, at least, ostensibly democratic bodies)—would formulate and apply rules that would have consequences for a large number of persons, if not for the population as a whole (such as rules relating to employment and consumer law). As for-profit institutions, they would control access by their “customers” (no longer citizens) to rule-making and dispute resolution procedures, as well as to the rules themselves. There would be nothing to stop them from creating “fast” and “slow” lanes, notably with respect to the speed of dispute resolution or the quality of the rules themselves, dependent upon the price paid. To the contrary, by their very nature of being for-profit, they would necessarily restrict and award access to their products and services based upon ability to pay.

In essence, while the repeal of net neutrality will erode the constitutional right of free speech enshrined in the 1st Amendment, the proposal to privatize regulation, if implemented, would erode the constitutional right of equal protection of the law enshrined in the 14th Amendment. As the Legal Information Institute of Cornell Law School explains, “the point of the equal protection clause is to force a state to govern impartially—not draw distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.”

The 14th Amendment applies only to state (public) actors, not to private ones. By removing regulatory powers from the state in order to place them in the hands of private, for-profit corporations, the corporations would, for the very reason that they are “for-profit,” draw distinctions between persons based upon their ability to pay. It is difficult to imagine under what circumstances differences in ability to pay for regulation are relevant to a legitimate regulatory objective: they would be relevant only to the objective of generating profit for the private regulator.

In 1938, Franklin Roosevelt warned:

Unhappy events abroad have retaught us two simple truths about the liberty of a democratic people…The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power… Among us today a concentration of private power without equal in history is growing.

Nearly 80 years later, in May 2017, Chris Hedges confirmed the realization of Roosevelt’s fear of American fascism:

Forget the firing of James Comey. Forget the paralysis in Congress. Forget the idiocy of a press that covers our descent into tyranny as if it were a sports contest between corporate Republicans and corporate Democrats or a reality show starring our maniacal president and the idiots that surround him. Forget the noise. The crisis we face is not embodied in the public images of the politicians that run our dysfunctional government. The crisis we face is the result of a four-decade-long, slow-motion corporate coup that has rendered the citizen impotent, left us without any authentic democratic institutions and allowed corporate and military power to become omnipotent. This crisis has spawned a corrupt electoral system of legalized bribery and empowered those public figures that master the arts of entertainment and artifice. And if we do not overthrow the neoliberal, corporate forces that have destroyed our democracy we will continue to vomit up more monstrosities as dangerous as Donald Trump. Trump is the symptom, not the disease.

Our descent into despotism began with the pardoning of Richard Nixon, all of whose impeachable crimes are now legal, and the extrajudicial assault, including targeted assassinations and imprisonment, carried out on dissidents and radicals, especially black radicals. It began with the creation of corporate-funded foundations and organizations that took control of the press, the courts, the universities, scientific research and the two major political parties. It began with empowering militarized police to kill unarmed citizens and the spread of our horrendous system of mass incarceration and the death penalty. It began with the stripping away of our most basic constitutional rights—privacy, due process, habeas corpus, fair elections and dissent. It began when big money was employed by political operatives such as Roger Stone, a close Trump adviser, to create negative political advertisements and false narratives to deceive the public, turning political debate into burlesque. On all these fronts we have lost. We are trapped like rats in a cage. A narcissist and imbecile may be turning the electric shocks on and off, but the problem is the corporate state, and unless we dismantle that, we are doomed.

It is in this context that the proposal to privatize regulation as well as the repeal of net neutrality can be best understood. They are logical steps in a “four-decade long, slow-motion corporate coup that has rendered the citizen impotent.” Rather than serve to dismantle the corporate state that Roosevelt feared and Hedges has confirmed, each serves to build it larger and stronger. We need to take Hedges’s list of basic rights that have been stripped away—privacy, due process, habeas corpus, fair elections and dissent—and add to it freedom of speech (due to the repeal of net neutrality) and equal protection of the law (if the proposal to privatize regulation were implemented).

Related posts on this site:

Chapter 27: Rules for a Flat World (Or Regulatory Dystopia)

Access to Justice vs. Revenue: A Zero-Sum Game?

You Asked For Research? You Got It! Now What Are You Going to Do With It?

