1.5 Legal and Political Systems of the World

The common-law tradition is unique to England, the United States, and former colonies of the British Empire. Although there are differences among common-law systems (e.g., most nations do not permit their judiciaries to declare legislative acts unconstitutional; some nations use the jury less frequently), all of them recognize the use of precedent in judicial cases, and none of them relies on the comprehensive, legislative codes that are prevalent in civil-law systems. Common-law systems also rest on basic rights to own and dispose of property, enforce consensual agreements, impose costs on those who would gain by fraud, and compensate innocent parties who are injured by others.

The main alternative to the common-law legal system was developed in Europe and is based on Roman and Napoleonic law. A civil-law A legal system in which core principles are adopted by statute into a referable system that serves as the primary source of law (as compared to the common-law system, in which judge-made law—not statute—plays a large role). or code-law system is one where all the legal rules are in one or more comprehensive legislative enactments. During Napoleon’s reign, a comprehensive book of laws—a code—was developed for all of France. The code covered criminal law, criminal procedure, noncriminal law and procedure, and commercial law. The rules of the code are still used today in France and in other continental European legal systems.

The codeA systematic and comprehensive written statement of statutory law addressing a certain legal topic (such as the Traffic Code). is used to resolve particular cases, usually by judges without a jury. Moreover, the judges are not required to follow the decisions of other courts in similar cases. As George Cameron, Emeritus Professor at the University of Michigan business school, puts it, “The law is in the code, not in the cases.” He goes on to note, “Where several cases all have interpreted a provision in a particular way, the French courts may feel bound to reach the same result in future cases, under the doctrine of jurisprudence constante. The major agency for growth and change, however, is the legislature, not the courts.”

Civil-law systems are used throughout Europe as well as in Central and South America. Some nations in Asia and Africa have also adopted codes based on European civil law. Germany, the Netherlands, Spain, France, and Portugal all had colonies outside of Europe, and many of these colonies adopted the legal practices that were imposed on them by colonial rule, much like the original thirteen states of the United States, which adopted English common-law practices.

There are also legal systems that differ significantly from the common-law and civil-law systems. The communist legal systems that remain (e.g., in China and North Korea) operate on very different assumptions than those of either English common law or European civil law. Islamic and other religion-based systems of law bring different values and assumptions to social and commercial relations. There is fear in some parts of the United States that, somehow, Sharia (the Islamic law championed by the Taliban or ISIS) will supplant our own legal traditions.

During the heyday of the Soviet Union and Mao’s China, legal scholars identified another legal tradition: socialist legal systems. The command economy approach of the Soviet and Chinese states meant that most types of property could not be owned. Socialist legal systems did keep many features of civil law, and law theorists in post-socialist states usually think of “socialist law” as a particular variant of the Romano-Germanic civil law. But in civil-law systems, as in common-law systems, considerable efforts are made to define how private property may be acquired, transferred, lost, or regulated; by contract, socialist law systems provide for most property to be owned by the government or by agricultural co-operatives.

In most socialist legal systems, the law is designed to support and promote socialist ideals and objectives that include public ownership of key industries, greater economic equality, social welfare programs for housing, education and health care, protection of workers’ rights, centralized planning, and state ownership of natural resources. Socialist systems can also embed some aspects of capitalism; China’s modernization was made possible by a relaxation of Mao Zedong’s strict communist ideology, starting with Deng Xioping in the 1980s. The People’s Republic of China has what might be called “private enterprises,” but they are largely state-owned, and often have members of the Chinese Communist Party on their boards.

These institutions work together to support democratic capitalism in the United States. It should be clear, however, that each institution is subject to changes in political and social sentiment, and significant shifts in the direction of democratic capitalism are entirely possible. Chief economics commentator Martin Wolf of the Financial Times is deeply concerned that the system as a whole is showing signs of significant weakness, and that to ensure a viable legal and economic environment, business must step up to support democratic capitalism.