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Legal Drafting and the Defeat of Development Policy: The Experience of Anglophonic1 Southern Africa

  • Neva Makgetla and Robert B. Seidman

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In the early 1960's, when the winds of change began to blow freedom into southern Africa, the causes of Africa's poverty seemed obvious. Since the turn of the century, colonial regimes had systematically disinherited and disenfranchised the black majority. As a result, while the region enjoyed a wealth of natural resources and, in a number of areas, developed industries and infrastructure, the majority of the population lived at the edge of subsistence.

By the mid-1980's, only South Africa and Namibia still labored under minority or alien rule. Yet even where countries had shed colonialism twenty years earlier, most people endured poverty and powerlessness. Their leaders had come into government promising a radical redistribution of power and wealth. That did not occur. Instead, the region's economies remained largely stagnant and dependent on unstable foreign markets, and the distribution of income and political power remained highly skewed. Poverty and inequality continued because of the failure to use the legal order—that is, the laws and regulations and the behavior of the relevant implementing and law-making institutions—to transform economic and social relationships.

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1.

By Anglophonic, we do not of course mean that English was the dominant language. We use the term to refer to countries previously controlled by Britain, where English remains the official language for government business.

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1. By Anglophonic, we do not ot course mean that English was the dominant language. We use the term to refer to countries previously controlled by Britain, where English remains the official language for government business.

2. A number of hypotheses suggest themselves. Obviously, the crucial factor was the absence of a mass movement able to compel government to act in its interests. Various authors suggest that in this context: (1) the leaders used radical rhetoric only for political or symbolic purposes, see, e.g., Andre, , The Revolution That Lost its Way (1984), a nonfalsifiable proposition; (2) external constraints-international pressures from the major Western powers, South African destabilization and so forth—gave the leaders no real choice; (3) the “international capitalist system” forced the leaders to conform, see, e.g., Williams, , The Authoritarianism of African Legal Orders: A Review and Critique of Robert B. Seidman's The State, Law and Development, 5 Contemp. Crises 255 (1980); (4) educated at Harvard and Oxford or their equivalent, or—worse—hangovers from the colonial regime, the civil servants and especially the lawyers who in fact drafted the laws had no clue about what sorts of laws a radical economic policy demanded; (5) faced by the most elemental demand on government—that they keep the machine running—change had to become incremental and incremental change negated a radical change. We do not here purport to analyze or to prove or disprove any of these.

3. That perception is not universally accepted. Some argue that the legal order must reflect social phenomena, and so cannot change them, see, e.g., Williams, id.; others, that its effects remain too unpredictable, see, e.g., Griffiths, , Is Law Important?, 54 N.Y.U. L. Rev. 339 (1979); Kidder, , Connecting Law and Society, Ch. 6 (1983); or unrecognizable, see, e.g., Singer, , The Player and the Cards: Nihilism and Legal Theory, 94 Yale L.J. 1 (1984), van Gunstern, , The Quest for Control 8687 (1976), to elicit the desired changes in resource use.

4. For example, statutes creating public corporations, establishing a new department in a Ministry, or a new administrative tribunal. For a brief discussion of the considerations involved in deciding whether to establish a new implementing institution or to rely upon one already existing, see Seidman, , Drafting for the Rule of Law: Maintaining Legality in Developing Countries, 12 Yale J. Int'l L. 84, 114 (1987).

5. Id.

6. See, e.g., King, , Manual on Legislative Drafting 21 (Commonwealth Secretariat, 1978) (“The draftsman may often find it difficult to determine the appropriate penalties for the offences created in the Act and clear instructions on this point from the Ministry concerned are often lacking”); Thornton, , Legislative Drafting 288 (2d ed. 1979).

7. See, e.g., Davies, , Legislative Law and Process 191 (1986).

8. Political scientists concerned with policy-making in recent years have developed a literature on the issue of implementation of policy. Pressman and Wildavsky sum up its theme:

We have learned one important lesson from the EDA experience in Oakland [the subject-matter of their case study]: implementation should not be divorced from policy. There is no point in having good ideas if they cannot be carried out …. The great problem … is to make the difficulties of implementation a part of the formulation of policy. Implementation must not be conceived as a process that takes place after, and independent of, the design of policy.

Implementation 143 (1973); see also Bardach, , The Implementation Game: What Happens After a Bill Becomes a Law 2 (1977).

