20th WCP: A Philosophical Perspective on the Regulation of Business

There is an effort underway in the automotive sector of the ever-expanding global economy to harmonize motor vehicle regulations world-wide. This micro-experiment in world democracy (along with others like it in different economic sectors) differs from more prominent examples of negotiating international law in that it deals with the amoral realm of business, rather than the moral/immoral realm of international conflict and criminal justice, and in that it deals with regulations, rather than laws. Because regulations govern very technical aspects of business activity, they are even further immersed in the amoral aspects of society, namely the activities that constitute science, technology, and commerce. Nevertheless, because the regulation of business is patterned after, and administered by, legal authorities established to maintain social order, the regulation of business reflects regionally the legal traditions under which it was established.

As might be expected, this regulatory harmonization effort is taking place under the auspices of the United Nations (specifically, Working Party 29). It has as its ultimate goal the development of a global automotive regulatory system in which motor vehicles are tested once according to universal standards, and are accepted everywhere, as opposed to the current situation in which differing regulations require unique vehicle configurations, and differing certification requirements require that a vehicle be tested according to multiple test procedures and standards, even where the vehicle configuration is the same. The U.S. Department of Commerce (DOC), the Environmental Protection Agency (EPA), and the Department of Transportation (DOT), primarily through the National Highway Traffic Safety Administration (NHTSA), are working closely with U.S. vehicle manufacturers in negotiating with, in particular, European Union (EU), and member country, regulatory authorities (1) and vehicle manufacturers to try to commonize standards and test procedures. This paper discusses how a fundamental difference in legal philosophies between western Europe (the continental legal system) and the U.S. (the Anglo-American legal system) relates to this effort to devise a global regulatory scheme.

The adversarial, Anglo-American model of law and sanction is based on a philosophical (some argue, theological) understanding of personal free will and its relationship to human dignity, freedom, and responsibility. Persons are not considered scientifically to be merely a function of nerves, genes, social programming, and operating environment, but rather are imbued with a rational consciousness, and therefore the ability to discern reason from unreason, which is attended by the moral responsibility to act reasonably. (2) The Anglo-American theory (as opposed to its philosophical foundation) of political democracy requires such a presumption about persons (i.e., citizens), who would otherwise be neither capable, nor worthy, of self-rule. This presumption of reasonableness correlates directly with the presumption of innocence in the Anglo-American concept of the rule of law. (3)

As a function of this understanding, when universalized in civil society, legal authority in the Anglo-American tradition is grounded in the rule of law, rather than in those who happen to claim or administer legal authority, and as such (focusing here only on criminal justice, since it is the starkest aspect of law), is 1) required to presume a person's innocence until s/he is found guilty by a jury of peers, with the burden of proof resting resolutely with the accuser (i.e., the state); 2) is rigidly restricted to judging actions, rather than persons, and 3) must hold perpetrators of unlawful actions to the same penal standard, regardless of who they might be, or what position they might hold in society. (4) The moral purpose of punishment with respect to the criminal is retribution (the deed is expiated through execution of the punishment), while the moral purpose of punishment with respect to society is that it confirms our collective commitment to the rule of law — even while deterrence is seen as a primary objective (i.e., as an amoral "goal"). (5)

For most of Europe, the continental model of criminal justice is based on the scientific assumption that persons are in fact a function of nerves, genes, social programming and operating environment. (6) Given the inevitability of personal outcomes thus defined, moral approbation, other than as a tool for affecting subsequent behavior, is irrational, because it is implicitly assumed that the person's behavior is the result of a predetermined disposition, rather than a function of his or her free will and rational conscience. Therefore, once it has been initially determined by an investigating magistrate that a person has committed an infraction, the presumed-guilty person is brought before a panel of three judges who decide on the basis of the evidence presented, including a personal dossier, whether the person in fact committed the infraction, and if so how much, and what kind of, punishment/treatment the person requires in order to be deterred and/or rehabilitated such that s/he can safely resume life in civil society. Personal conduct in this model is judged amorally (i.e., without regard to the moral responsibility that attends the Anglo-American concept of the relationship between free will, human dignity, and moral responsibility), and it follows from this amoral outlook that the relevant objective of punishment under continental law is behavioral conditioning through appropriately-applied incentives and disincentives.

