Front Page Titles (by Subject) V.: Just Rules, Agreed-on Rules, and Just Conduct - The Collected Works of James M. Buchanan, Vol. 10 (The Reason of Rules: Constitutional Political Economy)
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V.: Just Rules, Agreed-on Rules, and Just Conduct - Geoffrey Brennan, The Collected Works of James M. Buchanan, Vol. 10 (The Reason of Rules: Constitutional Political Economy) 
The Collected Works of James M. Buchanan, Vol. 10 (The Reason of Rules: Constitutional Political Economy) Foreword by Robert D. Tollison (Indianapolis: Liberty Fund, 1999).
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Just Rules, Agreed-on Rules, and Just Conduct
The central argument in the previous section was that justice among rules is simply a case of justice within rules once removed. By implication, justice among meta-rules is a matter of justice within meta-meta-rules, and so on. In this sense, justice within rules becomes the paradigmatic case. Any appeal to considerations of justice in an interaction is an appeal to agreements made with respect to that interaction or to agreements made with respect to the rules under which that interaction takes place.
This line of reasoning requires us to clarify the distinction between rules that are “just” in the sense defined (that is, rules that emerge from voluntarily agreed-on procedures for determining rules) and rules that are agreed on. We must also point out that our paradigmatic notion of just conduct, or justice within the rules, entails an extension of our definition of just conduct to include conduct that is obedient both to agreed-on rules and to just rules, as defined.
To amplify what is at stake here, we shall offer a simple example. A tennis match of some significance is in its fifth and final set. Individual A is leading 5-4, and B is to serve. Suddenly, the umpire announces a change in the rules: The net is to be raised one foot. Could not B legitimately complain that this rule change is “unjust,” that he does not deserve to be treated in this way? or that A does not deserve an unanticipated advantage? Following the reasoning set out in the previous two sections, it would indeed seem that A and B are being treated unjustly. The rules to which they tacitly agreed when they decided to participate have been changed. They have not implicitly promised to obey the new rule, so they cannot be accused of unjust behavior if they violate it. On the contrary, the rule to which A implicitly agreed has been violated in A’s favor: B has been treated unjustly.
Yet such a conclusion may well be premature. We must ask whether the rule change in question has been made in accordance with the recognized meta-rules. Suppose, for example, that a properly constituted body, say, the World Tennis Federation, has decided to raise the net in the game of tennis by appropriate adherence to its own rules of procedure. To take the simplest case, suppose that the decision is made some time in advance and is to take effect at midnight on New Year’s Eve, 1985, and that the match between A and B is the final of the 1985 Australian Tennis Championship, held under World Tennis Federation rules and occurring on New Year’s Eve. The match has taken rather longer than expected, and at 4-5 in the fifth set with B to serve, midnight strikes. In this case, since A and B were aware of the prospective rule change and the possibility that the match would last until midnight, both A and B can reasonably be held to be bound by the new rules.
If, however, the World Tennis Federation did not announce the rule change in advance and the umpire was simply notified by cable of the rule change at midnight, then neither A nor B could be construed to be bound by the new rule by virtue of direct implicit agreement. But if the federation’s actions were procedurally “just”—that is, obedient to agreed-on meta-rules governing its behavior in determining the rules—then the rule change would not be a violation of justice. The prevailing meta-rules would have been faithfully applied. The point here is that A and B are to be seen as tacitly accepting not just the rules of the game but also the meta-rules—indeed, a whole sequence of rules of various degrees of abstraction. The mere existence of such meta-rules testifies to the prospect that rules may be changed, and any change obedient to these meta-rules is presumptively just. The prospect of rule change is something that players agree to face, much like changes in the weather. Unlike changes in the weather, however, rule changes are the result of human activity and hence come under the scrutiny of “justice.” The question at issue is whether rule makers, in changing the rules, violate legitimate expectations, and the answer is that they do not, provided that they follow the relevant meta-rules. The requirement that no rule change ever occur is one possible meta-rule, but if it is not the prevailing meta-rule a blind following of the meta-rule forbidding rule change would be unjust. If, for example, the umpire refused to alter the height of the net, in spite of a clear specification in the meta-rules that he do so, B would receive an undeserved advantage and A would lose an advantage he did not deserve to lose.