9. Heck, , Interessinjurizprudenz in Recht und Staat in Geschicht und Gegenwart (1933), reprinted and translated as The Jurisprudence of Interests (M.M. Schoch ed. & trans.); The Jurisprudence of Interests: Selected Writings of Max Rumelin et al. 29, 34 (1963) (“[T]he fundamental truth is that each command of the law determines a conflict of interests; it originates in a struggle between opposing interests, and represents as it were the resultant of these opposing forces …. It operates in a world full of competing interests, and, therefore, always works at the expense of some interests. This holds true without exception.”) In Zambia, for instance, the state could give priority to meeting foreign debt payments. To that end, it might use tax and other incentives to encourage investment in export industries. This course of action would appeal to Zambia's foreign creditors. Alternatively, the government could implement measures to direct the same resources to fund social services and increase production for domestic consumption. Such an approach would more likely appeal to the Zambian poor. Ineluctably, the same law gives different incentives and capacities to different groups in society. No law affects everyone equally. A law's capacity to change behavior varies with the group addressed.

10. In fact, we know precious little about the limits of law. In 1917, Roscoe Pound first called for their exploration (and coined the phrase) in The Limits of Effective Legal Action, 3 A.B.A.J. 55, 6263 (1917). In 1941, Malinowski wrote that “questions about the limits of legislative action, about its ability to create new types of man and types of culture are as practically cogent as they are theoretically illuminating.” Malinowski, , A New Instrument in the Interpretation of Law—Especially Primitive, 51 Yale L.J. 1237 (1941). He too called for a study of the issue. In the event, however, precious little research on that issue has emerged. But see, Jones, , The Efficacy of Law (1968); Lloyd-Bostock, , Explaining Compliance with Imposed Law, in The Imposition of Law 9 (Burman, and Harrell-Bond, eds. 1979); Evans, , Law as an Instrument of Social Change, in Applied Sociology—Opportunities and Problems 285 (Gouldner, and Miller, eds. 1965); Stjernquist, , How are Changes in Social Behaviour Developed by Means of Legislation?, in Legal Essays: A Tribute To Frede Castberg on the Occasion of His 70th Birthday, 4 07, 1963 (1963); Miers, and Page, , Legislation (1982); Seidman, , Why do People Obey the Law? The Case of Corruption in Developing Countries, 5 Brit. J.L. & Soc. 45 (1978); Seidman, , State, Law and Development 99 (1978).

11. Economists tend to view the central economic relationships through the lenses of two ideal types, expressed in more-or-less formalised models. They contrast the market, wholly shed of government intervention, with a state control that leaves no room for individual initiative. Neither prototype captures reality sufficiently to understand or induce particular decisions by role occupants. In the real world, whether in the U.S. or the Soviet Union, neither purely personal considerations nor the legal order ever entirely disappear. By utilizing a bipolar conceptualization, economic theorists often distract from the complex interaction between individual activity and state regulation that defines economic behavior—and which has led to the current situation in southern Africa.

12. See the article by Makgetla in this volume.

13. The definition of supply-side theory remains rather vague. We refer here to the dogma espoused by the IMF after the late 1970's, which: (1) explicitly distinguishes itself from the Keynesian stress on manipulating demand; (2) like supply-side theories in the U.S., focuses on how the government affects profitability; and (3) relies heavily on microeconomic models to support its macroeconomic beliefs. The school has also been termed the “new classical” school in macroeconomics.

