Commentary

The Egyptian Judiciary Blazing the Path to Democracy and Economic Development

This article appeared in Al-Ghad on May 29, 2006.

The world is watching Egypt. It holds the key to the flourishing of the Arabs. For the Egyptian protestors are marching for one of the most precious elements of good government, of democracy, of freedom, and of prosperity: an independent judiciary.

The protestors understand quite clearly that an independent judiciary is necessary for free elections, to ensure that the law is followed, but it is more than that: an independent judiciary is the linchpin of a flourishing and free society and economy. Law must be predictable for it to provide social order. And it must be perceived to be fair to induce people to cooperate. It’s widely understood that even a good person should not be a judge in his own case; it’s even more important that the people who make the laws should not be the ones to judge how they are applied in particular cases, especially when their own interests are involved.

Impartial and independent judges are necessary for both democracy and free markets. The famous economist Mancur Olson, who devoted a lifetime to understanding how and why some societies flourish while others fail, identified the independence of the court system as the key, for “the same court system, independent judiciary, and respect for law and individual rights that are needed for a lasting democracy are also required for security of property and contract rights.”

Democracy is not just the realization of some mystical “will of the majority,” but a system that requires limits on behavior, such as respecting election results, respecting the rights of all to express their views freely, and respecting the rights of normal citizens. And all of those require an independent legal body that can limit the power of the legislative and the executive powers, especially in cases such as Egypt, where the executive holds almost all the reins of power in its hands.

Autocrats cannot be trusted to enforce the laws fairly or — just as importantly — to apply the laws to themselves, because there is no independent power to make them comply. Because of that, they cannot make credible commitments. As Olson pointed out in his last book, Power and Prosperity, a pure autocrat, an unlimited sovereign, has no incentive to respect his own promises: “the promise of an autocrat is not enforceable by an independent judiciary or any other independent source of power — by definition autocrats can overrule all other power sources. Due to this situation and the obvious possibility that a dictator could come to take a short-term view, the promises of an autocrat are never completely credible.”

That leads to the problem that Nobel Prize winning economist Edward Prescott has named “time inconsistency,” in which a ruler makes a commitment at time A, such as not to confiscate the property of people who invest in long-term development projects (for example, a factory), but finds at time B that he has no incentive to respect his earlier promise after the investment has been made. Since at time B the investment has already been made, the autocrat’s incentive is to confiscate it. Because of that time inconsistency, no one can trust the autocrat, and no one makes the investment. Everyone suffers as a consequence.

So without an independent judiciary, the government’s promises are not credible and no one can trust the government not to go back on promises to respect rights. And when the judiciary is controlled by self-interested politicians, the promises of citizens when they make contracts among themselves are also rendered less credible, because the parties to a contract can’t be sure that they’ll get a fair hearing in the event of a dispute. Fair adjudication of disputes matters greatly for the success of an economy. It’s long been known that the most successful economies are those that produce goods and services that require long-term planning, which in turn requires a great deal of trust and realistic expectations that long-term deals will be respected.

Egypt has not always been an autocracy. The country has a noble and proud tradition and a history of democracy, of parliamentary government, and of a well-trained and professional judiciary. That judiciary has been under attack for many years. And it has, to the credit of the Egyptian nation, fought back. In 1968 judges demanded greater safeguards of their independence, and over 100 were dismissed. And now a new generation of judges is protesting the silencing of some of their members for speaking out about corruption and election-rigging.

An independent judiciary is central to the reform process in any country, in any part of the world. There is not only no democracy without an independent judiciary; there is no impartial justice, and without impartial justice, there is no long-term investment and no economic development. In many ways, the future of Egypt and of all the Arab people is at stake in the struggle over judicial independence.

Dr. Tom G. Palmer is Senior Fellow at the Cato Institute. He received his doctorate in political science from Oxford University.