This is a matter of some account in political-economic contexts. Consider the case in which government action creates change in the income of a specified group by means of some regulation restricting entry into a particular industry. Now suppose that after a time government removes such protective regulation. Individuals will lose income, and the individuals who lose will not necessarily be those who gained in the first place. Those who purchase New York taxi medallions and stand to lose if the number of medallions is increased are not necessarily those who benefited from the introduction of medallions. The case is sometimes made in this connection that the government action is “unjust,” either in removing the regulation or perhaps in introducing the regulation in the first place. Similarly, the charge is occasionally made that when governments do pay compensation to the victims of policy changes, such action is unjust to taxpayers who must foot the bill.
In the justice within rules perspective, however, none of these claims is necessarily valid. Provided that government action in each case is itself obedient to the prevailing and accepted rules governing public-sector conduct, there is no violation of precepts of justice. As a matter of fact, modern political arrangements seem to be such that those who allocate public revenues can allocate them more or less as they choose or as political considerations suggest, in which case, the government simply cannot in such contexts violate principles of justice. To argue that government action is unjust is to claim that it violates agreed-on rules of public conduct. That is simply the way arguments about justice must properly proceed.
Now, it may be that the rules are unclear, as they often are in social contexts. There is some question, for example, as to whether regulation may in some situations amount to a “taking” and hence violate existing constitutional rules. There is also some question as to whether judicial interpretation may, in some cases, amount to a change in the rules and, in this sense, raise the issue of what role the courts properly exercise in the whole institutional order. Furthermore, certain rules may overlap with others at the same level of abstraction and indicate rather different behavioral restrictions. In all such cases, justice requires clarification of the rules and reconciliation of ambiguities. One major clarification along these lines involves the recognition of the level of abstraction at which agreement is to be applied. But the grammar of arguments about justice at least seems clear.
One other possible ambiguity should be addressed. What are we to make of the status of agreements made outside the structure of rules? Clearly, when the set of individuals party to the agreement includes all the individuals who compose the political order, such agreements cannot conceivably violate precepts of justice. But when these sets of people are different, such agreements may be unjust. That is to say, the agreed-on rule structure may preclude certain sorts of agreements.
It is important to make this point in order to clarify the status of simple two-person market exchange in our conception. The parties to that exchange agree voluntarily to its terms. If one party subsequently fails to live up to those terms, he is presumptively acting unjustly toward the other party. But this presumption of unjust conduct can only be that—for it may be that the more inclusive set of constitutional rules explicitly precludes small-number voluntary transactions of various sorts or otherwise establishes obligations that conflict with those imposed in small-number transactions. Consider, for example, the case in which the firms in an industry form a cartel by means of an agreement, voluntarily entered into, the object of which is to restrict entry into the industry, reduce output, and raise prices. Suppose, now, that one of the parties to that agreement reneges on the terms, cuts prices, and makes substantial profits at the other firms’ expense. Is that cartel breaker acting “unjustly” with respect to other firms in the industry? Surely yes. Yet in doing so, the firm is also ceasing to act unjustly with respect to consumers of the firm’s product, if the more inclusive set of constitutional rules constrains restrictions on cartel deals. Considerations of justice here conflict, precisely as they would if A made separate agreements with B and C that for unexpected reasons turned out to be in conflict. But whereas in the case of ordinary agreements that conflict, considerations of justice do not indicate which agreement should be decisive, there is a distinct presumption in the cartel case that the constitutional rules should be decisive. In this sense, some amplification of Hobbes’s characterization is in order. Although it remains true that “whatsoever the gamesters all agree on is injustice to none of them” (emphasis added), this does not rule out the possibility that the gamesters are acting “unjustly” in a more global sense. Whether or not that is so will depend, however, on the same basic principle—namely, whether the gamesters have prior, more inclusive agreements with other agents that are, or ought to be, overriding.