The Rule Of Law

Political programs live or die by the quality of their execution. Pro-growth fiscal policy, industrial policies, or controlled immigration strategies remain theoretical until they are translated into concrete measures – a step that must respect important principles.

Specifically, the legitimacy and, ultimately, the effectiveness of government policies depend on whether their implementation adheres to what legal philosophy calls the ‘Rule of Law.’

According to this concept, individuals in positions of authority are required to exercise their power consistently with well-established public norms, rather than arbitrarily and peremptorily. In return, citizens are bound to respect and comply with the legal framework.

The lineage of the Rule of Law stretches from the Magna Carta (1215) to John Locke’s ‘Two Treatises of Government’ (1689) and Montesquieu’s ‘The Spirit of the Laws’ (1748).

A modern theory was presented by Lon Fuller in ‘The Morality of Law’ (1964). In his work, the American philosopher outlined eight formal principles of legitimacy that must be satisfied for a law to meet the condition of ‘inner morality.’

Mr. Fuller argued that a law must be (i) generally and equally applicable to individuals, (ii) widely accessible in the public domain, and (iii) prospective (i.e., applying only to future behavior). Furthermore, it must be (iv) intelligible, (v) coherent with the prevailing legal system, and (vi) demand only what is practicable, thereby making compliance possible. Finally, a law must be (vii) stable to facilitate decision-making and (viii) applied and enforced in a manner consistent with its written status.

Where the legitimacy test fails, legal authority risks dissolving into coercion. Under these circumstances, the ‘bond of reciprocity,’ which represents the mutual obligation and constraint between the ruler and the citizen, weakens, leading to social disturbances.

Fuller’s principles are not confined to the public domain. I would argue that corporate policies must be subject to the same legitimacy standards, whether they relate to recruitment (e.g., publicity), performance management (e.g., stability), compensation (e.g., consistency in application), permissible client interactions (e.g., intelligibility), or know-your-client procedures (e.g., practicality), to cite only a few examples.

A persistent failure of corporate policies to comply with Mr. Fuller’s eight principles would challenge employees’ perception of fairness, which is referred to as ‘organizational justice’ in management literature. Such dynamics lead to the erosion of trust, negative attitudes, and lower productivity.

To avoid these pitfalls, firms can explicitly follow the Rule of Law when formulating their policies and implement regular audits to test the alignment of their existing policies with legitimacy principles.

Organizational justice and fairness are not philanthropy. They are a source of productivity, a quiet lever on the path to durable greatness. They strengthen the vital bond of reciprocity between the firm and its employees, fostering an environment in which engagement drives superior performance.