Constitutional Constraints and Property Rights: Lessons from Russia :

1
Constitutional Constraints and Property Rights
Lessons from Russia ?????????????? ???????????
? ????? ????????????? ????? ??????????? ?????

• David M. Woodruff
• London School of Economics and Political Science
• d.woodruff_at_lse.ac.uk
• http//personal.lse.ac.uk/woodruff

2
Constitutions and Commitment North
Weingast??????????? ? ??????????? ?????????????

• How do constitutions enable a credible commitment
  to property rights? They determine veto points
  for changes in rules and reduce likelihood that
  the sovereign will alter property rights for his
  or her own benefit. (North and Weingast 1989,
  803)
• ????? ??????? ??????????? ???????????? ????????
  ??????????? ???????????? ?? ????????? ? ??????
  ?????????????? ??? ?????????? ????? ???? ???
  ????????? ?????? ? ????????? ??????????? ????,
  ??? ??????? ??????? ????? ????????????? ????
  ??????????? ??????.

3
Constitutions and Commitment North
Weingast??????????? ? ???????????
????????????? ???? ? ????????

• Note the assumptions???????? ?????????
• status quo stable property rights?????? ???
  ?????????? ????? ?????????????
• only changes in rules threaten property rights
  ?????? ????????? ? ???????? ???????? ??????
  ?????????????
• These assumptions not convincing (Stasavage
  2002) what if the ruler needs to raise taxes to
  pay back his debts, but cant change rules due to
  veto points??????? ????????? ????????????? ???
  ?????, ???? ????????? ????? ????????? ??????,
  ????? ??????? ?? ????? ??????, ? ?? ????? ??-??
  ????? ?????

4
Implications??????

• Legislative stasis not the same as secure
  property rights?????? ????????????? ??????????
  ????????? ? ???????????????? ? ????????? ???????
  ?????????????
• Veto points can inhibit legislation to secure
  property rights constitutional constraint can
  work against property rights????? ???? ?????
  ?????? ???????? ????????????????, ???????????????
  ????? ????????????? ??????????????? ???????????
  ????? ??????? ?????? ?????????????

5
Ok, but do property rights regularly get
destabilised in ways requiring legislation to
address?
????????, ?? ????? ?? ??????, ??? ??????????????
???? ????????????? ??????? ????????????????
????????????
6
Endogenous destabilisation of legally defined
property rights?????????? ??????????????
?????????????? ??????????? ???? ?????????????

• Property rights allocate authority to act in
  particular ways with the backing of the state,
  whether or not other actors agree?????
  ????????????? ???????? ???????????? ?????????
  ???????????? ???????? ? ?????????? ???????????,
  ?? ?????? ???????? ?????? ???????
• Creditors, for example, can confiscate debtors
  property (under defined conditions) if they dont
  get paid?????????, ????????, ????? ????????????
  ????????????? ????????? (??? ????????????
  ????????) ???? ???? ?? ????????????

7
Endogenous destabilisation of legally defined
property rights?????????? ??????????????
?????????????? ??????????? ???? ?????????????

• Property rights allocate authority to act in
  particular ways with the backing of the state,
  whether or not other actors agree?????
  ????????????? ???????? ???????????? ?????????
  ???????????? ???????? ? ?????????? ???????????,
  ?? ?????? ???????? ?????? ???????
• Actors vested with such authority may find ways
  to use it to undermine others property-related
  expectations???????? ????????????? ? ???????????
  ?????? ????????? ????? ????????? ?????????? ??-??
  ???????? ?????? ???????, ? ??????? ????????????
  ????? ???????? ??????????? (????????????)
• Some Russian creditors used to avoid getting paid
  back in order to make use of chance to confiscate
  debtors property? ??????, ????????? ?????????
  ?????? ?????? ?????? ?????? ? ???, ?????
  ???????????? ????????? ?????????

8
Endogenous destabilisation of legally defined
property rights?????????? ??????????????
?????????????? ??????????? ???? ?????????????