14. See generally Makgetla and Seidman, The Suitability of Law and Economics for the Third World, forthcoming. The discussion here rests mainly upon the following: Posner, , Law and Economics (3d ed. 1986) (the standard textbook); Liebhafsky, , Price Theory as Jurisprudence: Law and Economics, Chicago Style, 10 J. Ec. Issues 23 (1976); Posner, , A Reply to Some Recent Criticisms of the Efficiency Theory of the Common Law, 9 Hofstra L. Rev. 775 (1981); Symposium on Efficiency as a Legal Concern, 8 Hofstra L. Rev. 483 (1980); Posner, , Some Uses and Abuses of Economics in Law, 46 U. Chi. L. Rev. 281 (1979); Leff, , Economic Analysis of Law: Some Realism about Nominalism, 60 Va. L. Rev. 451 (1974); Kennedy, , Cost-Benefit Analysis of Entitlement Programs: A Critique, 33 Stan. L. Rev. 387 (1981); Coleman, , Economics and the Law: A Critical Review of the Foundations of the Economic Approach to Law, Ethics 649 (1984); Markovits, , Duncan's Do Nots: Cost Benefit Analysis and the Determination of Legal Entitlements, 36 Stan. L. Rev. 1169 (1984); Posner, , Utilitarianism, Economics and Legal Theory, 8 J. Legal Stud. 103 (1979); Baker, , The Ideology of the Economic Analysis of Law, 5 Phil. & Pub. Affairs 3 (1975); Kronman, , Wealth Maximization as a Normative Principle, 9 J. Legal Stud. 227 (1980); Ellickson, , Of Coase and Cattle: Dispute Resolution Among Neighbors in Shashta County, 38 Stan. L. Rev. 623 (1986); Heller, , The Importance of Normative Decision-Making: The Limits of Legal Economics as a Basis for Liberal Jurisprudence—as Illustrated by the Regulation of Vacation Home Development, 1976 Wis. L. Rev. 385; Michelman, , A Comment on Some Uses and Abuses of Economics in Law, 46 U. Chi. L. Rev. 307 (1979); Calabresi, and Melamed, , Property Rules, Liability Rules and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089 (1972); Samuels, , The Coase Theorem and the Study of Law and Economics, 14 Nat. Res. J. 1 (1974).

15. See article by Makgetla in this volume for a more detailed discussion of supply-side economics as applied to the Third World, and South Africa in particular.

16. See IMF, Impact of External Environment and Domestic Policies on Economic Performance in Developing Countries, in World Economic Outlook, 04, 1985 (1985); World Bank, Industrialisation and Foreign Trade, in World Development Report 1987 (1987); Berg, E., World Bank, Accelerated Development in Sub-Saharan Africa (1982). Oddly enough, although in the 1970's the IMF lent far more to South Africa than to any independent African state, it did not feel called upon to condemn the much greater, repressive state intervention associated with apartheid.

17. Posner, supra note 14, at 230; Samuels, supra note 14, at 2 (“Property rights constrain the field of feasible outcomes, define the Pareto-domain, and govern the allocative outcomes' substantive composition.”).

18. Coase, , The Problem of Social Cost, 3 J.L. & Econ. 2 (1960).

19. This is, of course, a recurring theme in Posner's works, supra note 14.

20. In the vocabulary of law and economics, without transaction costs—i.e., when perfect competition exists. Perfect competition exists when: (1) the commodity dealt with is perfectly homogenous; (2) so many buyers and sellers exist that none has market power; (3) each seller and buyer has perfect information about prices and product quality; and (4) freedom of entry into and exit from the industry exists. Furthermore, all producers maximize profits. See Gregory, and Ruffin, , Principles of Microeconomics 183 (1986). Note that given the same assumptions, and particularly, perfect information, government allocation of resources could also be perfectly efficient. See Kennedy, supra note 14, at 400.

21. See Coase, supra note 18, at 2-8. Some authors interpret this to mean that even in situations of monopoly, free bargaining will lead to an efficient solution. See, e.g., Kitch, , The Intellectual Foundations of Law and Economics, 33 J. Legal Educ. 184, 190 (1983); Calabresi, , Transaction Costs, Resource Allocation and Liability Rules, 8 J. L. & Econ. 67 (1968); but see Farrell, , Information and the Coase Theorem, 1 Econ. Persp. 113 (1987).

22. The bald statement in the text ignores so-called wealth effects. Allocative decisions inevitably affect distribution of wealth; relative wealth affects the structure of demand. (Rules that favor the wealthy stimulate the yachting industry; those that favor the poor, the clothing and food industries.)

23. Buchanan, , Politics, Property and the Law: An Alternative Interpretation of Miller et al v. Schoene, 15 J. L. & Econ. 439 (1972). Buchanan's approach embodies “an explicit prejudice in favor of previously existing rights, not because this structure possesses some intrinsic ethical attributes, and not because change itself is undesirable, but for the much more elementary reason that only such a prejudice offers incentives for the emergence of voluntarily negotiated settlements among the parties themselves. Indirectly, therefore, this prejudice guarantees that the authority of the State is effectively minimized.”

24. See, e.g., Posner, , Utilitarianism, Economics and Legal Theory, 8 J. Legal Stud. 103, 110 (1979) (economic efficiency provides “an attractive and coherent basis for ethical judgmerits); Coleman, , Economics and the Law: A Critical Review of the Foundations of the Economic Approach to Law, Ethics 649, 658 (07, 1984) (the efficiency criterion amounts to a command to courts to devise solutions that mimic the solutions that a zero-transaction cost market with cooperative parties would have generated).