This philosophical rift between the Anglo-American and continental legal approaches ultimately also explains why the Anglo-American criminal justice system is so much more punitive than continental criminal justice systems, especially in the U.S., which has much, much longer prison sentences, and much harsher prison conditions, than exist anywhere in western Europe. This is best understood in terms of the moral blame inherent in the Anglo-American legal approach. Because the Anglo-American political/legal system affords persons the philosophical presumption of reasonableness (i.e., that every person is inherently worthy of moral responsibility), and, by extension, the presumption of innocence under the rule of law, any judgment of guilt, backed by considerable certainty that the accused person committed an illegal (i.e., immoral) act, is attended by severe moral condemnation, since it is assumed that the breach was a violation not only of the law, but of the person's own moral responsibility to conform to reason. This moral outrage in turn is used to rationalize harsh punishment. (7)

Turning back to automotive regulatory harmonization, similar approaches are taken in applying regulations to, and enforcing sanctions against, vehicle manufacturers. Western European nations require vehicle manufacturers to demonstrate compliance with applicable regulations using a prototype vehicle before the vehicle model represented can be offered for sale (i.e., manufacturers are 'presumed guilty'). Once "type approved," the manufacturer of the vehicle is free to market it throughout the European Union. Member countries that wish to challenge compliance of a vehicle model with applicable regulations must take the matter up with the government that certified the vehicle; it in turn works with the manufacturer to resolve the issue. In practice, a large degree of deference is extended to established manufacturers that have demonstrated good compliance performance in the past. Moreover, manufacturers found to be out of compliance with, for example, an emissions regulation are more likely to be allowed to offset the noncompliance by exceeding minimum requirements on future products, rather than being forced to conduct a very expensive, often ineffective, and always image-damaging, recall campaign. This approach also serves to actually offset the harm caused by the excess emissions, whereas a typical U.S. recall, which rarely exceeds a 50% completion rate, and is usually not performed until long after the part or system in question has malfunctioned causing the vehicle to emit beyond regulated levels, does little to actually offset the intervening excess emissions.

In the U.S., manufacturers "self-certify" to federal motor vehicle safety standards, which is to say that they declare, via a certification label placed on every vehicle, that the vehicle complies with all mandated safety requirements (i.e., manufacturers are presumed innocent) at the time of sale. However, NHTSA regularly buys motor vehicles from dealerships and tests them for compliance. If a non-compliance is found and verified, a recall will be ordered, regardless of the manufacturer's past performance, or the fact that the non-compliance may be inconsequential from a safety standpoint (such as an incorrectly printed certification label). The compliance programs for exhaust and evaporative fuel emissions are similar. While EPA does use a pro-forma type-approval system in its emissions certification requirements, the in-use compliance portion of EPA's program is thoroughly consistent with the Anglo-American approach to law and sanction: it is punitive, rather than corrective or rehabilitative, and it is indiscriminately applied to any and all manufacturers, regardless of current status or past performance.

While the philosophy behind the Anglo-American legal system as applied to citizens is morally and intellectually defensible, in the case of regulations applied to corporations, the materialist assumptions that underpin the continental legal system would seem to make more sense insofar as corporations are not persons and are not imbued with a rational consciousness, nor worthy of moral judgment. (8) Rather, they are determinate entities that behave in predictable ways in response to incentives and disincentives. The design and manufacturing errors that result in recalls are virtually never caused by intentional wrongdoing, and it is therefore misguided to treat such transgressions as moral transgressions. And, conversely, notwithstanding corporate public relations campaigns to the contrary, the inclusion of enhanced safety features are not motivated by sincere respect for the sanctity of human life, but by the application of positive and negative stimuli in the form of government regulation, public and market demand, and the threat of product liability lawsuits. Corporations function in the amoral realm of business and technology, where it is more appropriate to manipulate incentives and disincentives to achieve public policy objectives, and to apply corrective, rather than simply punitive, sanctions in the event of regulatory transgression.

Nevertheless, in the U.S., legal principles based on a moral philosophical understanding of persons in civil society are still routinely applied to corporations in the amoral world of business. This largely accounts for the much more adversarial relationship between EPA and NHTSA on the one hand, and vehicle manufacturers on the other, relative to that which exists between environmental and safety authorities and manufacturers in Europe. Such an adversarial relationship between industry and government frequently impedes the development of rational policy, which instead degenerates into what is derogatorily referred to as "politics." (9)

The suggestion that the continental legal approach may make more sense in regulatory affairs is currently being considered (albeit obliquely) by those engaged in global automotive regulatory harmonization efforts. Recognition of the moral/amoral difference between the Anglo-American and continental legal approaches may add depth to the otherwise purely academic discussion of the philosophical foundations of law in modern society. This in turn could lead to real improvements in public policy.

Notes

(1) While other, non-EU countries are involved in the negotiations, the primary debate is between the U.S. and western Europe (specifically EU member states), whose lead in automotive regulations the rest of the world has largely followed. Not coincidentally, this is also true of the Anglo-American and continental legal systems, which have been adopted, albeit with regional and cultural influences, by virtually all industrialized nations.