Democracy? It’s Messy. Who Needs It?

Law and Economics Programs at US Law Schools

Law and Economics Programs at US Law Schools: Conceived in Opposition to Civil Rights and Dedicated to the Proposition that Majorities Should Not Rule: Part 1, Part 2, Part 3 and Part 4

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Blog, Law and economics, Privatization

Democracy? It’s Messy. Who Needs It?

Since I first read Gillian Hadfield’s work I’ve been a huge fan. I’ve greatly appreciated and learned much from many of her articles, such as “The Cost of Law: Promoting Access to Justice through the (Un)Corporate Practice of Law,” “Life in the Law-Thick World: The Legal Resource Landscape for Ordinary Americans” (with Jaime Heine), and “Legal Barriers to Innovation: The Growing Economic Cost of Professional Control Over Corporate Legal Markets.” So when I saw that she was publishing a new book, I pre-ordered and waited impatiently.

As soon as the book arrived, I dove in. I found it fascinating. Hadfield weaves gripping stories. Her arguments are presented logically and her style is highly engaging. With my trust in Hadfield from her earlier works, I was effortlessly drawn in.

But once I finished the book and put it down, something started bothering me. It started as niggle but grew to bother me a lot. At first, I couldn’t put my finger on what it was. Then, after some time and distance from the book, the scales began to fall from my eyes.

Rules for a Flat World: Why Humans Invented Law and How to Reinvent It for a Complex Global Economy proposes the privatization of regulation. This proposal could appear to some to be mundane, even innocuous. After all, a number of previously public services have been privatized in the US and in other countries in recent years, and there are plans underway to privatize a great deal more. What’s one more to add to the list?

Before coming to that conclusion, however, let’s go back and re-consider Hadfield’s proposal with attention, and, even better, with very careful attention. Privatize regulation. What does Hadfield mean by that? In her words, she means allowing “markets” (or, private enterprise) to produce what she refers to as “legal infrastructure.” For Hadfield, this includes legal services, but most especially—and by far most importantly—it also includes “legal/regulatory rules and procedures themselves.”

Hadfield argues that our public institutions are woefully inadequate for many kinds of regulation. They are hamstrung by their propensity for high levels of complexity resulting in high costs for businesses. Further, and perhaps worse, they do not have the financial, technical, or human resources needed to develop the new “legal infrastructure” that we need today.  For these reasons, Hadfield argues that much of the power to determine the rules that govern and deeply affect us as a society (such as those relating to contracts, health and safety, employment, data security), and that govern businesses in particular, should be removed from our current public intuitions (executive, legislature and judiciary) and instead be placed in the hands of privately-owned, for-profit companies (or privately operated nonprofits) whose principal “customers” for such rules will be other companies. Once this is done, Hadfield maintains, the role of the public institutions would be limited to regulating these private regulators.

A Rose by Any Other Name

What if Hadfield’s proposal was phrased in another way? What if it was explained as a proposal to move political rule-making and the procedures that follow—that is, moving government itself—to private, for profit enterprises (or to nonprofit organizations seeking to achieve private nonprofit goals). Phrased in this manner, the proposal is not mundane and it’s certainly not innocuous. It’s an unabashed rejection of democracy and democratic processes.

You may or may not be ok with this. Some people are perfectly ok with it. Whether you are or not, we must honestly and openly recognize the proposal for what it is. We must look through the veil of highly engaging rhetoric to the final reality of its profound consequences for democracy and for how our country is governed.

Is Rules for a Flat Worldengrossing?” Definitely. Is it “thought provoking?” Absolutely. Is it “sweeping in scope?” Unquestionably. It’s also neoliberalism par excellence. It is neoliberalism (or, if you prefer, libertarianism) taken to a logical extreme. In that sense, it is by no means “new,” “original,” or “visionary.” Instead, it follows a path already well-trodden by Bob MurphyBruce Benson, Bryan Caplan and Edward Stringham, Bruno LeoniMurray RothbardDavid Friedman and his father Milton FriedmanFriedrich Hayek, Ayn RandLudwig von Mises, Lewis Powell, and James Buchanan, as well as by The Heritage FoundationCATO InstituteAmerican Enterprise InstituteAmerican Legislative Exchange CouncilCitizens for a Sound EconomyThe Heartland Institute, the Independent Institute, Foundation for Economic Education, Competitive Enterprise Institute, and the Mises Institute, to name a few. (See more about these organizations below).

