Posner and Sykes Book Symposium: Response by the authors

by Eric Posner and Alan Sykes

[Eric Posner is Kirkland & Ellis Distinguished Service Professor of Law and Aaron Director Research Scholar at the University of Chicago. Alan Sykes is Robert A. Kindler Professor of Law at NYU Law.]

In Economic Foundations of International Law, we provide a treatise-like account of international law from a rational choice perspective. The book builds upon an already considerable body of work by many different authors, and we hope that it will stimulate further research in this area.

We thank Andrew Guzman, Emilie Hafner-Burton, David Victor, Rachel Brewster, and Steve Charnovitz for taking the time to read the book and provide their reactions for this symposium, and Opinio Juris for hosting it. Here we provide a brief response to their comments.

Hafner-Burton and Victor focus on the relationship between political science scholarship and legal scholarship, and see in an empirically grounded economic approach a way to reconcile the disparate focuses of the two disciplines, where in the past scholars in the two disciplines seemed to have trouble communicating with each other. We agree with their sentiments. Political scientists and law professors will always harbor different methodological orientations—political scientists, frankly, have higher standards both for modeling and empirical testing, while law professors are more preoccupied with interpreting legal texts and providing normative recommendations—but the rational choice framework provides a kind of portal between the two disciplines. Both groups understand the language of rational choice even if they find other theoretical constructs used by the other to be bewildering, and the rational choice framework provides a useful way to generate hypotheses for empirical testing. Hafner-Burton has herself been a leading figure in empirical testing of the effects of international human rights law, and although many law professors writing about human rights stubbornly refuse to engage with it, it is obvious that her work, the work of Beth Simmons, and that of other political scientists, will have a major effect on legal scholarship on human rights in the long run. By contrast, we question whether realist theory will ever have an impact on international law scholarship, and doubt that constructivism will ever have a distinctive impact on international law scholarship, though many of its premises and commitments mirror ways of thinking that have long played a role in legal scholarship of all types.

Let us turn from positive to normative. Guzman argues that “with respect to climate change at least, it seems clear that the disastrous consequences of a failure to cooperate far outweigh the speculative risks of non-consensual rule-making or delegation.” We agree with Guzman that the failure to cooperate may prove disastrous: the science and the economics seem pretty clear on this score. We also agree with him about an important point that has not been sufficiently recognized by politicians and even scholars: that a meaningful climate treaty would not only set limits on emissions of greenhouse gases, but also require a massive, and hitherto unknown level of international delegation to an independent international body with the power to monitor compliance, and possibly even to revise the rules in light of new information and to enforce the rules against recalcitrant states.  But we are quite pessimistic that such delegation will prove acceptable, at least short of a crisis situation. Economics is helpful here for explaining why. There is a simultaneous problem of decentralized cooperation among a large number of states, and massive agency costs—two problems that will tend to reinforce each other. All of our experience with international organizations—almost all of which have turned out to be weak despite often ambitious intentions (as Guzman himself has persuasively documented in an extremely good paper)—reinforces the seriousness of these problems.

Enforcement raises another set of conundrums.  International law to date, as we emphasize repeatedly, requires self-enforcement.  Simple strategies such as you cheat, I cheat can work fairly well in some settings, such as international trade agreements.  But that approach is much less likely to work when cheating by one party injures the global commons.  Reciprocal cheating by all other parties would then imply an immediate breakdown of cooperation.  It seems that some other set of penalties for cheating may be required, but the task of establishing them and administering them is a daunting one.

In short, as Guzman appears to recognize—and perhaps in this way we are in agreement—the real barrier to meaningful cooperation is the state system itself. But what is to replace it? He doesn’t say, but we look forward to continuing the conversation.

Rachel Brewster’s comment focuses on remedial aspects of international law.  She lays out the advantages and disadvantages of “liability rule” and “property rule” approaches to the policing of violations, and suggests that we “maintain that the best means of operating international remedy regimes is through liability rules.”  We do not mean to take such a strong position on the normative issue of optimal remedies.  Rather, our focus is on the positive, and on what might otherwise seem a puzzle – why does international law generally (through the draft articles on state responsibility), and in particular instances (such as WTO remedies and remedies under investment treaties), emphasize factors such as “compensation,” “proportionality” and “equivalence,” rather than “punishment” and strict “compliance” with international obligations?  Our answer is that compliance is not always optimal, and that limited and calibrated remedies can move the system toward one that induces only efficient compliance. The imperfections of liability rules notwithstanding, the simple fact is that international law often chooses to rely on them.

Brewster also raises an intriguing puzzle about WTO law (one that Charnovitz notes as well) – the fact that cheating is not punished until such time as a cheater has been detected, has been given the opportunity to comply, and still refuses.  Even then, the punishment is calibrated to the prospective harm done by cheating, not to the harm that occurred in the past.  Brewster sees this feature as a defect in WTO dispute settlement that requires attention.  We are more agnostic.  If this is a defect, why did the WTO adopt it and why is there little evidence of serious political will to change it?  Speculations abound in this regard: Perhaps litigation of disputes yields particularly large positive externalities by clarifying the rules, or perhaps (as Charnovitz suggests) immediate compliance with obligations is for some reason sub-optimal. Undercompensation in domestic remedial law is ubiquitous; a possible explanation is that it encourages potential victims to take precautions rather than rely on a highly expensive litigation system to deter harmful behavior. We cannot offer a definitive answer to Brewster’s puzzle, but caution against assuming that this mechanism is necessarily suboptimal.

Steve Charnovitz makes several suggestions for improvements in the book, with which we agree in the main, and will certainly bear in mind if the book is successful enough to warrant a second edition.  Some of his quibbles with our international trade chapter strike us as mistaken or based on a misreading, however, but they are at level of detail that we will not address here.  Our greater area of disagreement lies with the following passage:

Although the book quite rightly points to “international externalities” as a core problem that brings into play international cooperation and law (p. 17), the traditional economic distinction of pecuniary/nonpecuniary is not very helpful for building theory and is not nuanced enough to deal with other issues like human rights — which the authors designate as one of the “externalities” (p. 19) — or with the challenge of global public goods.

Our view is that transnational problems attributable to externality explain virtually all of international law (with a limited caveat for international law as a domestic hands-tying mechanism in a few contexts). Externality lies at the heart of the theory of public goods, for example, and explains their underproduction in a decentralized setting.  Human rights treaties (to the degree that they do not arise for domestic hands-tying purposes) are driven by transnational altruism and the external harms associated with human rights abuses.  The fact that these externalities are non-reciprocal helps to explain why human rights treaties often cannot be made self-enforcing without linkage to other issues, and why compliance with human rights treaties in illiberal countries is so poor.  We do agree that that the pecuniary/non-pecuniary distinction is rarely central in international law, as it simply delineates a class of externalities (pecuniary) that cause no distortion under conditions of perfect competition.  The global community is not “perfectly competitive,” however, and hence pecuniary externalities may often cause distortions that require an international legal remedy (they lie at the heart of the terms of trade theory of international trade agreements, for example).


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