Wednesday, 31 October 2001
111 Yale L.J. 357 (2001)
Property has fallen out of fashion. Although people are as concerned as ever with acquiring and defending their material possessions, in the academic world there is little interest in understanding property. To some extent, this indifference reflects a more general skepticism about the value of conceptual analysis, as opposed to functional assessment of institutions. There is, however, a deeper reason for the indifference to property. It is a commonplace of academic discourse that property is simply a "bundle of rights," and that any distribution of rights and privileges among persons with respect to things can be dignified with the (almost meaningless) label "property." By and large, this view has become conventional wisdom among legal scholars: Property is a composite of legal relations that holds between persons and only secondarily or incidentally involves a "thing." Someone who believes that property is a right to a thing is assumed to suffer from a childlike lack of sophistication--or worse.
One might think that law and economics scholars would take property more seriously, and at first glance this appears to be true. Analysis of the law from an economic standpoint abounds with talk of "property rights" and "property rules." But upon closer inspection, all this property-talk among legal economists is not about any distinctive type of right. To perhaps a greater extent than even the legal scholars, modern economists assume that property consists of an ad hoc collection of rights in resources. Indeed, there is a tendency among economists to use the term property "to describe virtually every device--public or private, common-law or regulatory, contractual or governmental, formal or informal--by which divergences between private and social costs or benefits are reduced."
In other times and places, a very different conception of property has prevailed. In this alternative conception, property is a distinctive type of right to a thing, good against the world. This understanding of the in rem character of the right of property is a dominant theme of the civil law's "law of things." For Anglo-American lawyers and legal economists, however, such talk of a special category of rights related to things presumably illustrates the grip of conceptualism on the civilian mind and a slavish devotion to the gods of Roman law.
Or does it? In related work, we have argued that, far from being a quaint aspect of the Roman or feudal past, the in rem character of property and its consequences are vital to an understanding of property as a legal and economic institution. Because core property rights attach to persons only through the intermediary of some thing, they have an impersonality and generality that is absent from rights and privileges that attach to persons directly. When we encounter a thing that is marked in the conventional manner as being owned, we know that we are subject to certain negative duties of abstention with respect to that thing--not to enter upon it, not to use it, not to take it, etc. And we know all this without having any idea who the owner of the thing actually is. In effect, these universal duties are broadcast to the world from the thing itself.
Because property rights create duties that attach to "everyone else," they provide a basis of security that permits people to develop resources and plan for the future. By the same token, however, this feature of property imposes an informational burden on large numbers of people, a burden that goes far beyond the need for nonparties to a contract to understand the rights and duties of contractual partners. As a consequence, property is required to come in standardized packages that the layperson can understand at low cost. This feature of property--that it comes in a fixed, mandatory menu of forms, in contrast to contracts that are far more customizable--constitutes a deep design principle of the law that is rarely articulated explicitly. The fact that the in rem aspect of property has largely disappeared from academic discourse has made this latent design principle all the easier to overlook.
This Essay will trace the decline of the conception of property as a distinctive in rem right in Anglo-American thought, and the rise of the view among modern legal economists that property is simply a list of use rights in particular resources. As is the case with law and economics more generally, this view of property finds its roots in Ronald Coase's seminal article, The Problem of Social Cost. Coase implied that property has no function other than to serve as the baseline for contracting or for collectively imposing use rights in resources, and he modeled conflicts over the use of resources exclusively in terms of bipolar disputes between A and B. Wittingly or not, this gave rise to a conception of property as a cluster of in personam rights and hastened the demise of the in rem conception of property.
In order to appreciate Coase's impact on the modern understanding of property rights, we begin, in Part II, with a brief overview of the traditional conception of property and the legal realists' advocacy of the alternative "bundle of rights" conception. Once the stage is set, we then turn, in Part III, to Coase's work, where we take a fresh look at his classic article and a companion piece in an effort to uncover the implicit conception of property rights that animates his theory. We conclude that Coase adopts an extreme version of the bundle-of-rights conception of property favored by the legal realists; in effect, Coase conceives of property in terms of a list of permitted and prohibited uses of particular resources. This is followed, in Part IV, by a selective review of post-Coasean treatments of property in law and economics scholarship, where we find the list-of-uses conception carried forward in a variety of guises. In Part V, we briefly consider some areas in which an explicit recognition of the in rem dimension of property would enrich the understanding of property issues by law and economics scholars. Part VI concludes.
Wednesday, 31 October 2001
111 Yale L.J. 399 (2001)
A veil of ignorance rule (more briefly a "veil rule") is a rule that suppresses self-interested behavior on the part of decisionmakers; it does so by subjecting the decisionmakers to uncertainty about the distribution of benefits and burdens that will result from a decision. A veil rule may produce this distributive uncertainty by either of two methods. One method is to place decisionmakers under a constraint of ignorance about their own identities and attributes. John Rawls coined the phrase "veil of ignorance" to describe a hypothetical original position in which principles of justice are chosen under precisely this constraint. But that is a special case of veil rules generally, indeed a radical case. Rawls's thought experiment introduces uncertainty by allowing the decisionmaker to know the distributive consequences of a decision on future citizens--call them A and B--but denying the decisionmaker the knowledge of whether she herself will occupy A's position or B's position. Where veil of ignorance rules appear under historical rather than hypothetical conditions, however, the relevant decisionmakers will usually know their own identities and interests. Veil rules that appear in actual constitutions, then, more often adopt a second method for introducing uncertainty: Although the decisionmaker knows or can guess whether she will occupy A's or B's position, the rule introduces uncertainty about whether A or B will reap the greater gains from the decision.
