TNAG-0531-FCO40-626-Application-of-International-Labour-Convention-to-Hong-Kong-1975 — Page 119

97

well-being has not increased even in a potential sense. It is curious, however, that these cases of negative change like depressions have historically been instrumental for generating widespread interest in the "compensatory justice" as demonstrated by unemployment compensations.

Economics, whatever its variety may be, allows no room for an organic view of society endowed with a sense of community. The economic system for the purposes of economic analysis is often co-extensive with the State in terms of territory, population and framework of ruless of economic behaviour.1 Just as the economy has no sense of community, the State constituted by legal stipulations has no sense of community either. The State as a specific legal and political construct cannot be expected to do everything that is good for individuals at its discretion. This then raises the question of how much of "compensatory justice" mentioned above the state should be responsible for, when a change that produces the issue of compensation is not completely under the control of the State. The more autonomous the economy is vis-à-vis the State, the less the State can claim the credit for the achievements of the economy or can be blamed for its failures. Thus the machinery cf "compensatory justice" must specifically be legislated for the State. An act to establish a social security administration is one of such legislative stipulations. Naturally, questions arise as to how much of compensation should flow through the state machinery, to what extent the State can commandeer society's resources for the stipulated purposes, how such commandeering should be done, etc. The operations of a market economy are largely autonomous of the State, and willingness to participate in the economic process implies consent to assume the risks that are normal ingredients of this process. Consent in turn implies claims to or responsibility for good or bad risks. In the case of bad risks, it would appear eminently desirable from the point of view of particular individuals that the State assumed the cost in full. But the State, being a body politic, must work through the political process to raise the resources to meet the cost. How much individuals want the State to cover the cost of risks is therefore politically inseparable from how much of resources they are willing to give to the State. The State-individual relationships cannot but be affected in different degrees by different ansvers to these questions. A common denominator that emerges from the political process is likely to fall far short of full compensation. This means that individuals and the State share in certain proportions the cost of total desired level of socio-economic security.

Once it is considered a state responsibility to compensate individuals, however modestly, for consequences of socio-economic hazards suffered by them through social security programmes, it is difficult for the State to avoid becoming conscious of the cost of such programnes. Efforts to reduce the frequency of socio- economic hazards directly before they hit certain individuals and thereby to reduce the cost of social security would be a natural course of evolution of cost- consciousness. These efforts include the legislations for standards of safety, health and discipline in sectors and places where hazards are likely to be most frequent. Eventually, legislative regulations of important aspects of human behaviour increasingly supplant forces of custom and community even in the homes of individual citizens, the legendary castles of men.

For example, a moment's reflection is enough to remind any average citizen of the USA what enormous variety of legal standards must be met in the daily routines of his home. These standards represent the hands of the state reaching deep into the erstwhile sanctity of the home and family. They include the location, size, structure and utilities of the dwelling unit, the rules of land use,

the standards of behaviour in operating

certain applicances like the automobile, the financial obligation for the security of visitors (by making the home owner legally liable for accidents of his guests within his premises), the standards of education for the children and for the degree of liberty allowed to parents for disciplining their own children or putting them to gainful employment, and last but not least, the legal definition of conjugal relations on which all the rights and duties of a family are based. In a modern society, these legislative regulations bearing upon safety, health and amenities are everywhere; in homes, factories, workshops, schools, offices, churches, streets, parks, fields and mountains. Social security alone can hardly aspire to make up for the consequences of all socio-economic hazards in the absence of such an extensive

1 HOW to incorporate the state and political processes into economic analysis has long troubled analytical economists. One recent example of facing this question, and a reasonably successful one, is James M. Buchanan and Gordon Tullock, The Calculus of Consent: __Logical Foundations of Constitutional Democracy (Ann Arbor, Michigan: University of Michigan Press, 1967).

E-1195-2E: 5