The China Lectures. Constitutional Reform in China: A Contribution to the Debate

By José Stelle

How can a modern society lay a solid foundation for further progress?

In the China Lectures, José Stelle offers a guide to the constitutional reform necessary for any such project.

At the core of Stelle’s lectures is the idea that a strict application of the rule of law is fundamental to any constitutional system. He examines how different peoples have attempted to secure this ideal by different means; in what measure they succeeded; in what measure they failed; the consequences of their success or failure; and how those failures can be avoided in the future. Stelle builds on the model of constitutional reform proposed by F.A. Hayek in his 1979 book Law, Legislation, and Liberty, going beyond Hayek’s constitutional “reinvention” to offer his own recipe for preventing unjust laws and constitutional abuses — and creating a system that promotes freedom, prosperity, and peace.

These lectures were given at Fudan University (Shanghai) in the fall of 2013.

• Language: English
• Publisher: José Stelle
• Release date: Jul 2, 2014
• ISBN: 9781310508172

José Stelle

A descendant of German and Italian immigrants, José Stelle grew up in Brazil and received a multifaceted education in Brazil, the United States, and the United Kingdom. Politically, the decisive event of his life was the constitutional chaos of Brazil in the early 1960s leading to the Revolution of 1964, which he witnessed up close as a teenager because he lived in a military camp and had relatives in the armed forces. Next to that in importance were the Cold War, the Vietnam War, and the effect of these events on the United States in the 1960s and ’70s. Between 1980 and 1985, Mr. Stelle worked as opinion editor of Brazil’s weekly news magazine Visão, which promoted the economic ideas of the Austrian school, particularly of Hayek, in Brazil. In 1983 (with Donald Stewart, a Brazilian of Scottish background) he cofounded Rio de Janeiro’s Instituto Liberal, the educational and public-policy-research organization that proposed and promoted the privatization of the government’s massive stake in Brazil’s economy. (The transfer of some 90 percent of the government’s assets to the private sector was successfully carried out in the late 1980s and through the 1990s; it was ended in 2001 by President Silva’s socialist administration.) During these years, Mr. Stelle also edited the Portuguese-language version of F. A. Hayek’s main political works. He moved permanently to the United States in 1986. He has taught at the Catholic University of Paraná, in Curitiba, Brazil, and at Lynn University and Palm Beach State College, both in south Florida. From 2006 to 2007, Mr. Stelle was a resident scholar at the Public Interest Institute at Iowa Wesleyan College. From 2009 to 2012, he was a fellow of the Beloff Centre for the Study of Liberty, University of Buckingham, UK, where he is still a visiting scholar. In the fall semester of 2013 he delivered a series of lectures in constitutional studies at Fudan University, Shanghai, China. Recently, employing his 39-year experience in the United States, he began work on an interdisciplinary critique of American history and culture, with emphasis on the uncertain American experiment in “popular government.” In philosophy, Mr. Stelle favors realism and has a strong interest in metaphysics, ancient epistemology, and the work of the Scholastics. He lives in Lake Worth, Florida.

Book preview

Preface

I am happy to give my best wishes for the publication of these lectures in China and the United States.[1] I have spent half of my life in the US, eventually becoming an American citizen, but Brazil is my country of origin, and I hope that what is said in these pages will soon appear also in Portuguese, my native language.

The text represents a partial recreation of my doctoral thesis, The Constitution of the United States of America: Perspectives for Evaluation and Reform, in the College of Humanities, Department of Economics and International Studies, University of Buckingham, United Kingdom. (Writing them in fact delayed by at least six months the completion of that work, which I am now attempting to finish.) In them, I sought to join the current debate in China about political reform. Because, by historical experience, such reform should amount to a solid written constitution supported by equally solid legal institutions, I have expounded in elementary and admittedly superficial terms, for an intended undergraduate audience at Fudan University, in Shanghai, what is in my view the essence and logic of constitutionalism: the rule of law or Rechtsstaat, as defined herein. To that end, I attempted to connect both the present listener and the future reader not only rationally but also affectively with the lineaments of the constitutional conception.