Law and economics shelter a fair variety of theorists under its tent. Compare Posner's position, supra, note 14 with Calabresi and Melemed, id. (welfare and equity claims on occasion may trump efficiency claims). See Note, , Efficiency and a Rule of “Free Contract”: A Critique of Two Models of Law and Economics, 97 Harv. L. Rev. 978 (1984). The latter variant resonates with the economic perspective that we denote as basic-needs. See infra, text accompanying note 40.

25. Stokey and Zeckhauser, policy analysts in the law and economics tradition, state: When contemplating action in any policy area, the first step is to determine whether and where there is a problem at all. In a market-oriented society, the question becomes: Is the market performing satisfactorily in this area, and if not, why not? …. It may be helpful to review the range of possible explanations for unsatisfactory market performance …:

1. Information is not shared costlessly among all prospective participants in the market.

2. Transaction costs significantly impede the conduct of beneficial trades.

3. The relevant markets do not exist.

4. Some of the participants in the market exercise market power.

5. Externalities are present, so that the actions of one individual … affect the welfare of another.

6. The commodity involved in the policy choice is a public good. Under any of these conditions, or if a compelling distributive objective will be served, government intervention may be appropriate.

Stokey, and Zeckhauser, , A Primer for Policy Analysis 215–16 (1978).

26. Buchanan, supra note 23.

27. See, e.g., Calabresi and Melamed, supra note 14.

28. See Samuels, , In Defense of a Positive Approach to Government as an Economic Variable, 15 J.L. & Econ. 453 (1972).

29. In this tradition, McCloskey criticizes economists, not for seeking theories of universal validity which can be applied generally without modification, but merely for failing to use all possible ways to find such supposed truths. He never questions that truths relevant to all economies exist. See McCloskey, , The Rhetoric of Economics (1987), especially chapter 1.

30. Makgetla, , Taxation in Zambia, app. 1 (1986) (copy on file, University of Zambia).

31. Hasan, Jyoti, Agricultural Development and Pricing Policy (M.A. thesis, University of Zambia, Lusaka, 1986).

32. Singer, The Reliance Interest in Property, Stan. L. Rev. forthcoming.

33. Cf. Galbraith, , The New Industrial State (1967); Berle, and Means, , The Modern Corporation and Private Property (1932).

34. Singer, supra note 32.

35. Stokey and Zeckhauser, supra note 25.

36. This notion goes back to Dicey, , Introduction to the Study of the Law of the Constitution 188 (10th ed. 1959). See generally Seidman, supra note 10, at 91.

37. See, e.g., Stroup, and Baden, , Externality, Property Rights, and the Management of Our National Forests, 16 J.L. & Econ. 303 (1973).

38. Smith, , Protecting Workers' Health and Safety, in Instead of Regulation 311 (Poole, ed. 1982) (“The most flexible method of achieving the necessary balancing of costs and benefits of occupational safety and health—if it functions properly—is the unregulated labor market. When employees are well-informed and have several alternative wage-danger offers from which to choose—and when employers are made to bear all the costs of added danger and receive all the benefits of reduced danger—the unregulated labor market can be counted on to allocate resources optimally.”).

39. See generally, ILO, Report on the World Employment Conference (1976); Meier, , Emerging from Poverty: The Economics that Really Matters (1984); Basic Needs and Development (Leipziger, ed. 1981).

40. See Seidman, and Gagne, , The State, Law and Development in Zimbabwe, 5 J. So. Afr. Aff. 149 (1980).

41. See, e.g., Seidman, and Seidman, , The Political Economy of Customary Law in the Former British Territories of Africa, 28 J. Afr. L. 44, 45 (1984).

42. ILO/JASPA, Zambia: Basic Needs in an Economy Under Pressure (1982).

43. The following four paragraphs draw heavily on Seidman, supra note 36, at 80, and Seidman, , Contract Law, the Free Market, and State Intervention: A Jurisprudential Perspective, 7 J. Econ. Issues 553 (1973).