A Framework for Misgivings

Just as I was coming to realize the full implications of Hadfield’s proposal, I came across an article by Anna Yeatman, “Freedom and the Question of Institutional Design.” It was a timely discovery. Her article helped me to organize my many, but jumbled, misgivings about Rules for a Flat World into a coherent framework.

Yeatman explains that in early modern Western political and juristic thought the question of how authority can serve freedom centered on the idea of the state. It is the role of the state to provide a public and lawful ordering of social life, as well as to provide a “jurisdictional container for society organized as a self-determining political community.” This idea of the state has been the foundation of modern democratic constitutionalism. Among other things, Yeatman continues, the exercise of the authority of the state by public agencies and public officials “has to be politically accountable to the individuals whose freedom they serve.”

Neoliberal thinkers reject this concept of “institutional design.” Instead, they posit that freedom already exists naturally. “It is expressed in the spontaneous order (as Hayek put it) of market society.” They are equivocal regarding the need for the state. Yeatman explains that on the one hand, they don’t want the state to interfere with the spontaneous order. On the other hand, they do want the state to impose the institutional design of market society. Yeatman further states: “In making it seem that the state simply recognizes a market society that already exists, neoliberal thinkers deny what it is that they actually do which is to have the state construct (in law and policy) the specific market ordering of relationships that they champion.”

According to the rhetoric of neoliberal thinkers, Yeatman clarifies, a market economy is a natural and spontaneous order that must be placed beyond politics. This justifies the “subjection of the inherently political nature of the state to supposedly impersonal economic forces.” In this manner, neoliberalism privatizes government services and strips the public service of its traditional role. “The idea of public office falls into desuetude in a mode of thought where private interest is said to motivate action. While the formal trappings of democratic institutions are maintained, the citizen public finds itself increasingly locked out of an informal, secret and insider-driven decision-making process.” A new set of rules is used. These rules distribute power to powerful, concentrated units of private capital (the modern corporation), and away from the state, which is thought of as both the public authority and the political community.

These words of Yeatman describe with precision Hadfield’s proposal for privatized regulation: Move power away from public institutions in order to place it in the hands of private ones, and, in particular, the hands of corporations. But, as you are doing so, deny that you are doing anything other than recognizing “natural order.” Although Hadfield’s denial describes the process as “supremely practical” rather than “natural.” As she states in Rules for a Flat World (citing Hayek): “The reason is nonideological and has nothing to do with liberal democracy and the proper role of government in promoting human well-being. It is supremely practical.” (Hadfield also rejects that her proposal is ideological in this video).

Yeatman’s Components of Neoliberal Thought

Yeatman tells us that while neoliberal thought is dynamic, “adaptive to opportunity, and informed by different intellectual strands,” it is also a distinctive worldview that has a number of components. She lists and describes a total of ten components, each highly pertinent in the context of Rules for a Flat World:

1. The importance of re-engineering the state to establish the institutional framework of a market society.” Or, as Hayek put it, of a “competitive order.” In Rules for a Flat World, Hadfield proposes to re-engineer our current regulatory state in order to establish a new form of regulation, based upon markets and competition among private enterprises.

2. The reduction of the role of “government” (favoring that term over the term “state”) to only provide “a lawful order for rules of conduct that are already immanent within a spontaneous market order.” More specifically the function of government is not to produce any particular services or products to be consumed by citizens, but “rather to see that the mechanism which regulates the production of those goods and services is kept in working order.” Hadfield proposes to reduce, if not eliminate, the function of government with respect to providing regulatory services that affect citizens (again, Hadfield proposes that companies be allowed to set rules governing areas such as contracts, health and safety, employment, and data security). She favors, instead, a government whose function is limited to assuring that private regulatory services are kept in working order.

