Rational Choice and Its Limits (Revised Version)

Abstract

This chapter asks the fundamental question of whether the concept of a market-oriented (economic) order can be reconciled with the idea of democracy from the perspective of rational choice approaches to the law. Europe has been facing great economic challenges for the past years — sovereign debt; fiscal and monetary policy; financial market regulation; trade and investment agreements. Some observers argue that prioritizing an economic rationale in the policy response to these challenges comes at the expense of democracy by undermining its most vital preconditions (such as equality and solidarity), while their antagonists state that in fact democratic decision-making is undermining financial stability and long-term welfare of societies. This contribution will establish that both positions contribute important insights and yet display too narrow a field of vision. Combining the arguments puts the cart before the horse: Democratic decision-making undermines, among other things, financial stability — and thus long-term welfare of societies — because it follows a logic that is primarily economic.

Revised version of the original published article “Rational Choice and Its Limits” by Emanuel V. Towfigh, German Law Journal 17(5):763–778.

Parts of this manuscript are based on the book “Das Parteien-Paradox: Ein Beitrag zur Bestimmung des Verhältnisses von Demokratie und Parteien” by Emanuel V. Towfigh, Mohr Siebek 2015.

I gratefully acknowledge fruitful comments by the editors, Matthias Goldmann and Silvia Steininger; earlier drafts of this manuscript have profited from feedback by Katharina Towfigh, as well as from my commentator, Agniezka Janczuk-Gorywoda, and other participants at the workshop Democracy and Financial Order at the University of Frankfurt. As always, any and all remaining misconceptions in this text are attributable to my own limited understanding only.

In some sense, this can be understood as a variant of the question whether a market economy is helpful (if not a precondition) for a democratic order; for a recent example of such an argument see von Weizsäcker (2014a), p. 13.

Keywords: Rational Choice