Thursday, May 10, 2007

China's Substantive Property Protection Law

Hayek defines in Planning And The Rule of Law "formal rules" and describes them "as a kind of instrument of production", meaning the Rule of Law drives economic prosperity. An anomaly of this is the fact that a land rife with human rights abuses, corruption, and bribery has one of the largest GDP growths in the world. You know who - China. Let's assume that China's government officials are honest and report their GDP growth fairly, what do we make of this anomaly?

Surprisingly, Chinese officials have decided to become a modern society and attempt at property protection law (Economist March 10th - 16th 2007). This isn't something to cheer about because a look under the hood shows a substantive law rather than a formal one.
We learned from Hayek that a substantive law serves a unique group and must define the terms and conditions of every situation. As Hayek writes, "It must provide for the actual needs of people as they arise and then choose deliberately between them...It must set up distinctions of merit between the needs of different people."

Hayek's description of substantive law is just what China's property law applies. In fact it serves to benefit a remnant of their society while the pheasant populations do not. However, just this week in the Economist (Apr 7th-13th 2007), there is news of a family who fought AND WON for their compensation over their forcefully confiscated home! They are the first in China who fought for their property rights and won!

I'm not saying Americans are better than Chinese that made us inherently form a formal law system of government. It is something in our history that made a group of human beings who otherwise would accept and perpetuate a central authority, form a rule of law. My question is, why did the rule of law spontaneously develop in America? What made our history special that our country's foundation is stewardship of the rule of law? Understanding this, I think, would help understand how we can translate otherwise non-rule of law cultures into thriving societies.

1 comment:

Tuhin Chaturvedi said...

The right to protection of private property developed first in America because they were the first nation to fight a war of independence and win it.And this rebellion was different from that of France and Russia because Americans wanted to be free for their own interest.Russia and France implied freedom as a statist event wherein the bourgeoise were to rule the country.This is a basic difference in these wars for freedom.After the American war,the founding fathers laid the charter wherein they gave individual property rights.Thus by the very concept of independence,America attained it in the true sense of the word rather than Russia or France.