The content and purpose of these pages have an interesting history. Initially, my distant goal was to cast the six lectures into a small book similar to that made up of the addresses given by the noted Austrian economist Ludwig von Mises to undergraduate Argentinian students in 1959 and published posthumously in the United States as Economic Policy: Thoughts for Today and Tomorrow and in Brazil as As seis lições (Six Lessons [on Economics]). Because of my connections in Brazil and of the constitutional problems Brazil continues to experience, my small book was to be translated into Portuguese and published as As outras seis lições (The Other Six Lessons), or possibly delivered before an audience of Brazilian students and concerned citizens at a welcoming educational foundation or public policy institute. A modified version of the fourth lecture (on democracy) was in fact given in 2011 both in Brazil, where it caused considerable controversy, and in the UK, where it was received in what seemed like stony silence, possibly on account of its challenge to long-established practice.

As stated in the first few pages, I felt concerned about the direction that the movement for political reform in China was taking. My experience in Brazil and the United States made me apprehensive about the calls for democracy among Chinese reformers. All indications were that they incurred in the usual but understandable mistake of confusing democracy (which, as Joseph Schumpeter, recalling Aristotle, points out, is only a method for determining who won an election, having therefore no constitutional competence) with constitutionalism and the rule of law (which the nature of democracy tends to erode). I sensed in their statements, also, what seemed to me a desire to apply current Western formulas to the complex cultural and political situation in China, something David Hume would have found unreasonable. I also thought that Hume’s disciple Friedrich Hayek offered a better constitutional plan, touching both the natural development of constitutions (The Constitution of Liberty, 1959) and the reinvention he proposed in order to improve the constitutional system (Law, Legislation and Liberty, especially volumes 1, Rules and Order, and 3, The Political Order of a Free People). Finally, given a few weaknesses I detected in Hayek’s plan, I thought it prudent to add something to the current debate by extending Hayek’s constitutional reinvention toward the ultimate demands of constitutional logic, which I find in the related concepts of the neutrality of the public square, of the demanding discipline of true law, and of the integrity of the state in all their expressions.

Long study of and experience with the US Constitution (to say nothing of its European and Latin American counterparts, including that of my native country) assured me that democracy did not produce the social and political order expected from it. Rather, it led to factional struggle tending to a climate of generalized distrust, low-level social unrest occasionally breaking out into acts of public violence or destructive revolution, undue economic and political centralization, and, consequently, the gradual wearing away of the very structure of conciliation that allowed the democratic element into its realm. (By similar or other means, these problems occur also in monarchical and other centralized systems, but that subject will not be part of our investigation.) Therefore, when a Brazilian with connections in China suggested that my view of constitutionalism and the rule of law might be applicable to the emerging situation there, and suggested that I think of presenting a series of lectures to undergraduate Chinese students in the coming year, I began to recast into their present shape some of the basics of my dissertation.

In that regard, I have an apology to make. Not only are my six lectures much more complex than those of the celebrated Mises, and not only do I fall short of the knowledge necessary to give the present work a similar clarity by compression, but the subject seems to me in some respects more intricate than that of economic science. As a result, what were to be six simple one-hour lectures became, in the rather academic tone presented here, more like six classes lasting two or three hours each. That cannot be corrected. I simply hope that those interested in constitutional questions will find this book worthy of their time.

I make, however, no apology for the spirit of what is said here. In that, I am not alone. Hayek was one of the first contemporary writers to take up Schumpeter’s doubts about democracy and cast them into a grave warning: that modern constitutionalism had failed, standing therefore in the need of reconstruction to save what is best and honorable in modern civilization itself. More recently (Democracy: The God That Failed, 2001), Professor Hans-Hermann Hoppe sounded a similar alarm. And, earlier this year, Frank Karsten and Karel Beckman’s book Além da democracia (Beyond Democracy) appeared in Brazil condemning democracy for the economic and political instability of the Western countries. There seems to be an emerging revolt against at least the abuses of democracy, if not against democracy itself.

These developments tend to support what is said in these pages: That, as it contemplates political reform, China stands in the especially propitious position of being able to avoid the mistakes, instabilities, and inefficiencies of the West, and to move, by a new constitution, patiently but confidently toward an advanced civilization of freedom and peace. If evoked, the genius of the good people of China can — by conciliation, reverence for the human person, respect for traditions, and an unconditional attachment to truth and the public interest — devise for themselves and the world an improved political, economic, and legal system, something even bolder and more beneficial than that which the American leaders framed in 1787 in even more difficult circumstances, and which they attempted to perfect by appropriate legislation in the Second Constitution that followed the ratification. Indeed, Benjamin Franklin, one of the writers of the US Constitution, reminds us that, among the American Indians of the Iroquois Confederacy, such a compact was called The Great Law of Peace. It is with that ideal in mind, and in the hope of contributing to that goal, that the present work is offered.