44. Cohen, M.R., Law and the Social Order 69 (1933).

45. Quoted in Havighurst, , The Nature of Private Contract (1961).

46. This follows from the assumption that no firm exerts market power in perfect competition.

47. Lewis, , The Essentials of Economic Policy 272 (1966).

48. Seidman, A., The Distorted Growth of Import-Substitution Manufacturing: The Zambian Case, in Development in Zambia (Turok, ed. 1979); Bhagavan, , Zambia: Impact of Industrial Strategy on Regional Imbalance and Social Inequality (1979); Makgetla, N., Control in the Parastatal Sector in Zambia: Four Case Studies, (paper presented to Workshop on Parastatals and Economic Development in Zambia, Lusaka, Zambia, 05 1986).

49. See infra text accompanying note 76.

50. See infra text accompanying note 122.

51. See infra text accompanying note 137.

52. A. Seidman, supra note 48.

53. Galbraith, supra note 33; Davies, , Nationalisation, Socialisation and the Freedom Charter, 12 S. Afr. Lab. Bull. 1 (1987).

54. See, e.g., Renner, , Institutions of Private Law and Their Social Functions (Kahn-Freund, ed. & trans. 1949).

55. See the discussion of the market in Makgetla's article in this volume.

56. Seidman, , The Reception of English Law in Colonial Africa Revisited, E. Afr. L. Rev. 47 (1969).

57. Id.

58. Even law and economics scholars agree that until the law assigns entitlements, the market cannot exist. See supra note 17. They then rely upon the Coase Theorem to argue that the way entitlements fall makes no difference in the total social product. See supra text accompanying note 22.

59. Cf. Posner, supra note 14, at 16 (Newton's law of falling bodies “is unrealistic in its assumption that bodies fall in a vacuum, but is still a useful theory because it predicts with reasonable accuracy the behavior of a wide variety of falling bodies in the real world”); see generally Friedman, , The Methodology of Positive Economics, in Essays in Positive Economics 3 (1953); but cf. Caldwell, , Beyond Positivism: Economic Method in the 20th Century 179 (1982) (“Philosophers of science since the 1940's have been unanimous in their rejection of the notion that the only goal of science is prediction.”); see generally Schumpeter, , Science and Ideology, in The Philosophy of Economics (Hausman, ed. 1984).

60. Myrdal, G., Economic Theory and Underdeveloped Regions 49 (1967).

61. Samuels, supra note 28.

62. See Davies, supra note 53.

63. For convenience, we summarize (and to an extent caricature) these theories in this scheme.

64. As we said earlier, supra note 2, we do not here consider why, despite their socialist rhetoric, governments clung to these measures. Rather, this analysis shows how the existing legal order worked to maintain the power of a small elite in the economic sphere. On that basis, we can derive alternatives that tend to empower the disinherited. To arrive at concrete policy proposals, however, obviously much more detailed research seems needed. In effect, we end up with a policymaker's agenda for research.

65. See Hahlo, and Kahn, , The South African Legal System and its Background 566 (1968); Hoston, , Edwards, , Nathan, and Bosman, , Introduction to South African Law and Legal Theory 128 (1977).

66. Constitution, 1980, Art. 89 (Law to be administered by Zimbabwe's courts is the law in force in the Colony of Cape of Good Hope on 10th June 1891, as modified by subsequent legislation in Zimbabwe).

67. Botswana Independence Order, 1966 § 4.

68. Swaziland Independence Order, 1966 § 5.

69. Lesotho Independence Order, 1966 § 4.

70. Hahlo and Kahn, supra note 65, at 578-79.

71. Id. at 5.

72. Id.

73. Wille, , Principles of South African Law 22 (5th ed. 1968).

74. Lee, , An Introduction to Roman Dutch Law 121 (1953).

75. See, e.g., South Africa: Group Areas Act, 1950; Zimbabwe: Palmer, , The Agricultural History of Rhodesia, in The Roots of Rural Poverty in Southern Africa (Palmer, & Parsons, eds. 1979).

76. See generally Sampliner, , Zimbabwe's Land Resettlement Program: Lessons from Kenya and Algeria, 5 J. Int'l & Comp. L. 49 (1983).

77. A very few plots of land went to producer cooperatives.

78. See supra note 33.

79. See Seidman, A. and Makgetla, N., Outposts of Monopoly Capitalism: Southern Africa in the Changing Global Economy 59 (1980) (In 1977 in South Africa, public authorities and public corporations—i.e., parastatals—comprised between them 56.5% of total fixed capital stock).

80. See, e.g., South African Iron and Steel Industrial Corporation, Ltd. Act, 1979, (No. 60 of 1979) (an act “to promote the development of the iron and steel industry and allied mining and industrial activities ….”).