• Property rights allocate authority to act in
  particular ways with the backing of the state,
  whether or not other actors agree?????
  ????????????? ???????? ???????????? ?????????
  ???????????? ???????? ? ?????????? ???????????,
  ?? ?????? ???????? ?????? ???????
• Actors vested with such authority may find ways
  to use it to undermine others property-related
  expectations???????? ????????????? ? ???????????
  ?????? ????????? ????? ????????? ?????????? ??-??
  ???????? ?????? ???????, ? ??????? ????????????
  ????? ???????? ??????????? (????????????)
• In such instances, to restabilise expectations
  about property security requires legislative
  change altering relevant allocations of
  authority????? ????? ??????????????? ???????? ?
  ??????????? ????????? ? ????? ???????, ?????????
  ????? ????????????? ?????????? ????? ?????????
  ????????????????
• Russian bankruptcy law of 2002 changes creditors
  authorisations, makes avoiding payment more
  difficult?????????? ????? ? ??????????? 2002 ?.
  ???????? ?????????? ??????????, ?????????
  ?????????? ?? ?????? ??????

9
Deinstitutionalisation and reinstitutionalisation
of property rights a causal mechanism????????-??
?????????? ???????? ???????????? ? ??????????
???? ?????????????
Legislation recalibrates authority, stabilises
property
Authority used to destabilise others property
rights
Law allocates authority
?????????? ?????????? ?? ?????? ????? ????
?????????????
???????????? ????????????? ??????????,
????????? ????? ????????????
????? ???????????? ??????????
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Examples???????

• Bankruptcy law????? ? ???????????
• Reverse stock splits (share consolidations)??????
  ?????? ????? ? ??????? ????
• Provisional remedies??????????????? ????
• Layoffs (in the United States)?????????? ? ???
• NB these rules not inevitable threat to property
  rights???????? ?????? ??????? ?????????????
  ???????? ?????? ?????????????

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Legislation recalibrates authority, stabilises
property
Authority used to destabilise others property
Law allocates authority
?????????? ?????????? ?? ?????? ?????
?????????????
???????????? ????????????? ??????????,
????????? ????? ?????????????
????? ???????????? ??????????
Constitutions with veto points dont imply
credible commitment to property rights
Veto points may hinder
????? ???? ????? ?????? ????? ????????
??????????? ? ??????? ???? ?????? ?????????? ?
???????????? ????????????? ????????? ?????
?????????????
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Pre-emptive response to objections????????????
??????????

• Maybe I shouldnt be analysing the character of
  property rights, but simply the roots of corrupt
  purchase of judicial decisions?????? ? ???
  ?????????? ???????? ???? ?????????????, ? ????
  ???? ??????????? ????? ????????? ??????????
• BUT corrupt purchase of judicial decisions is
  useful only because of the things in principle
  possible under law?? ?????? ????????? ???????
  ?????? ????????? ????????????, ?????????
  (????????????????) ????????

13
Pre-emptive response to objections????????????
??????????

• Ive missed North Weingasts implicit, but
  plausible assertion of an appropriate initial set
  of rules (established by common law)? ????? ??
  ????????, ??? ???? ? ???????? ??????????, ??
  ????????????? ???????????? ??????????? ?????
  ?????? (????????????? ?????)
• BUT one could cite any number of legal changes
  since the 18th century crucial to contemporary
  property rights?? ????? ?? ?????????????
  ????????? ???????, ??????? ? 18-??? ????,
  ??????????????? ?????????, ??????? ????????
  ????????????????? ??? ??????????? ????
  ?????????????

14
Pre-emptive response to objections????????????
??????????

• North Weingast were talking about the sovereign
  altering property rights for his or her own
  benefit, which can be blocked by Parliament
  veto???? ? ???????? ?????????? ? ???????, ?????
  ??????? ???????? ???????? ????? ?????????????
  ???? ????? ??????, ???? ????? ??????????????
  ???? ??????????
• BUT Such Hobbesian threats to property rights
  are only a narrow subset of all such threats??
  ????? ??????????? ?????? ?????? ?????????????
  ?????? ?? ?????????????

15
The problem of binding Leviathan must be
reconceptualised as a problem of binding all
those authorised to act in the name of the state,
including the actors regulated under private law
???????? ??????????? ????????? ?????
????????????? ??? ???????? ??????????? ????
?????????????? ??????????? ?? ????? ???????????,
??????? ????????? ???????????? ?????