Morality and contract: the question of paternalism.

• Author: Gordley, James

When we ask how morality relates to contract, we might have three questions in mind. One concerns the basis of contract law. Do its standard doctrines have anything to do with morality? A second is about paternalism. Is it right or proper for a state to interfere on moral grounds with contracts voluntarily entered into? A third concerns ethics. What moral standards, as distinguished from legal rules, should private parties respect when they make and enforce contracts? These questions are intertwined. I have written about the first of them elsewhere. (1) I have discussed the third briefly in an essay on business ethics. (2) Here, I will consider the second.

1. SOME BASIC CONCEPTS

   As in dealing with the other two questions, I will be drawing on the ideas of writers in the Aristotelian philosophical tradition. Perhaps the most significant was the thirteenth century theologian and philosopher, Thomas Aquinas. Others lived during a neo-Thomist revival in the sixteenth and early seventeenth century and belonged to a school which historians call the "late scholastics." (3) Leading members were Domingo de Soto (1494-1560), Luis de Molina (1535-1600), and Leonard Lessius (1554-1623). (4) Their intellectual project was to synthesize Roman law with the ideas of Aristotle and Aquinas. (5) Roman private law, as has often been said, treated particular problems with great subtlety but had no general theory. (6) Roman public law was less subtle. It was based on the principle that all legitimate authority came, directly or indirectly, from the Emperor. (7) As I have described elsewhere, the late scholastics gave Roman private law a theory and a systematic doctrinal structure for the first time. (8) They also dismissed Roman claims about the Emperor's authority arguing, on Aristotelian grounds, that since man is a political animal, every society can establish its own government. (9) Indeed, every society can reconstitute that government if its leaders subvert the ends for which government is established. (10) In the seventeenth century, many of the conclusions of the late scholastics were borrowed and disseminated throughout Europe by the founders of the northern natural law school, Hugo Grotius (1583-1645) and Samuel Pufendorf (1632-1694), paradoxically, at the very time that the Aristotelian philosophical tradition was falling from favor. (11)

   I have tried to show elsewhere that ideas drawn from that tradition are more helpful than those of modern philosophers in understanding contract law. Here, I will begin by describing some key ideas that bear, as we shall see, on the question of when the state should interfere with voluntary private arrangements. Some people may regard these ideas as matters of common sense even though they have no commitments to Aristotelian philosophy and are not used to the Aristotelian vocabulary in which these ideas are expressed. Others may have serious objections. Such objections cannot be brushed aside or easily answered. For that very reason, they cannot be addressed here. The question here must be limited and hypothetical: supposing, as I have argued elsewhere, that these older ideas are helpful in understanding contract law, what are their implications for state interference with contracts? Even one skeptical of the value of the Aristotelian tradition might find that question interesting. He might even be less skeptical after seeing its implications. A person who was not skeptical would be still more interested in where these ideas lead.

   For some modern thinkers, the choices a person makes matter because he will choose what he most prefers. (12) The satisfaction of his preferences is deemed to be desirable, whatever they may be. (13) Other modern thinkers believe that choices matter because they are an expression of individual freedom which no one has the right to override. (14) In contrast, in the Aristotelian tradition, choices matter because of the contribution they make to a good life, a life that realizes, so far as possible, one's potential as a human being. Leading such a life constitutes human happiness. It is the end which all actions should serve either instrumentally or as constituent parts of such a life. (15)

   Living such a life is the ultimate end of an individual. Enabling its citizens to live such a life is the end of government. In the Politics, Aristotle explained that "the form of government is best in which every man, whoever he is, can act best and live happily." (16)

   Thus, for the individual and for the state, to choose rightly is to choose what contributes to such a life. The virtue of prudence is the ability to choose rightly. (17) It is a rational ability. (18) Animals cannot exercise prudence because they act by appetite. People, in contrast, can understand that an end is worthwhile and what actions contribute to it. Though prudence enables them to recognize the right choice, to act rightly they will need other virtues as well. For example, they will need courage, which enables them to persevere despite fear, danger or pain, and temperance, which enables them not to be deflected by the pleasure that a wrong choice might bring. (19) In the Ethics, Aristotle described the different virtues as acquired capacities to live this distinctively human life. (20)

   Although prudence is a rational ability, nevertheless, it is not a form of deductive logic. One can understand many things that one cannot demonstrate. Consequently, to speak of "prudence" is merely to say that human beings do have an ability to understand what makes for a good life. (21) It is not to explain how this ability works, or to claim that one can prove that certain choices are correct.

   While prudence enables one to make correct choices, it does not follow that the same choices are right for everyone. People are different and so are their circumstances. Even if people were the same, there would still not be a single correct choice which every person under identical circumstances ought to make. Freedom of the will, according to Aquinas, means not merely that one may choose to act wrongly but that there may be different ways to choose rightly, no one of which is best. (22) That is so even though the choice may matter very much. It matters which of many possible beautiful buildings an architect chooses to build even though one cannot rank order their beauty. For Aquinas, it mattered that God made the universe, but he discussed God's freedom in the same way as that of human beings: there is no best of all possible worlds that God had to create. (23) Thus, though there are wrong ways to live, there are many right ways to do so.

   In deciding how best to enable their citizens to live a good life, those with political authority exercise prudence of a distinctive kind. Aquinas called it "political prudence." (24) Though prudence enables both individuals and their leaders to see what best contributes to such a life, neither individuals nor their leaders are infallible. Thus one question we will be confronting is what should happen when the leaders believe that a certain choice is wrong. They may believe that a person making such a choice lacks prudence. Or they may believe he lacks courage, temperance, or some other virtue. Should they intervene? Here, we will be concerned with the extent to which they should do so by interfering with contracts the parties would otherwise enter into.

   To live a good life, human beings need not only virtues but material things as well. In the Aristotelian tradition, enabling them to obtain what they need is the concern of three additional virtues: distributive justice, liberality, and commutative justice. (25)

   Those in authority exercise distributive justice when they allocate resources to ensure, insofar as possible, that each person can obtain what he needs. (26) On a large scale, they may be deciding how all the resources of society should be divided. On a smaller scale, they may be deciding how to divide a limited stock of common resources: for example, how many fish each fisherman should be able to take from a public pond. Indeed, we can speak of distributive justice whenever a common stock of resources is to be divided even when the allocation is made by a private person: for example, by a dean assigning office space. (27)

   One can imagine two ways in which resources might be allocated. One is by deciding what each person needs to accomplish his ends and assigning him resources according to the value of his ends and the amount he needs to achieve them. Hugo Grotius pointed out that if this were the normal way of allocating resources, it would work only in a society like a family or a monastery where there are few people, and they are on good terms. (28) There is another disadvantage as well. To the extent that those in authority are deciding how resources should be used, that choice will be made by them rather than by the individuals they govern. Yet, for Aristotle, making choices is part of living a good life. (29) The distinctive feature of a human being is that he acts through reason, choosing on the basis of what he understands. (30) The state deprives him of this aspect of a good life when it makes decisions for him.

   In any event, when writers in the Aristotelian tradition discuss distributive justice they did not generally have this method of allocation in mind. They commonly said that those in authority should ensure, so far as possible, that each person has a fair share of wealth. By wealth, they meant roughly what we would call purchasing power. (31) A fair share, they acknowledged, will be understood differently in differently constituted societies. In a society ruled by the virtuous, an aristocracy, it will be taken to mean that wealth should be divided in proportion to virtue; in a democracy, that each person should ideally have the same share. (32) Writers in this tradition made it clear, however, that such principles are ideals. Aristotle warned...