81. Makgetla, supra note 48; Seidman, A., Inaugural Lecture: A Development Strategy for Zimbabwe, 10 Zambesia 31 (University of Zimbabwe, 1982).

82. Seidman, A., An Explanation for the Distorted Growth of Import-Substitution Industry: The Zambian Case, J. Mod. Afr. Stud. (1974).

83. Dimock, , Government Corporations: A Focus of Policy and Administration, I, 43 Am. Pol. Sci. Rev. 913 (1949).

84. See, e.g., Seidman, H., The Theory of the Autonomous Public Corporation: A Critical Reappraisal, 12 Pub. Admin. Rev. 89, 93 (1952) (“the objective to be sought is not freedom from all governmental regulations and controls, but freedom from those which are unsuitable for a business operation and stifle operations.”).

85. See, e.g., Great Britain: Coal Industry Nationalisation Act 1946, 9 & 10 Geo. 6, ch. 59, § 3(1); Air Corporation Act, 1949, § 5; see generally Robson, , Nationalized Industry and Public Ownership 6062 (1960).

86. See, e.g., Zambia Airways Corporation Act, § 27 (Cap. 744).

87. See, e.g. Great Britain: Coal Industry Nationalisation Act 1946, 9 & 10 Geo. 6, ch. 59, § 1(4)(c).

88. See generally Gibson, , South African Mercantile and Company Law 294 (1966).

89. Robson, , Nationalized Industry and Public Ownership 4 (1960); Mason, , The Roles of Government in Economic Development, Am. Econ. Rev. 637, (papers and proceedings 1960); Jain, , Management of State Enterprises in India 44 (1967).

90. 43 Pari. Deb. H. C. (5th Ser.) 2018, quoted in Pozen, , The British Public Corporation in Ghana: Legal Transfers in the Third World 18 (J.S.D. dissertation, Yale Law School, 1973); Hailey, , African Survey, Revised 1956 1325 (1957), quoted in id. at 19.

91. Seidman, supra note 36, at 262-63.

92. See generally Government Enterprise: A Comparative Study (Friedmann, and Garner, eds. 1970).

93. See, e.g., Uganda: Lint Board Marketing Act, 1959 (Cap. 234), § 5(1).

94. See, e.g., Air Zimbabwe Corporation Act, 1968 (Cap. 253), § 23 (“It shall be the object of the Corporation so to exercise its functions and conduct its business as to ensure that all its income, taking one year with another, is not less than sufficient to enable the Corporation to meet the outgoings of the Corporation which are properly chargeable to revenue account ….”).

95. See, e.g., id. at § 7(c), (d); Zambia Airways Corporation Act, § 5 (cap. 744). Most African general incorporation statutes included the same qualifications. See, e.g., South Africa: Companies Act, 1973 (No. 61 of 1973), § 218.

96. See, e.g., Kehinde, , The Politics and Administration of Public Corporations in Nigeria, in Nigerian Administration and its Political Setting 95 (Addedji, ed. 1968); Turkson, , Ministerial Control of Public Corporations in Ghana, 11 U. Ghana L. Rev. 83 (1974); Ghana, , Report of the Committee of Enquiry into the State Furniture and Joinery Corporation (1968); Ghana, , Report of the Committee of Operation into the Manner of the Operation of the State Distilleries Corporation (1968).

97. For example, when the Zimbabwe Government acquired control over Rhobank, a private commercial bank that became Zimbank, it did so under the general private corporation laws.

98. See Temu, , The Economic Implications of Management Agreements in Tanzanian Parastatals, 5 E. Afr. L. Rev. 77 (1972); Carvalho, The Control of Managing Agents in Tanzanian Parastatal Organizations with Special Reference to the National Development Corporation, id. at 89.

99. Cohen, , The Distribution of Powers in a Company as a Matter of Law, 90 S. Afr. L.J. 262, 286 (1973). The quote refers to South African law, but the same applies in English common law. Automatic Self-Cleansing Filter Syndicate, Ltd. v. Cuninghame (1902) Ch. 34; Scott v. Scott, (1943) 1 All E.R. 582; see John Shaw & Sons (Salford) Ltd. v. Shaw (1935) 2 K.B. 113, 134.