(2) This understanding is ultimately traceable to philosophical idealism and the underlying presumption that reality is a function of consciousness, rather than vice versa, and that it is oriented according to moral, including immoral (i.e., as opposed to amoral) considerations. This is ultimately the dialectic of both Plato and Hegel (H.G. Gadamer, Reason in the Age of Science, Yale University Press, 1982). However, there is a basic conflict between this understanding of reality and the one presumed by science, namely, that reality is determinate and that consciousness is a function of it, rather than vice versa. In this sense, science adheres to a fundamentally amoral worldview, and, in fact, it was Marx who challenged Hegel's dialectic on these grounds. He argued that Hegel had the dialectic "upside-down" and postulated historical materialism in place of philosophical idealism. Marx posited that the history of the social universe, like the history of the natural universe, follows inexorable laws that are determinate, and ultimately knowable (and, of course, Marx claimed to know them). More to the point at hand, notwithstanding the fact that the Anglo-American legal system suffers from this tension with science, and, in this country at least, is compromised by it (witness the debate over tobacco liability), the constitutional framework and philosophical underpinnings for it are less attenuated by this tension. By contrast, in continental Europe, where scientific materialism prevails, the primary tension is between individual accountability (the experience of an apparently free will) and social scientific determinism.

(3) The relationship between the presumption of reasonableness and continental idealism speaks to the moral character of the historical dialectic, and the reason that the so-called "Right Hegelians" claim that Geist, or intersubective consciousness, that informs human history is really God in the Judeo-Christian sense. The moral presumption of reasonableness, stripped of its political theoretical detachment, is at bottom the Judeo-Christian concept of brotherly love, which, through ever more universal reciprocation, becomes the self-fulfilling prophecy that drives humanity toward peace and reconciliation and, according to the this view of Hegel, man toward God. Under this view, the trend toward world government, far from being totalitarian, is an expression of Hegel's "reason in history, and it is why Hegel viewed the state as the highest form of social order — the institution in which the universal (or intersubjective) will of free subjects is manifest as Reason (now worthy of capitalization — even in English) in historical terms (Reason in History, G.F.W. Hegel, Bobbs-Merril Company, 1953). The totalitarian specter in the form of the amoral influences presented by science, technology, and business ("totalizing discourses," as Foucault and his various followers refer to them) present the salient challenge to collective thought that is specifically played out in politics, and it is because of this, rather than any sentimental or self-righteous appeal to "the rights of man" that democracy is a morally-superior form of human government, relative to totalitarian forms, which are amorally based. Ultimately, the reintegration of intersubjective consciousness (Hegel's Geist coming to self-consciousness) is driven by the dynamic between reason and persuasion: idealistically, in the Hegelian sense, perfect agreement among persons erases the distinction between self and other; intersubjective consciousness thus becomes pure consciousness, or a self-conscious Geist (again, it has been argued that this is fundamentally a theological proposition; Hegel addresses this question as one of theodicy, thereby avoiding the otherwise inevitable argument over the apparent mysticism of religion, in that it posits an apparently non-human condition, about which we can know nothing).

(4) This ignores sentencing laws that have evolved over time, which do take into account mitigating factors, including a person's history and stature, but the premise is still accurate in terms of Anglo-American legal philosophy.

(5) This is true, notwithstanding the common misconception that the purpose of punishment is to exact revenge, which is immoral.

(6) Whereas the philosophical underpinnings of the Anglo-American legal system are found in idealism, those of the continental legal system are found in materialism. In rejecting idealism in favor of materialism and the scientific scope and method it entails, continental philosophy rapidly collapsed into social theory (including psychology) and, ultimately, social science (including psychiatry). In effect, social science is to social theory as technology is to science, namely, the completely un-reflective, and in that sense vulgar, offspring. Because materialism, with its scientific worldview, presumes that reality is pre-determined, the moral/immoral distinction is rendered meaningless, which, in turn renders reality amoral, and, as such, a rich and worthy object of scientific study, as well as of technological, and social scientific, manipulation (The Origins of Totalitarianism, Hannah Arendt, Harcourt, Brace & World, 1966). While continental European countries since World War II have democratized their political systems, the basic philosophical underpinnings for the continental legal system have not significantly changed. Continental social theory (from Marx and Freud to Foucault and Deleuze) continues to maintain a fundamentally scientific, amoral outlook on society, even while imposing upon it a "self-consciousness" which is inconsistent with it's "self." The recent spoof played by the New York University Physicist, Alan Sokol, on "Lingua Franca," a so-called "leftist" sociology journal, in which Professor Sokol spouted what he believed to be utterly implausible nonsense from a scientific materialist perspective because it denies the determinacy of reality, was nevertheless plausible from a historical materialist perspective, even while the latter relies on an analogous determinacy (i.e., historical materialism).

(7) To rationalize is not to justify; harsh punishment does tend to result from moral outrage, but this tendency merely betrays self-righteousness on the part of the morally outraged, and as such is an immoral influence (this is the blame-wraith of moral judgment).

(8) This is not to say that the analogy between a corporation and a person is completely baseless (corporations are made up of persons, after all), but the human motivations behind corporate activity, the overriding goal of which is monetary profit, and the human aspirations behind leading of an ethical life in civil society, are fundamentally different, and therefore may well warrant different legal/regulatory approaches.

(9) In spite of the practical (in the Aristotelian sense) nature of public policy, it requires moral justification (in the Platonic sense) in order to escape this derisive connotation.