By speaking of veil rules in constitutions, I mean to pose a very different question than the one pursued in the standard discussions of the veil of ignorance. The constitutional choice literature stemming from James Buchanan, Gordon Tullock, and their successors conceives the uncertainty produced by the veil of ignorance as a mechanism for inducing hypothetical constitutional designers to approach the choice of the constitutional rules themselves in an impartial way. Decisionmaking by legislators and other officials within the framework of the constitutional rules, by contrast, falls in the domain of "ordinary politics," where self-interested individuals and factions struggle for advantage. The constitutional designers' self-interest is constrained by uncertainty; that of ordinary decisionmakers is constrained by voting rules (such as supermajority requirements), by substantive constitutional prohibitions on inefficient legislation, and by institutional competition resulting from the separation of powers. I erase that distinction by asking whether and how constitutional rules might subject in-system decisionmakers to the same uncertainty constraint that governs the hypothetical stage of constitutional choice, and for similar reasons. I also touch upon an important special case, the proposal of constitutional amendments, that shares features of both constitutional choice and ordinary politics.
I argue that the Federal Constitution itself contains a number of rules that may usefully be analyzed as veil rules. Provisions, structures, and practices as diverse as the Ex Post Facto and Bill of Attainder Clauses, the Emoluments Clause, the Twenty-Seventh Amendment, Article V's procedures for constitutional amendment, the doctrine of precedent, the original mechanism for selecting senators (by vote of the state legislatures), and the rules governing presidential election and succession may all profitably be considered in this light, although not all of these should count as examples of veil rules rightly understood. The legal literature on these and other topics makes casual references to the veil of ignorance, but there has been very little sustained examination of the subject of veil rules as a general strategy for promoting impartial decisions under actual constitutions. My initial aim, then, is to synthesize and critique these localized literatures in order to obtain an overview of a recurring theme in constitutional design.
The payoff from this synthesizing work is that it helps supply an answer to two questions: why the Constitution does not contain more veil rules than it actually does, and why it uses veil rules where it does use them, but not elsewhere. It sounds paradoxical to move from an explication of existing veil rules in some settings to an explanation for their conspicuous absence in others, but that question illuminates the tradeoffs inherent in constitutional design. Having appreciated the power of veil rules to dampen self-interest, we might want to know why the veil technique is not ubiquitous in the Constitution. In particular, it is a striking feature of constitutional law that Congress is subject to more constitutional veil rules, of wider scope, than is the President or the judiciary. Why should that be so, given that it would be perfectly possible to apply a range of veil rules to the latter institutions as well?
Some of the literature suggests that the skewed distribution of constitutional veil rules is best explained by the presence or absence of alternative institutional features that suppress self-interested decisionmaking. Federal judges, for example, are not restricted by veil rules requiring prospective and general decisionmaking because life tenure and the design of the adjudicative process independently serve to suppress the decisional bias that veil rules are used to check. While this view gives a plausible account of the paucity of veil rules governing judicial action, its logic suggests that the executive branch should be subject to a far more stringent set of veil rules than it actually is. A second type of explanation applies the insight that the price of reducing bias is to reduce decisionmakers' information. In some settings, the information suppressed by a veil rule is so valuable that its loss might be thought to outweigh even large gains in decisionmaker neutrality. This is true and important, and I shall have recourse to it more than once in explaining the detailed scope of particular veil rules. But paradoxically, the insight is too powerful to be really useful. Any distribution of veil rules across the Constitution, even a distribution much different than the one we see, could be explained by supposing that the costs of foregone information are (or are not) excessive in settings where veil rules do not (or do) apply.
I emphasize a third and somewhat different explanation, one that points not to the direct effects of veil rules but to their secondary or indirect consequences. The indirect tradeoff, I argue, is not between information and neutrality, but between information and motivation, or (as the Framers would have put it) institutional "energy." Veil rules not only dampen both information and bias; they also suppress decisionmakers' activity. Removing the spur of self-interest threatens to reduce decisionmakers' activity below acceptable levels, to the point where constitutional designers might plausibly prefer to lift the veil and spur more activity, even if the price is that some fraction of that increased activity is self-regarding. If, like the Framers, we systematically fear excessive congressional activity, on the one hand, and fear insufficient presidential (and even judicial) activity, on the other hand, then something roughly like the current skewed distribution of veil rules suggests itself. The enervating effect of veil rules would amount to a qualified good in the legislative setting and a qualified bad in executive and judicial settings. This is an interpretive explanation or justification of the Constitution and its implicit theoretical commitments. I make no normative claims about how a new constitution should be designed from scratch, nor do I attempt historical analysis of the later development of federal political institutions, such as the (relative) growth of presidential power.
The plan of the Essay is as follows. Part I defines terms, distinguishes veil rules from the separation of powers and other types of constitutional rules that restrict self-interested decisionmaking, and sets out a few methodological premises. Part II surveys constitutional veil rules by examining "veil tactics": features of constitutional provisions and doctrines that produce veil-like effects. Examples are constitutional requirements that official decisions be prospective and general, such as the Ex Post Facto and Bill of Attainder Clauses, and constitutional rules that increase the durability of decisions or delay their effective date, such as the doctrine of precedent in constitutional cases, the Twenty-Seventh Amendment, and the Emoluments Clause. I also touch on the (infrequent) use of randomization in constitutional law. Part III examines the direct effects of veil rules on decisionmakers' information and their indirect effects on decisionmakers' motivation, emphasizing that the enervating effect of veil rules helps us toward an account, or a rationalization, of the distribution of veil rules across institutions. Part IV is a brief conclusion.