Development and the Process of Constitutionalization

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Development and the Process of Constitutionalizati
on

• Eric BrousseauEconomiX, Université de Paris X
• Yves Schemeil,PACTE, IEP Grenoble IUF
• Jérôme Sgard,CERI/Sciences-Po

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Institutional Framework and the Process of
DevelopmentNorth, Wallis, Weingast, 2006

• Constitution as pact within the elite or
  Specialists in violence
• Civil peace allows economic activity
• Multi-tier Rent sharing pact (Specialist in
  violence / Technocrats / Masses)
• Limits reliance on violence, unless the order
  collapses
• Meets participation constraints

Society Limited Access Open Access
State Individual rights Competition Organizations Political Compet. Natural Personal Closed Accessible to elite Winner takes all (Liberal) Impersonal Open Accessible to all Checks and Balances
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The Question of Transition

• Doorstep conditions between Limited and Open
  Access
• Permanent risk of drift back to violence and
  insecurity, due i.a. to winner-take-all pattern
• vs. progressive rise in the rule of law within
  the elite and possibly in other social sectors
• Clear analysis of the stability of alternative
  orders, but
• Process of transition ?
• Logic of self-organization of alternative orders
  ?

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Our (small) addition

• An agent-based analytical framework that
  emphasizes the interaction between the rulers and
  the governed
• Delegation as contractual transaction the
  opposition between strong (or public) and weak
  (or private) delegations

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Our (small) addition

• An agent-based analytical framework that
  emphasizes the interaction between the rulers and
  the governed
• Delegation as contractual transaction the
  opposition between strong (or public) and weak
  (or private) delegations
• gt Strong anchor in the division of labor,
  social and economic
• gt Easier comparison of trajectories or
  scenarios

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Development of the presentation

• An analytic framework
• Two illustrations, in the very long and very
  short run
• How the on-going bargain between rulers and
  governed can account for differentiated
  development trajectories

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Bounded vs. Constitutional Regulators
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• Weak/ Bounded Delegation by Stakeholders
• Competitive incentives to build and defend club
  goods
• Enforcement capabilities based on adhesion and
  easy exit
• Strong/ Constitutional Delegation by Citizens
• Comprehensive, complex, costly to exit
• Capacity to build/design collective interest
• Monopoly of legitimate violence

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Bounded vs. Constitutional Regulators

• Weak/ Bounded Delegation by Stakeholders
• Competitive incentives to build and defend club
  goods
• Enforcement capabilities based on adhesion and
  easy exit
• Strong/ Constitutional Delegation by Citizens
• Comprehensive, complex, costly to exit
• Capacity to build/design collective interest
• Monopoly of legitimate violence
• gt Risk of extortion and coercion
• gt Possible demand for reverse-commitments by the
  rulers

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Two Models of Constitution
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• Despotic
• The distribution of rights is unequal gt
  Inequalities are cumulative and constestability
  is low
• gt Weak legitimacy implies that the common
  interest is narrow
• Local communities provide most public goods gt
  Persistence of traditional solidarities social
  fragmentation
• gt Limited political and economic
  integration
• gt Bounded growth for both public and private
  goods

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Two Models of Constitution

• Despotic
• The distribution of rights is unequal
• Local communities provide most public goods
• Liberal
• Equal constitutional rights gt Rule of law AND
  hierarchy of norms (topped by a Supreme court)
• gt Political participation AND economic
  integration
• gt Dynamics of rights (legalization) AND
  Constitutionalization
• Skilled and Neutral State Organizations as
  ultimate providers of public goods
• gt Increasing provision of public goods market
  infrastr. and solidarities
• gt Optimal federalism and public/private
  provision
• gt Growth-and-legitimacy loop

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Constitutionalization in Very Long Run
Antique Empires
21st Century Globalisation
Migrant Tribes
External competition
Feudal Kingdoms
Post-WW II Welfare States, cum trade integration
Absolutist/ Mercantilist States
Early 19th Century, Liberal States
Internal competition
high
Westphalian constitutional pact
First amendment
Second amendment
Constitution of the world ?
The Consistency of Social Contracts Regimes
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Constitutionalization in the very short run the
blue blood reformers (1985-2005)
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• Hobbesian reforms
• The state endows agents with hard, limited,
  revolutionary economic (sometimes politic)
  rights
• gt e.g. privatization, free enterprise,
  flexible labor, trade lib, etc
• The Libertarian state
• Market institutions are demanding gt e.g.
  Central banks, banking supervision, anti-trust,
  non-tariff barriers, etc
• The Policy-making state
• New public goods in the post-WashC era gt
  Education, Poverty reduction, Health, Environment

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The Constitutional bargain
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• Citizens
• The dynamics of equal rights the
  growth-and-legitimacy loop.
• The citizens consent to support the state
  depends on
• Efficiency in producing goods and services gt
  Skills, information, meritocracy, reliability
  (i.e. the Weberian bureaucracy) valorization of
  scope and scale effects
• Being the ultimate guarantor of equal rights
• gt Against special interests, corruption,
  cartels, etc.
• gt Against capture by rulers checks
  balances, judicial independence, etc.
• gt A counter-example the Informal sector (De
  Sotto, Maloney)

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The Constitutional bargain packages of rights
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Security of persons property rigths
Market access fair competition
Political access
Social rights
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The Constitutional bargain packages of rights
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Security of persons property rigths
Physical security vs. civil war, rampant
violence Security of property rights vs.
large-scale informality vs. illegitimate
allocation of prop. rights vs rent-seeking
(energy-exporting) countries
Market access fair competition
Political access
Social rights
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The Constitutional bargain packages of rights
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Security of persons property rigths
Market access and competition vs. capture by
the prime movers vs. pro-business
reform Absorption of market externalities
vs. rampant macro-financial instability vs.
weak consumer norm enforcement
Market access fair competition
Political access
Social rights
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The Constitutional bargain packages of rights
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Security of persons property rigths
Access to voice and representation vs.
capture by insiders (eg old white men) vs.
limited access to organizat media Checks and
Balances vs. weak enforcemt. of hierarchy of
laws vs. limited independence of courts vs.
corrupted, incompetent local govts
Market access fair competition
Political access
Social rights
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The Constitutional bargain packages of rights
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Security of persons property rigths
Support to aggregate demand vs. absence of
macroeconomic capacities vs. narrow domestic
market Social solidarities vs. large
switching cost when leaving communities vs.
Failure to address broader externalities
(environmt., etc)
Market access fair competition
Political access
Social rights
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The Constitutional bargain packages of rights
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Security of persons property rigths
Failed states Rent-seeking states
Market access fair competition
Oligarchic societies
Political access
Authoritarian modernisers
Social rights
Libertarian or strong social endogeneizers
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The Constitutional Profiles
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BBR
Security of persons property rigths
Market access fair competition
Political access
Social rights
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The Constitutional Profiles
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BBR
Brazil
Security of persons property rigths
Market access fair competition
Political access
Social rights
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The Constitutional Profiles
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BBR
China
Brazil
Security of persons property rigths
Market access fair competition
Political access
Social rights
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The Constitutional Profiles
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BBR
China
Russia
Brazil
Security of persons property rigths
Market access fair competition
Political access
Social rights
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The Constitutional Profiles
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BBR
China
Russia
Brazil
Cuba
Security of persons property rigths
Market access fair competition
Political access
Social rights
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The Constitutional Profiles
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BBR
China
Russia
Brazil
Cuba
Somalia
Security of persons property rigths
Market access fair competition
Political access
Social rights