100. See supra text accompanying note 99.

101. Many countries tried. Some countries created a National Development Corporation, which acted as a holding company for other parastatals, directing policy through nominal control over the subsidiaries' Boards of Directors. See, e.g., Mramba, and Mwansasu, , Management for Socialist Developoment in Tanzania: The Case of the National Development Corporation in Tanzania, 1 The Afr. Rev. 29 (1972); Grayson, , A Conglomerate in Africa: Public Sector Manufacturing Enterprises in Ghana, 19621971, 16 Afr. Stud. Rev. 315 (1973). Ghana tried a State Secretariat for parastatals: see Graba, , Problems Relating to Management and Control of Public Corporations in Ghana, 1 Greenhill J. of Admin. 100 (1974).

102. See Zimbabwe: Three Year Transitional Plan (1984); Zambia: Five Year Plan (1978).

103. Francis Nkhoma, speaking at Workshop on Parastatals and Economic Development in Lusaka, Zambia, May 1986.

104. Pozen, , Public Corporations in Ghana, 1972 Wis. L. Rev. 806.

105. Makgetla, supra note 48.

106. In the United States, for example, the Securities and Exchange Act requires extensive disclosures by corporations in connection with many securities questions. No such laws existed in any southern African state.

107. Christie, R., Business Law in Zimbabwe 416 (1985).

108. See generally Multinationals Beyond the Market: Intrafirm Trade and the Control of Transfer Pricing (Murray, ed. 1981).

109. See generally Brownsberger, , Development and Government Corruption—Materialism and Political Fragmentation in Nigeria, 21 J. Mod. Afr. Stud. 215 (1983); Ocran, , Law in Aid of Development (1978); Seidman, , Why do People Obey the Law? The Question of Corruption in Developing Countries, 5 Brit. J. L. & Soc. 45 (1978).

110. Berle and Means, supra note 33.

111. Seidman, supra note 36.

112. Seidman and Makgetla, supra note 79.

113. In southern Africa, moreover, both local and Western governments provided additional guarantees.

114. The same displacement, of course, can happen in nongovernmental borrowings. Since the arrival of the welfare state, however, municipal law usually has provided avenues of relief for over-extended debtors, at first in equity, then by way of bankruptcy and corporate reorganization laws.

115. Department of State Telegram No. 185216 (August, 1977), in Digest of U.S. Practice in International Contract Law (1977), quoted in Sornarajah, , The Myth of International Contract Law, 16 J. World Trade L. 187 (1981).

116. North-South: A Programme for Survival. The Report of the Independent Commission on International Development Issues Under the Chairmanship of Willy Brandt 193 (1980).

117. Friedmann, , Expropriation in International Law (1953); Brownlie, , Principles of Public International Law 548 (1979).

118. See, e.g., Zambia, , The Unemployment Act, 196 (ch. 512).

119. Zimbabwe: The National Labor Relations Act (1984).

120. See supra, note 117.

121. In part, the development of government interest in industry through parastatals led to this result. During the early independence years, when government had relatively little direct investment in productive enterprise, the government frequently sided with labor in conflicts between (black) labor and (white, expatriate) management. After acquiring an equity interest and joining management, government's interests changed its alignment.

122. Zimbabwe: The National Labour Relations Act (1984).

123. Zambia: Minimum Wages, Wages Councils & Conditions of Employment Act of 1948 (ch. 506).

124. In Zambia and Tanzania, the state did prevent entrepreneurs from laying off workers without government permission. (Zimbabwe sometimes reached the same result by ministerial jaw-boning.) Moreover, civil service jobs remained secure. These measures, however, functioned mainly as a sop to the trade unions and as a form of patronage. These governments did not seek to compel employers to use or motivate labor more effectively by using labor-intensive technologies or permitting greater participation in management. In Zambia, at a Workshop on Parastatals and Economic Development in May, 1986, a spokesman for Kafue Textiles proclaimed proudly that a new machine had reduced the need for two workers, while agreeing that nevertheless it would not lay anyone off.

125. Verbit, , International Monetary Reform and the Developing Countries: The Rule of Law Problem 163 (1975).

126. Id. at 250.

127. Ghana and Tanzania established parastatals to compete with private import-export trading companies. Zambia and Zimbabwe each established a state monopoly on mineral exports. On Zimbabwe, see Herbst, , State Power vs. the Multinationals: Mineral Marketing Policy in Zimbabwe, Political and Administrative Studies, Departments of Economics and Law, University of Zimbabwe (1987). Tanzania and Zambia each hired a Swiss company to investigate transfer pricing.