3.The elaboration of economic action to become the prototype for all human action.” Stated another way, it is a singular rather than plural conception of life in society that reduces all human action to economic action. This justifies the adoption of “competition policy” where publicly funded services (Yeatman’s examples are education, health and welfare) are redesigned as market-based services. This requires the service providers to shift to a business model where the paramount goal is efficiency. Further, former citizens are redefined as customers whose “choice” to use the service in question is guided by its price. The assumption, Yeatman explains, is that if the customer does not wish to pay the price of the service, it is because they do not value it sufficiently.

Rules for a Flat World fails to contemplate any kind of human action other than economic action. This is underscored, for instance, in Hadfield’s remarkably restrictive examples of what law “should” be: to “promote trade or investment in new technologies, improve incentives for workplace safety, or design cost-effective taxes.” Conspicuously absent from her examples of what law “should” be are areas like protection of human rights and civil liberties, protection of the environment, equitable rules for marriage, divorce, and child custody, and rules for immigration. Further, Hadfield complains of the high “costs” of governmental regulation, in large part because government regulators have no incentive to be efficient. In contrast, under her model, private regulators would have every incentive to be efficient, else they’ll “get thrashed by competitors.” Finally, she confirms that “users” will (or at least should) have a choice of private regulator, and that private regulators will need to be sure that their high fixed costs are spread across enough “users” (Hadfield does not refer to them as “citizens”), “relative to how much each is willing and able to pay.”

4. The rejection of public planning. Yeatman explains that public planning requires “a sense of history, an ability to live between past and future.” In this context, the public collective “we” has to ask the question of how do we build on past achievements and meet future challenges. The emphasis is on “a public discursive process within which opinion can be voiced, made to take account of contrary or different opinion, and some kind of considered collective judgment arrived at.” In contrast, neoliberal thinking “rejects the political arts, and instead embraces technologies of quantification.” This way of thinking dispenses with a sense of history or place, and is given to a mathematical matrix of living in the now. It does not allow for “prudential consideration of the consequences and implications of conduct for the future wellbeing of individuals, their families and communities.”

Hadfield rejects what she terms “central planning,” which she defines as “rules crafted in bureaucracies, discussed in committees and voted on by elected or appointed officials.” She rejects it because it is incapable of collecting, analyzing, synthesizing, weighing, and choosing the information required for the “best solution,” because information “does not play nice.” For Hadfield, markets are a far better solution for building legal infrastructure, where coordination is accomplished not by “analysis and committee,” but by Adam Smith’s “invisible hand.” Hadfield is clear that the priority should be for “our legal infrastructure to innovate in step with the innovative pace of our economy.” The consequences and implications for the future wellbeing of individuals, their families and communities aren’t mentioned.

5. The reduction of politics to competition between private interests. As Yeatman explains: “The older patriotic conception of a partisan politics that is tempered by consideration of the public interest as this is informed by advice from a disinterested and independent professional public service is jettisoned.” While attentive reading of Rules for a Flat World is necessary in this case, a merely inattentive one would suffice to reveal that Hadfield firmly—if not categorically—rejects the value of political processes in the formulation and application of legal rules and procedures (they are too complex, too costly, too bureaucratic,…). At no point in her 396-page book does Hadfield raise any concern for the public interest. Hadfield’s entire focus, instead, is on the interest of the economy. And the best interest of the economy, Hadfield argues, lies in competitive, private regulation.

That’s five of Yeatman’s ten components of neoliberal thought. I could continue with the remaining five, but this post is already quite long, and I think you get the idea.

“An Organised Takeover of Common Sense”

Yeatman’s conclusion is worth quoting at length:

The doctrine of neoliberalism is a drastic reduction of the modern idea of freedom to a monism of market-oriented action… Neoliberals offer the artifice of market design where the competitive order of market relationships becomes the framework for social life in general. To establish this institutional design, neoliberal doctrine uses the authority and sovereignty of the state against the very nature of the state as a political-legal container for social life.

This approach to how our lives and conduct are framed has assumed the status of common sense at least for the governing elites: [quoting Andrew Dean] “Writing against such powerful and often invisible beliefs is no easy task: there are certain positions that are now fundamental to public debate, most of which rest on the assumption that markets, allowed to operate freely and independently, will in every situation allocate resources more efficiently, and make everyone better off.”

