Prudence and constitutional rights.

• Author: McClennen, Edward F.
• Position: Preferences and Rational Choice: New Perspectives and Legal Implications

[T]he object of man's desire is not to enjoy once only and for one instant of time, but to assure forever the way of his future desires. And therefore the voluntary actions and inclinations of all men tend not only to the procuring, but also to the assuring of a contented life. (1)

INTRODUCTION

A great deal of historical and contemporary work in the economic theory of institutions has focused on what the representative person can expect in the way of economic benefits by participating in various institutional arrangements. Starting with Adam Smith, and running like a bright thread throughout virtually all the subsequent theoretical literature on political economy, one can mark a preoccupation with the conditions under which individuals can transact with one another to their mutual expected economic gain. (2) In the more formal literature on welfare economics, this concern culminates, in the middle of the twentieth century, in a fundamental theorem, according to which individuals can, under conditions of perfect competition, achieve an outcome that is Pareto-optimal and Pareto-efficient relative to the outcome in which no transactions take place. (3) The theme of Pareto-efficient changes in institutional structures is also central to many other contemporary works, including Coase's analysis of the firm and the problem of social cost, (4) Posner's economic analysis of law, (5) Axelrod's work on iterated prisoner's dilemma games, (6) Ullmann-Margalit's study of the emergence of norms, (7) and the whole of the public choice literature of the last four decades. (8) The Pareto conditions also figure centrally in virtually all axiomatic bargaining and social choice models. (9) In all of this work, the explicit or implicit claim is that rational individuals, when confronted with the possibilities for mutual (expected) economic gain, will be disposed to take the steps necessary to secure such gains.

People typically are concerned, however, not just to maximize expected economic gains, but also to protect themselves against losses that would compromise their prospects for future gains. In the language of Hobbes, as quoted above, they are interested not only in procuring but also in assuring. (10) The latter theme reappears repeatedly in the history of political theory, (11) and especially in the literature dealing with constitutional restraints on the exercise of both legislative and executive power. (12)

These two concerns, regarding economic gain and protection against loss, each play a role in James Buchanan and Gordon Tullock's landmark work, The Calculus of Consent. (13) Considerations of protection against losses favor the adoption of a unanimity rule in which each individual's consent must be given to reach a collective decision, since under such a rule you can veto any policy that would impose losses on you. Buchanan and Tullock argue, however, that operating under an unanimity rule is very costly, not only in terms of the time and other resources that must be expended to secure a full consensus, but in terms of opportunity costs. (14) Many valuable projects will not be ratified and implemented because of the refusal of some to give their assent. If these decision-making costs are sufficiently high, one will find it in one's interest to support less-than-unanimity voting rules. The significant savings in decision-making and opportunity costs--and hence resultant economic gains--will justify exposing oneself to the risk of policies that can impose losses upon oneself. Indeed, in certain cases, the most cost-effective approach will be to allow decisions to be made by a simple majority vote, or even to be settled by an administrative decision. (15)

Buchanan and Tullock go on to argue, however, that it is also rational for individuals to insist on a constitution that specifies different decision-making rules for different classes of policy matters. (16) The rational individual may well be willing to support a simple majoritarian rule (or even administrative choices) for cases in which substantial issues are not at stake, but insist on something more approximating a rule of unanimity for cases where the costs of an adverse decision could turn out to be prohibitively high. In that latter category, they suggest, will be policy decisions that modify or restrict the structure of individual human and property rights.

The relevant point is that the individual will foresee that collective action in this area may possibly impose very severe costs on him. In such cases he will tend to place a high value on the attainment of his consent, and he may be quite willing to undergo substantial decision-making costs in order to insure that he will, in fact, be reasonably protected against confiscation. (17) The argument for majoritarian procedures and administrative choices pivots, then, on considerations of the expected savings from what would be the high decision costs associated with the unanimity rule. But the argument for constitutional restrictions, for a "bill of rights," pivots on a different consideration altogether--on the concern of how to avoid substantial losses that could flow from allowing the majority (or governmental administrators) to settle all issues.

While discussion of the reduction of costs argument spans virtually the whole of The Calculus of Consent, the argument for protection against substantial losses receives only a few paragraphs of attention. In what is to follow, I shall try to redress this imbalance by exploring the protection argument at length. I also want to extend Buchanan and Tullock's brief argument in two respects: First, by way of offering a grounding for their important insight, I shall argue that the concern to protect against losses that would impair the continued pursuit of one's ongoing and future interests is a matter of prudence (18) and, as such, is something that can plausibly be viewed as a rational concern, at least for most persons. Second, I shall argue that the objects of such a prudential concern appropriately include not just the kinds of protections enumerated, for example, in the U.S. Bill of Rights, (19) but other rights as well, including welfare, health, legal representation, and educational rights. That is, I shall argue that prudential considerations provide a powerful argument not only for constitutional restrictions on governmental actions, but constitutionally mandated, positive government programs as well. On this way of thinking, a wide spectrum of public programs can be best understood as efficient ways in which persons can be provided with insurance against the vicissitudes of both social and commercial activities as well as natural events. Within the context of a theory of prudential concerns, then, the view that government is best when it governs least is very questionable.

1. CHARACTERIZING PRUDENTIAL MOTIVATION

   To be prudent is clearly something distinct from, say, simply to have concern for long-term as opposed to short-term considerations. One who focuses on long-term investments, but chooses among alternatives simply by reference to expected monetary return, is not thereby being prudent. The plan that yields the greatest expected monetary return might expose one to substantial risk, including loss of all of one's capital. To choose in this manner is not to choose prudently. Being prudent involves giving special consideration to the avoidance of at least certain kinds of loss, even if the loss in question is quite unlikely.

   Being concerned with avoiding loss, however, still does not capture precisely enough the idea of prudence. If one had a steady and guaranteed source of income, one that was more than sufficient for the promotion of one's projects--so that what is lost is easily replaceable--avoiding loss would hardly be dictated by prudence. Prudence is a more focused concern than just avoiding loss, even substantial loss. It is better characterized as a concern about avoiding a loss that would be disastrous for the individual in question--and that involves great harm or damage to that person. This usually includes loss of life, serious impairment of health, loss of income, and substantial loss of property. In very general terms, it is concern to avoid a loss that would prove ruinous to substantial and important undertakings. (20)

   Since disaster is often relative to specific projects that can vary significantly from one person to the next, it might seem hard to draw any general conclusions about what prudence specifically requires. But the references to loss of life and impairment of health make it clear that there are some important general conclusions that can be drawn. While projects will vary from one person to the next, it is plausible that each will still be disposed to avoid substantial losses with regard to what have come to be known as "primary goods." (21) These are goods that are typically useful regardless of one's plan of life or particular undertakings. (22) They include one's physical, emotional, and intellectual capabilities or skills; financial and other (renewable or nonconsumable) resources; and opportunities--all of which play a critical role in the pursuit of one's projects.

   Primary goods are instrumental goods, but they have a special place in a system of instrumental value. The value of an instrumental good is often taken to be entirely derivative of, and dependent upon, the value of that to which it is a means. From this perspective, usefulness is an ephemeral value, likely to disappear when one's interest in the end to be served thereby is altered. (23) But primary goods have a value that tends to be conserved in the face of such changing interests, for they are instrumental to a significantly wide range of projects that persons might pursue. Correspondingly, the loss of such a good can compromise many goals or ends that a given person has or might have in the future.

   One can think of a primary good as having...