128. In Zimbabwe, Anglo-American had its own people sitting on the boards of directors of at least two of the three largest commercial banks.

129. On the problems of localization of the civil service, see generally ADU, The Civil Service in the New African States (1965); Kirk-Greene, , The Higher Public Service, in The Politics and Administration of Nigerian Government 213 (Blitz, ed. 1965); Bienen, , Kenya: The Politics of Participation and Control (1974); Nwosu, , The Politics of Development Administration: A Viewpoint (1974).

130. See generally Seidman, , Foreign Private Investors and the Host Country, 15 J. World Trade L. 637, 657 (1985); Ahorani, , The Foreign Investment Decision Process (1966); Taylor, , Industrial Tax Exemption in Puerto Rico (1947); Meier, , Legal-Economic Problems of Foreign Investments in Developing Countries, 33 U. Chi. L. Rev. 463, 478 (1966).

131. Ahorani, supra note 130, at 169.

132. See. e.g., Nwogugu, , The Legal Problems of Foreign Investment in Developing Countries (1965); Dempsey, , Foreign Investment Incentives in the Developing World: The Legislation of Greece, Egypt, Pakistan, Thailand, the Republic of China, 11 Case W. Res. J. Int'l L. 575 (1979); Wan, , A Comparative Study of Foreign Investment Laws in Taiwan and China, 11 Cal. W. Int'l L.J. 236 (1981); Snyder, , Protection of Foreign Investment, Examination and Appraisal, 10 Int'l & Comp. L.Q. 469, 469–70 (1961); Mummery, , The Protection of International Foreign Investment (1968); Ryan, , Investment Contracts in Developing Countries, Austl. Y.B. Int'l L. 91 (19701973); Meier, , Legal-economic Problems of Foreign Investments in Developing Countries, 33 U. Chi. L. Rev. 463 (1966).

133. See Seidman, supra note 130.

134. See, e.g., Liberia, Investment Incentive Code, 1966, in Int'l Centre for Settlement of Investment Disputes, Investment Laws of the World: The Developing Nations (looseleaf, n.d.); Dempsey, supra note 132 (Greece); Megwa, in The Politics and Administration of Nigerian Government, supra note 129.

135. See generally Seidman, supra note 130, at 647.

136. See generally id. at 658.

137. See A. Seidman, supra note 81.

138. Hayek, , The Road to Serfdom (1944); Hayek, , The Constitution of Liberty (1960); see Ocran, supra note 109, at 57.

139. See Waterston, , Development Planning: Lessons of Experience 380 (1965).

140. See generally id.; Seidman, A., Development Planning and the Legal Order in Black Anglophonic Africa, 14 Stud. Comp. Int'l Dev. 3 (1974); Bessanov, , Economic Planning in the Developing Countries of Africa (1974).

141. Bessanov, id. at 69 (“The planned development of the economy becomes … possible and necessary only in socialism where all basic forces of production are in the hands of the state which intervenes in the name of society and its interests, as its principal governing agent, or in the hands of the cooperative associations of producers whose activity is also regulated and directed by the national state.”).

142. Id.

143. Svendsen, , Decision-Making in the National Development Corporation, ERB (Restricted) Paper 68.4 (Dar es Salaam: Economic Research Bureau, University College, 1968), reprinted in Socialism in Tanzania 89 (Cliffe, and Saul, eds. 1973).

144. See, e.g., Zambia: Industrial Development Act, 1977 (no. 18 of 1977).

145. See, e.g., Ghana: Capital Investments Decree, 1973.

146. See Seidman, supra note 130, at 648-49.

147. See A. Seidman, supra note 82.

148. See A. Seidman, supra note 141.

1. By Anglophonic, we do not of course mean that English was the dominant language. We use the term to refer to countries previously controlled by Britain, where English remains the official language for government business.

* Assistant Professor of Economics, University of Redlands, Redlands, California.

** Professor of Law and Political Science, Boston University School of Law, Boston, Massachusetts. For valuable comments, we are indebted to Professors Ann Seidman, Avi Soifer, Joseph Brodley, and the members of the Boston University School of Law Thursday Luncheon Faculty Seminar, and, for research assistance, to Peter Trotter and Maureen Rogers.

Legal Drafting and the Defeat of Development Policy: The Experience of Anglophonic1 Southern Africa

  • Neva Makgetla and Robert B. Seidman

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