The progressive penetration of neoliberal thought into the mode of thinking of our governing elites has been driven not just by its highly organised promulgation but also by the same eagerness not to defy what are represented as new impersonal historical forces: economic globalization, automation of jobs, market forces. The impersonality of the market mechanism itself creates the ultimate resource for deniability—no one has to assume personal responsibility in a context where decisions are driven by market forces…For an ideology that trumpets freedom of choice, neoliberal doctrine is profoundly committed to representing our collective situation as one where we have no choice to influence the key decisions that affect our lives.

No doubt many members of the governing elites are influenced by neoliberal doctrine in ways that they can hardly account for, and perhaps they would think again if they were invited to consider the assumptions and content of neoliberal doctrine. The difficulty is that when a doctrine has successfully shaped common sense it is difficult to see how it has been formed, promulgated, disseminated, and networked.

In sum, for Yeatman, the development of the neoliberal thought collective is “an organised take-over of common sense.”

Why Insist?

You may be wondering why I’m so insistent with respect to Rules for a Flat World (I also address the book at length but from another angle in my book Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind?, and I mention it here and here). If so, it’s a fair question. There are several reasons:

For many people (those that are paying attention), the suggestion to privatize regulation is, on its face, difficult to take seriously if not outright laughable. Hadfield herself acknowledges that it can sound “crazy.” At the same time, however, suggestions to privatize other public services, such as water, education, policeprisons, and the military have also, at one time, appeared laughable—crazy—to many people (and they still do). This did not stop the privatization of any of those other public services, as well as others, each with disastrous consequences.

Further, in contrast to Hayek, whose book The Road to Serfdom was spurned and widely ridiculed at the time of its publication, Hadfield is highly respected in her field of law and economics, and her publications are widely read and quoted. Many (like me) no doubt eagerly awaited the arrival of her book, many have read it, and many more will surely read it in the future. One commentator has described Hadfield as “one of the most consequential legal scholars doing evidence-based work.” If Hadfield were less respected or less known, I, let alone many others, might not have even noticed a book such as Rules for a Flat World, much less have actually read it. If Hadfield were less respected and less known, it’s unlikely that no fewer than 15 captains of industry together with recognized thought leaders would have agreed to provide marketing blurbs recommending her book. (One commentator referred to them as a “long list of endorsers…with ‘A’ level credentials in the new economy“). If Hadfield were less respected and less known, it’s unlikely that the Financial Times would have allocated column space for her to explain her proposal.

A recent online symposium hosted by Prawfsblawg focused on Rules for a Flat World (together with Richard and Daniel Susskind’s book, The Future of the Professions: How Technology Will Transform the Work of Human Experts). Nine law school professors and other academics contributed to the symposium. Of those nine, just one, Javier de Cendra, expressly raised the question of how Hadfield’s proposal might relate to democracy. (De Cendra did not, however, propose a response to the question, simply writing obliquely “the need for new rules for a flat world forces us to rethink the foundations of our democracies [and] the distribution of power therein”). One contributor went so far as to imply that Hadfield’s proposal would be beneficial to democracy, describing Rules for a Flat World as offering “a blueprint for a more efficient, inclusive, and accessible legal system.” All the other contributors were silent in this regard, instead praising the book and/or Hadfield as “sensible,” “excellent,” having “tremendous scholarly rigor,” and stating that Hadfield “may be right.”

It is for all these reasons that I am so insistent with respect to Rules for a Flat World. It is important to call the book out for what it is. It is important to get past platitudes such as “tour de force,” “amazing accomplishment,” and “widely acclaimed” in order to really understand Hadfield’s proposal, to understand the origin and purpose of its ideology (indeed, to simply recognize that it has an ideology*), and, especially, to understand the full import of the consequences of her proposal, were it to ever be implemented.

I do not want to argue that private organizations should never have any role to play with respect to regulation. They already do, and, indeed, that train left the station long ago, as evidenced in this article by Philip Weiser, for example. I do want to argue that any such role must be carefully constructed. Any private organization acting in a regulatory capacity must be required to act in the public interest, and not in the interest of the private organization or its shareholders. Further, it must be required to act in a manner that is fully transparent to all stakeholders and it must be subject to close oversight by and accountability to at least one democratically controlled public authority.  And that public authority must not be starved of the resources and authority it needs to be effective in its oversight role. Anything less than this careful construction would be disastrous for our already highly fragile democratic institutions.