José Stelle

Visiting Scholar, The Beloff Centre for the Study of Liberty

University of Buckingham, Buckingham, UK

Lake Worth, Florida, USA

May 20, 2013

---

[1] These lectures were given at Fudan University (Shanghai) in the fall of 2013.

Lecture One

The Ideal of the Rule of Law

Part I: Introduction

I wish to thank all those who made it possible for me to be here this week to speak on some fundamental questions of politics. I say this not only because civility and truth demand it of me, but also because I am certain that gratitude is one of the main elements of correct thought. Thank you all for the warm welcome.

I would like you to accompany me for a minute on an investigation of how the sense of gratitude in particular, and moral sentiment in general, enhances our judgment by putting everything into perspective. Let us, therefore, consider that — to be true and real — the appreciation I have just expressed must encompass many people.

Let us start with the pilots of the aircraft that brought me here; the ground crew that fueled the airplanes; the flight attendants who made my long trip more comfortable; the catering service that prepared the food I ate during the flight; the baggage handlers who loaded and unloaded my baggage; the airline’s founders, managers, and staff; the bankers and the holders of bank accounts who financed the airline’s credit needs; the airport-security staffs; the airport-maintenance crews; and the humble custodians who cleaned the lavatories of the airports I passed through and of the airplanes I flew in so that I could stand before you today.

Special thanks are due also to the unknown miners of one country or another, who — sometimes working a kilometer underground — dug up those rare metals and chemicals that, mixed with others, endowed the airplane’s fuselage with increased strength so it would not split in midair.

Going farther back, we must remember also the philosophers, scientists, mathematicians, educators, economists, statesmen, inventors, and entrepreneurs whose ideas and theories helped and continue to help promote the economic development and the relative freedom and prosperity we enjoy today.

Returning again to the present, let us include the engineers who designed and the workers who built the airplane and the computer systems that guided it, allowing me to fly in safety for thousands of miles, to be finally set down here, alive and well, in this great and prosperous city, among a disciplined people who continue to live by many good morals and traditions. And so on. The list never ends.

So, you see, when we think in terms of gratitude, our whole mental system, humanized by our moral sentiments, is engaged on the side of justice and the common good, and we begin to understand both our need of freedom and of a corresponding sense of responsibility and respect.

We begin to see the proper relation of one person to another, of one thing to another, and of both the potential and the limits of freedom. We begin to see both the structure and process of the market and the parallel structure and process of general rules, specific regulations, and ethics that sustain the market, the political constitution, and all honest human relations. For without these rational and affective structures, a market and a political system will still exist, but they will not be as humane and as perfect as they could be.

I came to speak on the essence of politics. By politics I mean, not partisan struggle for illicit control of the state, and not the exercise of arbitrary power, but politics as the good government of the republic. It is important to stress this point because what people normally call politics is, as a rule, mere factional struggle for the creation and maintenance of privilege. It is not what should be the central concern of government, which is the promotion of justice and what James Madison, the Father of the [American] Constitution, called the permanent and aggregate interests of the community.

I would like to praise the government and the good people of China for the economic progress that together they have achieved with great effort under the responsibility system, and I wish them even greater progress in the years to come. In 1983, in Brazil, I met two young Chinese men who were graduates in economic science at Beijing University. Those two students explained to me the reforms that the Chinese authorities had introduced in agriculture, with good results. I told them these reforms seemed very wise. For the so-called Industrial Revolution — which gained special impulse in the heart of Great Britain in the mid-eighteenth century, and which transformed that small federation of states into what was for almost two centuries the most modern and most powerful country in the world — gained much from the agricultural revolution that took place on British soil during the previous century.

Clearly, the logic of development is that one must have an adequate supply of food before embarking on industrial development. In the early 1980s, China was doing the right thing, and it has done many right things since then by extending those reforms to other areas of its economy. I hope China will continue on this positive path. It seems to me that China has only begun to feel the power of the responsibility system expressed in its market. Greater improvements, greater efficiency, greater refinements, and a greater example for the world are still to come.

