Newsroom / News / Media / Info Magazine LGP NEWS 01/2021 / Individual freedom vs. state regulation

Individual freedom vs. state regulation

Individual freedom vs. state regulation

Extensive state interventions in fundamental freedoms and in economic life have reignited a smouldering debate about the relationship and the right balance between state interference and personal or economic freedom. A conversation between law firm founder Gabriel Lansky, constitutional lawyer Heinz Mayer and economic researcher Stephan Schulmeister

Stephan Schulmeister: I’d like to start with a few general thoughts on the relationship between the public sphere and the private sphere, the state and the market and how the legal system helps to shape these relationships. In economic life, there has been an undeniable trend over recent decades towards pushing back the role of the state. For example, in budgetary law: 50 years ago, we still had an additional article in the constitution stating that budgetary policy has to take account of the overall economic balance. This reflected the dominant economic theory at the time, giving absolute priority to full employment. This way of thinking is now outdated, as can be seen in current European law, whether in the fiscal rules, Maastricht or the Fiscal Compact, for example. On an economic level, however, there is still a rather pronounced withdrawal of the state and a renunciation of its creative rights. 

Another area is the relationship between individual fundamental rights and state regulation. As far as individual rights and freedom of expression go, quasi-authoritarian state structures are emerging in many places, such as Hungary. So when some leftists, with a certain kind of naivety, claim that neoliberalism is in itself an anti-state approach, this is nonsense. Rather, neoliberalism calls for a particular type of state that takes the back seat as far as property rights and markets are concerned, but also opts for more strident conduct in the fields of internal security, defence and the enforcement of property rights, for example. 

Gabriel Lansky: Are the current developments in this area causally related to the coronavirus or is this just a loophole that politicians are exploiting? 

Heinz Mayer: The pandemic has shown that, in certain situations, a strong state is necessary. It is simply not possible to fight a pandemic on an individual basis. On the other hand, we can see that our entire state structure has glaring weaknesses. It starts with the legal system: we have an epidemic law from 1913. It has been amended many times, but it is still a patchwork and would be completely inadequate to combat the pandemic. In addition, over the last 20 to 30 years, we have pared the administration to the bone in some areas and it is almost incapable of acting in crisis situations. The Ministry of Health is not in a position to properly deal with what is admittedly a very difficult situation from a legal point of view. Why? Because they do not have enough lawyers who would be able to fit such measures into a meaningful whole. 

Economically, it has become very clear that this rubbish slogan ‘more private – less state’ really is just that. Until recently, we saw utterly absurd debates about the zero deficit, which is nothing more than a striking political demand. This has also painfully revealed the state of our journalism, which is almost at rock bottom in terms of its weakness, unimaginativeness and colourlessness. This terrible development is related to several things: the critical press has great difficulty in financing itself and journalists have had less and less time to research and think over the last 20 to 30 years. They must get into a topic and have the article ready in two hours, and that’s what it looks like, too. 

Schulmeister: The relationship between public and private is precisely the central question. You cannot see the legal system without also looking at socio-political developments. Over the last 40 to 50 years, we have seen the advancement of neoliberal thinking. This is a development that is now even beginning to affect the wealthy. Whether it’s controlling the pandemic or climate change, it‘s clear that there are areas where the state needs to have powers of intervention. These are enormous challenges, and we can clearly say, on the basis of economic theory, that the market will not solve them, but that, on the contrary, they will be made worse and worse by market forces. 

In this sense, the self-empowerment of politics is desirable so that it can clearly take responsibility for public goods, in the sense of economic theory. This includes the environment as a public good, but also encompasses legal security, social security, internal security and others.

The question for lawyers is to what extent their work is integrated into these ideological changes. In her book ‘The Code of Capital’, Katharina Pistor, a German lawyer based at Columbia University, shows how transnational law firms have a lasting influence on the rules of capitalism through the codification of law. This begs the question as to how the genuinely public sphere can regain a higher status, and what contributions lawyers can make to this. 

Lansky: As is well known, social, economic and cultural rights (as well as the basic covenants related to them) have not become hard constitutional law: instead, they have remained at the lofty heights of soft law under international law, in contrast to the liberal fundamental rights and freedoms that are legally explored by the constitutional courts. 

Social and economic rights will not become lived, adjudicated constitutional rights in the foreseeable future. If, however, there were a guarantee that mandated state action for people’s health and, for example, ordinances issued by the Minister of Health had to be measured against this, this could create content upon which to base an allegation of unconstitutionality, which would then lead to a shift in case law at the Constitutional Court. 

Mayer: I see the problem in the fact that the idea of solidarity has been lost within society. The individual’s freedom has been emphasised to an increasing extent, and the state has been pushed back. This became apparent with the first restrictions on freedom of movement a year ago, when an outcry rippled across the country. 

However, we do not have unlimited fundamental rights: the law contains reservations that authorise, or in some cases oblige, the state to interfere with individual rights. But the awareness that the state can, and in certain cases must, intervene in fundamental rights has been widely lost. 

I have also noticed this in the media. Individual freedom must not be allowed to lead to de-solidarisation, and we were already on the way there, in my opinion. That is dangerous because a community, a state, a democracy cannot function without solidarity. At the very least, an imbalance has become visible. 

Lansky: But is there a bridge between a paradigm shift in politics and a paradigm shift in constitutional law? 

Mayer: It’s tricky to say. We can be certain, though, that recent decades have seen the protection of fundamental rights as the dominant theme in the Constitutional Court. The jurisprudence of the Constitutional Court and, by extension, the way in which our public life is shaped, has been strongly related to individual legal positions in recent decades. This applies less to the general interest, which our legal system must also serve. 