*Postscript: Underscoring the ideology behind the proposal to privatize regulation, Rules for a Flat World was recommended, albeit hesitantly, in a post on the website of the Competitive Enterprise Institute (CEI). One of the more remarkable elements of the recommendation is its inclusion of Hadfield in a group referred to as “the libertarian legal community.” Also remarkable is the association of Rules for a Flat World with two other books that are described as exposing “politicized science” and that are recommended without any hesitation. One of these books, Scare Pollution: Why and How to Fix the EPA by Steve Milloy, argues that the Environmental Protection Agency is “rogue” and “out-of-control.” The other book, Green Tyranny: Exposing the Totalitarian Roots of the Climate Industrial Complex by Rupert Darwall, is described as showing that “the climate industrial complex has totalitarian roots both in the National Socialist Party (the first green party in power), and in the Frankfurt School of cultural Marxism. [Further, the book discusses] the threats to our freedom of speech and democratic institutions posed by the totalitarian mindset of global warming alarmists.” Libertarian community, indeed.

If you found Yeatman’s article interesting and you’d like to explore further, try these books and articles:

The Strange Non-Death of Neoliberalism and The Knowledge Corrupters: Hidden Consequences of the Financial Takeover of Public Life, both by Colin Crouch: Many books on the topic of neoliberalism are so technical and jargon-filled, they are unreadable. That is definitely not the case with either of these two books. Their clear and straightforward prose sheds valuable light on what neoliberal ideology is, how pervasive it has become, and what its consequences are for economies and democracies.

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown, by Philip Miroswki. This book is a bit too heavy on the jargon, but not so much that the book is inaccessible to the average reader. With a little effort (but not an inordinate amount), this book becomes entirely accessible. And the effort pays off, especially with respect to the book’s discussion of the strong influence if not control that Charles and David Koch have exercised over economics departments at a variety of US universities and its repercussions on the functioning of our democratic institutions.

Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, by Jane Mayer.  This book explains how Charles and David Koch, Richard Mellon Scaife and others have “weaponized philanthropy” by the creation of foundations and think tanks like those mentioned above (that is, The Heritage Foundation, CATO Institute, American Enterprise Institute, American Legislative Exchange Council, Competitive Enterprise Institute, and Citizens for a Sound Economy), and by using them to promote policies of limited government and the privatization of public services (among other policies, such as the denial of  a human factor in climate change and opposition to environmental regulations.). Of particular interest is the book’s discussion of the creation and funding of organizations like the Olin Foundation and the Hoover Institution, and the role those organizations have played in the development of “Law and Economics” programs at US universities, inspired by Hayek’s argument that “to conquer politics, one must first conquer the intellectuals.” (Hadfield is a professor of both law and economics at the University of Southern California. She is the Director of Gould’s Center for Law and Social Science and the former Director of its predecessor, the Center for Law, Economics and Organization, which received significant sponsorship from the Olin Foundation. Hadfield has held four Olin Fellowships and is a past National Fellow of the Hoover Institution. Hadfield credits her “dear friend and coauthor,” Barry Weingast, as helping her to develop the “grounded theory” of Rules for a Flat World. Weingast is a Senior Fellow with the Hoover Institution).

Democracy in Chains: The Deep History of The Radical Right’s Stealth Plan for America, by Nancy MacLean. This book is a timely and highly pertinent complement to Meyer’s. It exposes the historical origins of the policies of limited government and the privatization of public services championed by the Kochs and their myriad of organizations that are described in Meyer’s book. Like Meyer’s, MacLean’s book also references John Olin and the Olin Foundation, describing their role in transforming prestigious (and less so) law schools by funding the methodical training of selected faculty members and judges in principles of “Law and Economics” and by the sponsorship of university “law and economics” programs, such as the one at Gould. Of particular note is this observation by MacLean: “Many [liberals] have tended to miss the strategic use of privatization to enchain democracy.”

Neoliberalism – The Ideology at the Root of All Our Problems,” by George Monbiot. If you don’t have the time or patience for an entire book, then this short article from The Guardian will take you just five minutes (well, maybe ten).

