Declarative Law; J. Fulda

In short, and as people of all political persuasions are coming to realize, regulation is not the answer. In this essay I wish to develop an alternative to the imperative law which proscribes and prescribes. The alternative would be declarative law, Joseph Fulda is Assistant Professor of Computer Science at Hofstra University. 684 law which describes. Such a law would not conflict with libertarian values. It would not mandate prior restraint nor would it presume guilt. Most likely, the practical results would be better than those of imper ative law. Basic civil law, both the common law and the statutory law, has the primary function of describing the responsibilities that one man bears another. This function of the law comes from the basic Western tra dition that the two senses of the word "responsible" are indissolubly linked; that is, if a man is respon sible for an act in that he performed it, he is responsible for that act in that he is liable for its consequences.

This relation between the two senses of the word "responsible" can also be seen in Western religion which DECLARATIVE LAW 685 maintains a clear connection be tween virtue and reward, vice and punishment. And it can be· seen in the market system where success is related to consumer satisfaction and failure is related to consumer dissatisfaction. The Issue of Negligence One of the ways, perhaps the prin cipal way, in which civil law de scribes our respective responsibili ties to family members, friends, and business associates is through the law of negligence. Negligence is "the failure to exercise that degree of care which, under the circumstances, the law requires for the protection of those interests of other persons which may be injuriously affected by the want of such care" (American College Dictionary). In other words, negligence is the "failure to exercise the care that a prudent person usu ally exercises (Merriam-Webster)."

Indeed in the law we are most often compelled to consider what "the or dinary, prudent man of average in telligence" would do and to use this fictional man as the basis for decid ing whether particular persons party to a dispute have met their respec tive responsibilities. New Jersey, which finds hosts who serve alcohol liable for the conse quences of their guests' driving while intoxicated, has, in essence, ex perimented with the idea of declar ative law. Unfortunately, however, the two senses of "responsibility" are not linked, since it is not the driver who is held responsible for the ac tions for which he is certainly, in the other sense of the word, responsible. I should like to give two examples where existing imperative law might well be replaced by declarative law. The first is the New York State law requiring seat-belt use for all front seat passengers under penalty of a fifty dollar fine. Instead of a direc tive ordering drivers to take this precaution,a simple statement that they are liable to a civil suit in negligence and criminal charges for manslaughter would suffice. In making such a declaration the leg islature would be doing no more than defining "prudence" and "ordinary care" in the light of the many stud ies showing the life-saving benefits of seat-belt use. As knowledge ad vances, what is prudent, ordinary, and reasonable will change. It is within the scope of the legislative mandate to describe interpersonal responsibilities to redefine these terms as needed. Naturally, to a lib ertarian, there is no room for legis lation-imperative or declarative requiring seat-belt use for the driver himself. The law exists to protect man from the folly of his fellow man, not from his own folly.

The second example is the New York City ordinance requiring land lords to install smoke detectors in all apartments at a maximum charge to 686 THE FREEMAN November tenants of ten dollars. Instead of this directive, we would prefer a decla ration that given this new, inexpen sive technology, its absence in the case of fire is negligent and opens the landlord up not only to civil suit but again to charges of manslaughter. There may be some apartment build ings in the poorer sections of town where tenants must choose between food now or protection from fire in the future. In that case nothing pre vents the tenants and landlord from negotiating a waiver of responsibil ity-much like the waivers that are often signed prior to a medical op eration consenting to limit liability. The advocate of regulation, hear ing what we have proposed, will no doubt object that there is no prior re straint, that the remedies discussed, civil or criminal, exist only after the fact, when it is too late. Regulation, in contrast, is intended to be pre ventive. The answer, of course, to this objection is that while the state imposes no prior restraint, the mar ket certainly does.

Importance of the Insurance Protection In a society based on declarative law, the need for liability insurance would be high and the insurance in dustry would surely develop schemes to protect their interests. Inspec tions by private insurance compa nies with millions of dollars at stake and whose inspectors may well have their jobs on the line will surely be more thorough than those done by disinterested bureaucrats working for indifferent agencies. Likewise, the expensive and cumbersome legal process of proving negligence when an insured company causes injury through imprudence is now gladly undertaken by the insurance com pany. Furthermore, .premiums for such insurance will be determined on the basis of both. the company's record and inspections. A company with substantially higher premiums than its competitors, and that in cludes companies insured on the ba sis of statistics without inspections, will soon find its prices noncompe titive and its customers switching loyalties. Likewise, a company with out insurance at all is likely to be boycotted by most consumers: the existence of insured firms and con sumers seeking security insures this.

Mter all, companies who are insured have every incentive to advertise this fact. It must be admitted, however, that on the free market consumers who wish to bear the risk of dealing with uninsured companies-and in New York City consumers do this every time they choose a "gypsy" cab over a regulated, heavily insured "yel low" cab-either to save money or for convenience are free to do so. The claim we make is that the market adequately prevents and retaliates for harm done us by others, not that 1985 DECLARATIVE LAW 687 it prevents us from harming ourselves. The Imperative for Freedom Besides liability insurance, insur ance against extraordinary losses in business due to imprudence and any number of other insurance schemes might be contracted into. Neither I nor anyone can know just how the insurance market would deal with product safety, economic security, employee safety, and the like. But one can rest assured that under a re gime of declarative law, the ex post penalties of the market and the law would be transmuted into preven tive measures by all manner of in dividual and group schemes. If one could know just how, the imperative for freedom would be a merely moral concern. Since one cannot mimic the actions and decisions and interplay of millions of freely acting individ uals, the imperative for freedom is a practical concern as well. @ Christmas 1985 Gift Subscriptions Checking your holiday gift list? For only $10.00 per name, you may make a gift of The Freeman and Notes From FEE for one year to friends, business associates, teachers, students, em ployees, clergymen, libraries-whomever you choose. The gift will begin with an attractive card, mailed in time for Christmas!

The Foundation for Economic Education Irvington-on-Hudson, New York 10533 William H. Peterson \Entrepreneurship, The Possible ~ Dream ~~ ENTREPRENEURSHIP,the possible dream. The dream may not always be big but it is possible, even probable given the right conditioning, given the right commitment. For in a free society the spirit of enterprise, the spirit of dynamic boldness, of busi ness ingenuity, appears to be rather universal, across the board-part and parcel of human nature. Thus in one way or another the spirit of enterprise crops up in every occupation, every craft, every profes sion, every walk of life, from a plumber figuring out a new way to fit a pipe bend, to a factory manager recasting a production layout flow, to a university student enhancing Dr. Peterson is director of the Center for Economic Education and holds the Scott L. Probasco Jr. Chair of Free Enterprise at the University of Tennessee at Chattanooga. This article is derived from a research program in entrepreneurship.