Rule of Law Protects Rights and not Interests
Jan 24-2021
It’s widely agreed that China needs innovation and the rule of law and that the former is inseparable from the latter. Yet to Prof. Zhang Weiying of the NSD, many people still have incorrect or even misplaced understanding of the relationship between the two. He spoke on the National Development Forum on December 20th, 2020.
One typical example is the saying that the law protects the interests of consumers, investors, or employees. Such notions are misleading, for strictly speaking interests are not subject to protection. Protecting interests not only contradicts market competition but also hinders innovation and blunts economic growth.
Juristically, the rule of law can only protect rights, which are not the privilege of a few people but something equally and compatibly enjoyed by everyone. It’s politics that protects interests for politics in essence seeks the balance of interests.
Rights are significant because they affect the interests of the people concerned. But it’s important not to confound rights with interests. Only rights-based interests are subject to and deserve protection.
Rights are the categorical imperative in the Kantian philosophy and as such are universal in nature. The categorical imperative is similar to one of the Confucian principles: Treat others the same way as you’d like to be treated. To ensure impartiality for all, Adam Smith referred to a ‘just observer’ and John Rawls used the classical metaphor ‘the veil of ignorance’. Rights are also equal: businesses have the equal right to offer products and services while consumers have the right of freedom of choice.
Whether the law protects rights or interests largely determines a country’s capability of innovation and pace of progress. The trajectories of France and the UK in the 18th-19th century are a case in point. Though France was the birthplace of a wide range of technologies, its growth was stifled by powerful guilds that won the support of officials to protect vested interests by making impossible the adoption of new textile technologies. The UK, by contrast, prioritized rights over interests and went as far as abolishing the 250-year-old Statute of Artifiers in 1814. However, the UK had a reverse of fate during the second industrial revolution when it kowtowed to vested interests and became hostile to new technologies.
Prof. Zhang continued to say that no industries should be off-limit to innovation, which grows out of an eco-system and not planning. Some entrepreneurs might just conduct arbitrage activities, which in itself offers innovation opportunities for other entrepreneurs. It would be naïve to postulate that banning real estate would lead to the emergence of high tech, or forsaking the internet would divert everyone to work on new materials.
For entrepreneurs, innovation is about solving concrete problems, especially technical ones. But the beautiful thing is that the consequences are hard to predict – some might end up changing the world.
