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Efficiency or justice: the irremediable choice? — In this article the relationship between two values, efficiency and justice, is analyzed within the context of normative economic analysis of law. When the economist in a prescriptive way recommends legal reforms of judicial remedies, based on efficiency-arguments, this relationship is crucially involved. The question then arises whether justice, the central value of legal theory, should be considered as a purely formal and heteronomous value, deriving its content from efficiency, or whether justice is a substantial and autonomous value, to be put in balance with efficiency, or whether justice is a substantial and absolute value, to which efficiency is completely subordinated. In the Benthamite utilitarian tradition, based on utility — maximization, justice appears to be eliminated as an autonomous value, for it is reduced to strict implementation of utility — maximizing legislation. Nevertheless the Benthamite attempt to replace justice by efficiency as the central value of law is doomed to failure. The implementation of Benthamite efficiency-police requires the use of interpersonal comparisons of utility (ICU), which is a praxeological impossibility. The post-Benthamite economic approach to law attempted to avoid the use of ICU by referring to PARETO-optimality and superiority. These criteria seem to provide an elegant solution to the efficiency — or — justice dilemma. While the economists apply themselves exclusively to precepts, leading to PARETO-improvements, the choice between several possible PARETO-improvements remains the preserved domain for theories of justice. Unfortunately, the PARETO-criteria are subject to different interpretations. Sometimes the concept „affectation” is interpreted as an affectation to rights, sometimes as an affectation to pure interests. In the first case, application of these criteria requires a pre-efficient concept of justice. In the second case, any compliance with the non-affectation assumption becomes impossible, by which these criteria lose their applicability. Recognizing the difficulties of PARETO-based efficiency, Richard Posner attempts to evade them by developing a flexible theory of wealth maximization. As far as goods and services, subject to enforcible property rights, are concerned, only an unhampered market will guarantee a maximization of global wealth. The unhampered market provides the optimal context for channeling goods and services to the user, who values them the most. For all situations in which exclusive property rights are impossible or would imply excessive transaction costs, Posner recommends wealth maximization by public or judicial policies, aimed at imitating the results which the operation of a market in these situations would yield. Consequently, Posner reduces justice to a post-efficient value. Although he considers that in most cases the implementation of classical principles of commutative justice would concur with wealth maximization, the validity of these principles is made dependent on the calculation of transaction costs. The Hayekian concept of the market provides an implicit refutation of Posner’s theory. Within this concept transaction costs are not considered to act as barriers to market-transactions, but to be the natural consequences of real market-processes in a world with imperfect knowledge. Consequently, transaction costs constitute the „raison d’être” of entrepreneurial activity, the dynamic factor in market-processes. While Posner considers transaction-cost calculation as the ultimate yard-stick in political choice between market-solutions and market mimicking public policy, the Hayekian view regards the market-process itself as the only rational method to deal with and to reduce the ever-changing spectrum of trans¬ action costs. Even the Hayekian theory on the evolution of systems of general rules of conduct is subject to an integration into a theory of transaction costs. Several kinds of legal rules,,such as rules providing contractual modalities, procedural rules, rules concerning the establishment of evidence, have to be considered as means of reducing transaction costs. Selective processes with regard to these rules, which Hayek discerns in the evolution of open legal systems, can be interpreted as marketor quasi-market processes in the provision of better procedures for coping with transaction costs. In the last part of this article, the author deals with the question whether the theories of Posner and Hayek have succeeded in eliminating the need for an autonomous concept of justice and its replacement by a teleologically neutral concept of efficiency. By accepting the given system of property rights as the unquestionable initial point of optimizing market processes, the teleological neutrality of Posner’s concept of efficiency can be challenged. In property rights systems, characterized by an inequality of rights, the free market-process would enable the privileged to increase their efficiency with the life or parts of life of the discriminated. Restoration of teleological neutrality on pure efficiency grounds would, in these cases, imply the use of ICU. Hayek’s theory on long-term efficiency-tendencies in the selection of general rules cannot dispense with an autonomous concept of justice either. Historical choices concerning fundamental property rules, always imply the loss of some rights x or privileges of some groups in favour of gains for other groups. Consequently, efficiency-comparisons regarding such fundamental property rules would again require the use of ICU. The author finally concludes that an efficiency-based defense of market-societies logically requires an initial constitutional point, based on the principle of equal rights. This principle can only be argued within the context of an autonomous theory of justice.
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How to Cite: Bouckaert, B. (1984) “Efficiëntie of rechtvaardigheid: het onvermijdelijk dilemma?”, Tijdschrift voor Sociale Wetenschappen. 29(2). doi: https://doi.org/10.21825/tvsw.94872