Related posts on this site:

Chapter 27: Rules for a Flat World (Or Regulatory Dystopia)

Access to Justice vs. Revenue: A Zero-Sum Game?

You Asked For Research? You Got It! Now What Are You Going to Do With It?

Law and Economics Programs at US Law Schools

Law and Economics Programs at US Law Schools: Conceived in Opposition to Civil Rights and Dedicated to the Proposition that Majorities Should Not Rule: Part 1, Part 2, Part 3 and Part 4

The Privatization of “Legal Infrastructure,” the End of Net Neutrality, and the Steady Erosion of Constitutional Protections

If you’d like to subscribe in order to receive notices of new posts, you can do so by scrolling to the bottom of this page — you’ll see the place in the bottom left corner. Thanks for subscribing!

Blog, Law and economics, Privatization

Part 4 – Law and Economics Programs: Conceived in Opposition to Civil Rights and Dedicated to the Proposition that Majorities Should Not Rule

The last two posts (here and here) described the pivotal role that The Calculus of Consent, a book by James Buchanan and Gordon Tullock, played in Henry Manne’s development of law and economics programs at US law schools.  (Read more about law and economics programs at US law schools here). The last post explained that Dwight R. Lee described The Calculus of Consent as offering a means of “protecting capitalism from government.”[1] However, Nancy MacLean flipped that description on its head, stating that The Calculus of Consent “might more aptly be depicted as protecting capitalism from democracy.”[2]

The last post also explains how, in her book Democracy in Chains,[3] MacLean argues that Buchanan and his colleagues were motivated by racial prejudice, and, in particular were motivated by opposition to the Supreme Court’s 1954 decision in Brown v Board of Education to oppose as a matter of urgency the “problems of equalitarianism,” including “the tax structure,” “income redistribution” and “the welfare state.”[4]

Finally, the last post described how certain commentators have rejected MacLean’s depiction of Buchanan’s motives. Most notably, Henry Farrell and Steve Teles assert that Buchanan’s role in the development of the conservative intellectual movement was too small to be significant (an assertion with which Henry Manne would certainly disagree[5]) and that, even if Buchanan’s role had been significant, there is no proof that he was motivated by racism.

Let’s say that Farrell and Teles are right. In that case, where can we turn to know who did play a significant role and to better understand what were their motivations?

What if we turn to Teles’s own book: The Rise of the Conservative Legal Movement: The Battle for Control of the Law.[6] His book, published in 2008 (nine years before MacLean’s), tells the story of how conservatives sought to challenge what they perceived to be the “liberal domination” of law and of American legal institutions. They did this, the book explains, not through “traditional electoral politics”[7] but through law schools, professional networks, public interest groups and the judiciary. Teles describes this phenomenon as the “conservative legal movement”[8] and he focuses his narration on three principal developments: the development of conservative public interest law,[9] the establishment and growth of the Federalist Society,[10] and the creation and advancement of law and economics programs at US law schools.[11]

As regards law and economics programs, Teles begins with the University of Chicago,[12] whose law and economics program he describes as the “mother ship,”[13] and the “spiritual center of the movement,”[14] especially for those who see it as a critique of “government activism” and a “method for studying law.”[15]

But for all the importance of Chicago, the bulk of Teles’s analysis is focused on the “myriad projects”[16] of Henry Manne.[17] For Teles, Manne’s role in the development of law and economic programs around the country cannot be underestimated: Manne was the movement’s first “organizational entrepreneur”[18] and he, along with Richard Posner of Chicago, “evangelized the gentiles.”[19] According to Teles, while there were “larger forces” encouraging law and economics, “Manne’s activities are essential in explaining the rapidity and depth of its diffusion in the 1970s and 1980s.”[20]

Teles explains that the “conservative legal movement” was born out of frustration with the Warren Court, and in particular with the decisions of Brown v. Board of Education, Baker v. Carr, and Roe v. Wade.[21] According to Teles, the “liberal legal network”[22] sought to entrench the work of the Warren Court by arguing that Brown demonstrated that a muscular role for the judiciary was “indispensable to the cause of equality and justice.”[23] Further, the “hegemonic”[24] liberal (as opposed to conservative) voices in law schools sought to ennoble the legal profession, “making it a tool for the pursuit of justice rather than a mere lubricator of commerce.”[25] Law schools (again, under the “hegemonic” power of “liberals”) sought to create a “heroic” conception of law and a heroic role for courts, which would “not incidentally” result in an elevated status for law professors.[26] For Teles, these “legal liberals” had an unfair advantage:

An egalitarian understanding of the Constitution, with civil rights at its core, was for them part and parcel of a new legal professionalism… Sanctifying legal liberals’ aspirations for the law was the powerful moral status of “rights” produced by the civil rights struggle and the image of the Warren Court that was simultaneously legally orthodox and substantively humane, whose actions rested on genuine authority as well as decent and civilized instincts. At the same time, the reputation of the institutions that they sought to reform, such as southern state governments, urban machines, and big business, was at a low ebb, and the ability of those institutions to compete in the cultural and ideological marketplace acutely limited. The place of legal liberals at the pinnacle of an increasingly well-resourced and influential legal academy gave their framing of legal politics real legitimating power, helping to preserve the role of legal liberalism in the legal profession even as its electoral grip was slipping away. The power of these ideas, which claimed to be above normal politics, would infuriate, frustrate and ultimately mobilize conservatives in the years to come.[27]

Look at that quote carefully. Its placement of the word “rights” in quotes indicates that there is some idea in that sentence that Teles does not agree with. Is it that “rights” have moral status? Or is it that what the civil rights struggle produced was not “rights?” It is hard to say with what exactly he is disagreeing. But his mockery of the “civil rights struggle” is crystal clear.

Let’s look at the quote again. It says that the power of “these” ideas is what infuriated, frustrated and ultimately mobilized conservatives. To which ideas is Teles referring? Is it ideas of an “egalitarian understanding of the Constitution, with civil rights at its core?” Is it ideas of the “moral status” of “rights?” Is it ideas of the Warren Court that are “substantively humane,” and “whose actions rested on genuine authority as well as decent and civilized instincts?” Is it perhaps all of those ideas? Again, it is hard to say to what exactly Teles is referring. But his affirmation that the conservative legal movement was born out of opposition to civil rights and to the civil rights movement is crystal clear. And, as Teles himself explains, the law and economics programs currently in place at a number of US law schools are a crucial element in that movement.

Related posts on this site:

Chapter 27: Rules for a Flat World (Or Regulatory Dystopia)

Access to Justice vs. Revenue: A Zero-Sum Game?

You Asked For Research? You Got It! Now What Are You Going to Do With It?

Democracy? It’s Messy. Who Needs It?

The Privatization of “Legal Infrastructure,” the End of Net Neutrality, and the Steady Erosion of Constitutional Protections

Law and Economics Programs at US Law Schools

Law and Economics Programs at US Law Schools: Conceived in Opposition to Civil Rights and Dedicated to the Proposition that Majorities Should Not Rule: Part 1, Part 2, and Part 3

[1] Dwight R. Lee, “The Calculus of Consent and the Constitution of Capitalism,” Cato Journal 7 (1987): 332,

[2] MacLean, Democracy in Chains, 81.

[3] Nancy MacLean, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America (London: Scribe, 2017).

[4] Ibid., 46.

[5] Manne described Buchanan as “one of the great towering figures of intellect in the world in the 20th and early 21st century.” “Dr James Buchanan’s Contributions to Social Philosophy and Political Economy,” Mercatus Center, published November 14, 2014, 2:05,

[6] Steven M. Teles, The Rise of the Conservative Legal Movement: The Battle for Control of the Law (Princeton, New Jersey: Princeton University Press, 2008).

[7] Ibid., back cover.

[8] Ibid., 5.

[9] Ibid., 58-89, 220-64.

[10] Ibid., 135-180.

[11] Ibid., 90-134, 181-219.

[12] Ibid., 91-101.

[13] Ibid., 91.

[14] Ibid.

[15] Ibid.

[16] Ibid., 90.

[17] Ibid., 101-34.

[18] Ibid., 101.

[19] Ibid.

[20] Ibid.

[21] Ibid., 44-46.

[22] Ibid., 22.

[23] Ibid., 45.

[24] Ibid.

[25] Ibid.

[26] Ibid.

[27] Ibid., 45-46.