The important point here is that this development should reflect overall balance. It should not encourage the growth of one sector to the detriment of other sectors, or of the material side of life over the nonmaterial. For the mental and affective systems that produce the supersensible psychological state we call conscience must have time to stop and rest and meditate on what they have been doing and what they should do next. Creative leisure and the habit of introspection are imperative for the individual as well as for the community. Work is part of our lives, but it must not overwhelm our psychology or suppress our capacity for inner growth and natural affection.

I have read and heard in the media that, not only abroad but also here in China, concerned persons are discussing political reform as the basis of a greater progress. This perceived need to extend reform from the economic system to the political system seems to rest on two insights: first, that economic development, while basic, does not alone promote optimum socioeconomic organization, to say nothing of the impact it may have on the environment; second, that even if we concentrated only on economic development, we would not be able to obtain the optimum efficiency that the market can offer, because this greater and necessary efficiency requires a similar efficiency in the country’s constitution and even in the mental constitution of the individuals who compose the nation as a whole.

Ancient Rome did not rise to prominence in the world because the Romans were more intelligent than the people who surrounded them. As Polybius, the Greek historian, remarked, Rome finally overcame Carthage because of the greater integrity — hence the greater efficiency — of its political institutions, especially its separation of powers by means of what the Americans would later call the system of checks and balances — that is, of brakes and counterweights in the political process. Carthage, by contrast, tended to concentrate power in the hands of the nobles and the aristocracy. The Romans began to decline when their own institutions — which were faulty from the start — allowed the introduction of centralizing features and doubtful habits that finally brought about political and moral bankruptcy. And this long, painful, almost imperceptible process of decline (which, in its late stages, was significantly complicated by unrestricted immigration) issued from the same process of compound interest that gradually transforms small fortunes into bigger fortunes, and small evils into greater evils.

If this is true, then the greater efficiency of China will depend on and will result from constitutional integrity; and this efficiency-as-integrity would involve a market in land — therefore, the stability of property and the performance of contracts, which would affect all prices in a positive way, and thus the accuracy of economic calculation. This sought-after efficiency must also take into account the psychology of the individuals who constitute the nongeographic and nonpolitical aspects of the state. It involves the very fountain of individual integrity — of right thought, right action, dignified sentiment, and disciplined freedom, which together promote good citizens, respect for the public authority, concern for justice and the public good, and the integrity of the state. This necessary constitutional integrity is the source of a potentially new and highly constructive mental energy that can enhance the one that has already powered the progress China has experienced in the last thirty-five years or so. We will talk more about this in our sixth and last lecture, which touches on the relationship between education and the law.

The concept of constitutional integrity as the foundation of China’s future progress will be the underlying theme of the present series of lectures. The significance of this concept lies in the fact that, if properly understood, it can help China make one truly great leap forward by avoiding the mistakes of the political systems of North America and Europe. If achieved, this constitutional integrity can make China the center of perfected economics, politics, art, and culture. It can produce a truly advanced civilization of justice and social order, of freedom and peace, one that can stand as an example of what human beings — working together, with a good disposition, in freedom, under law, and by the combined power of reason and sensibility — can achieve for themselves, their families, their country, and all humanity.

I agree that China should extend reform to the political system. Some of these reforms have already taken place by the simple logic of economic advance through the personal management of resources. Indeed, as the development of the Roman law and of the British Common Law indicates, it is precisely by natural evolution combined with moderate but deliberate alterations in the law, and not by abrupt and possibly mistaken changes, that superior and lasting progress becomes feasible. Clearly, even China’s politics are different today from what they were thirty or forty years ago, and its laws have advanced in trying to cope with changes in the world. That is all to the good.

I have cause for concern, however, even for serious apprehension. It seems to me that, both at home and abroad, some of the proponents of political reform for China may be mistaken in their advice. The main reason for my concern is this: when we import solutions without sufficient care, we run the risk of forgetting the wisdom of our ancestors. That wisdom rests on the observation that, for good or ill, all processes are natural, therefore slow and incremental, and that we must be active in promoting our goals and talk freely about our problems, but also consciously patient in our theory and practice in order to obtain the best results.

I may be wrong about this, but it seems to me that those who seek to extend