Constitutional Court jurisprudence covers changed living conditions via the principle of equality. Time and again, the Constitutional Court decides that certain legal regulations are no longer objective, and thus not conducive to equality because of the changes in the actual circumstances. Examples include the decisions on active euthanasia or same-sex marriage. Consequently, it can be said that the Constitutional Court is moving with the times, at least in some areas, when it comes to the requirement for objectivity in the principle of equality. 

Schulmeister: The question is: where will the pressure of the problem be so great that the public sphere will become more important? In my opinion, it will be climate change, which will be with us for decades to come. I believe the scientists: it will definitely be bad, and this is an area where it will become clear that there are indeed public goods. Until we have reached the point where, for example, social cohesion is understood as a public good and this is translated into the modernisation of the welfare state, and corresponding largescale projects to combat climate change are developed, I fear that we will still need the crisis to get much worse. We will not come out of it without a catastrophe.

Neoliberalism fought the state with all its might for decades when it was still a bastion of the trade unions and social democracy in the form of the social security institutions. They were all bases of power. 

Now that the state is pretty much in tatters, the neoliberals want to grab the state for themselves. The state is now becoming a great redistribution machine. Take the coronavirus subsidies in Austria: the wealthier the stakeholders are, the more they get. 

People who are unemployed get two one-off payments, while people on minimum wage get nothing at all. People pretend that a kind of Kreisky-esque policy is being pursued, under the motto of ‘whatever the cost’. What we see in reality, however, is a cash injection policy for the rich. 

Lansky: On the theory that the judiciary is belatedly following developments in socio-political and power politics: there is, for example, the case law of the German Federal Constitutional Court on the EU bailout package. There, in a somewhat incomprehensible decision, the German Federal Constitutional Court decided to place limits on ECB capital injections, which gave a strong justification requirement for Europeanised pots. In the decision, the need for an aggressive European anti-crisis policy was met with a high degree of formalism within Europe, thereby making European anti-crisis policy more difficult in favour of nation-state decision-making power. In the light of what we have discussed, exactly the opposite constitutional initiatives would be needed: constitutional law should contribute to European solutions! 

Mayer: In reality, the German Federal Constitutional Court has long since assumed a political function. Some of what is judged there no longer has anything to do with the application of the law in the traditional sense. These are political value decisions, made without necessity. 

This whole Solange jurisprudence, which defines the relationship between the state and the European Union, is characterised by an extremely nationalistic view. I would not have expected that from a German Federal Constitutional Court, but from Poland or Hungary. That said, the fact that the German Federal Constitutional Court is making this kind of decision in the current climate is bad, no question about it. 

Lansky: This raises the question as to how much constitutional jurisdiction and the constitution must and may follow economic policy or ideological developments. In other words, at a time when the need for goal-oriented political action obviously demands more from the state and from Europe, to what extent must the Constitutional Court be transformed from a pure, absolutely necessary guardian of individual liberties into an authority that calls for the state to fulfil its guarantee obligations? 

Mayer: For a long time, our Constitutional Court flirted with the German Federal Constitutional Court and its case law. However, this trend has diminished in recent years. That said, there is another level to this debate. This comes in the form of the European courts, which see themselves as the motor of Europeanisation. They say, quite openly, that they are there to develop the EU further, to drive it forward. The case law of the ECJ no longer has anything to do with legal control or a legal institution; it makes political decisions. 

On the other hand, we have national constitutional courts that do the opposite in order to retain sovereignty on a state level. This weakens the EU and leaves it unable to act on many points. In reality, the question of political jurisdiction, an issue that can be the subject of cases in front of the Federal Constitutional Court, also occurs at the European courts, the ECtHR and the ECJ, which are striving to develop the European legal order further. In this way, of course, they have taken on a political function. Professor Rüthers, a colleague of mine from Germany, has dedicated a book to this process: ‘Vom Rechtsstaat zum Richterstaat’ (‘From the constitutional state to the judges’ state’). Compared to the German Federal Constitutional Court, our Constitutional Court looks positively restrained. 

Schulmeister: I can see changes in Mrs Merkel’s policy and in that of the European Commission. This receives relatively little public attention, but the EC has changed course on crucial economic issues, which gives cause for some hope. 

Unfortunately, there is a total lack of a new theory: indeed, after 1945, it turned out to be important that an alternative had already been developed, in the form of Keynes’ work. We currently lack a reasonably coherent counter-theory to this neoliberal nonsense. Instead, we see a multitude of fragmented proposals to improve the world, such as the common good economy, environmental and climate protection measures, Green Deal and so on – but they’re not enough. 

My hope is that in this transitional phase, this Rooseveltian New Deal thinking will be given a chance: to say that we don’t have a new theory, we don’t have a comprehensive explanation of what has gone wrong over the last 50 years, but we know that things can’t go on like this and, as a result, we are really getting stuck in to tackling it. 

Lansky: To sum up, we have a situation that demands more state interference and more state action. We need more state action in solidarity, not only in favour of the economy, but also in favour of the rest of society. There is a paradigm shift in parts of the political system where people are suddenly taking positions that sound like they understand that their previous neoliberal fixation was wrong. However, we have a media landscape that does not understand this and does not tell people about these changes. We have a legal meta-system that is not responding to the situation and the changed environment. And last but not least, there is no intellectual reappraisal of the ideological superstructure, even though we would need this in order to derive instructions for action from it. The question we now need to ask is what can be learned from this and how can this lack of theory be remedied. 


AUTHORS:

Dr. Gabriel Lansky, Attorney-at-Law and Managing Partner at LANSKY, GANZGER + partner
em. o. Univ.-Prof. DDr. Heinz Mayer, Senior Expert Counsel at LANSKY, GANZGER + partner
Dr. Stefan Schulmeister, Austrian lawyer and economist (Photo: ORF/Stöckl)

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