Economic Analysis Of The Law-abiding Behavior

As a basic link of the working system of the law, once law-abiding have some problem,the whole system can’t work well, and the foundation of a society under the rule of law alsocan’t be achieved. So, law-abiding is the basic requirement of a society under the rule of law.But, we can only find few papers about law-abiding, and on these papers, authors generallywant to show the necessity of the absolutely abiding by law through the ethic and moral way.But, there are always lots of illegal behavior in a society under the rule of law, thatcannot be explained by the traditional theory of the absolutely law-abiding. Following thistheory, the goverment must try its best to eradicate such illegal behavior, and a society underthe rule of law also should be a society absolutly law-abiding. So, the existence of these factsmust have other reasons which are not included by the traditional theory, namely theeconomic reasons. With limited resource, it’s impossible that the goverment put too muchlegislation and law enforcrment resource to pursuit too little income from the law-abiding inorder to ensure the subjects’ absolutly law-abiding, and it’s also impossible that the subjectsdon’t want to get higher illegal income with little risk, but abide by law.So, in this thesis the economic way has been selected to analysis the law-abidingbehavior of the subjects. Then, with the related economic model, the author indicate that,according to the economic laws, it’s impossible that the subjects are absolutely abiding by law,but do lots of illegal actions. What the govermwnt should pursue, is not the subjects’ absolutlyabiding by law, but the moderately abiding by law in accord with the principle of efficientlydeploying the resource.In the first chapter, the treatment about employee-employer relations of a special subjectwith lots of illegal behavior，enterprise A，has been selected as an illustration. With severaltypical case, such as the case about the compensation of Zhang’s work injury, the case of Su’sbeing covertly dismissed, and the case of the dispute about the minimum wage of theproduction line workers, the reason of the illegal behavior of the enterprise in these cases hasbeen analysed through economic way, and point out that the ultimate reason of the illegalbehavior is the enterprise’s consideration about the cost and income, law is only one of thefactors of this consideration. Even the case about the employment of a counselor, the ultimateobjective of the enterprise is not come from the law-abiding consideration, but the maximization of the enterprise’s profit. In some measure, the enterprise want to find aprofessional man to safeguard their profit from the illegal behavior. And the most importantfactors which have affected the selection of the law-abiding behavior, include the legislationdefects, the limited law enforcrment input, the adaptive process of the new law, and the greatdisparity in strength between the legal subjects.In succession, around these factors, the inevitability of the illegal behavior’s existencehas been demonstrate.First，the legislation defects. In the second chapter, through the linearity analysis of thenecessity existence of the legislation, demonstrate that, as under the principle of efficientallocation of resources, our society have to accept some legislation defects to a certain extent.Then, the legislation defects of the “Labor Contract Law” and the “Law on Mediation andArbitration of Labor Disputes” have been selected as examples to illustrate that the legislationdefects inevitably result in certain illegal behavior, so the existence of such illegal behaviordoesn’t violet the maximum social welfare principal.Second, the limited law enforcrment resources. In the third chapter, through the linearityanalysis of the effect as the law enforcement resources put into the law-abiding behavior,demonstrate that, with the limited resource, under the principle of efficient allocation ofresources, the law enforcement input should reach the moderation level of the law-abiding,with this level, the maximum social welfare can be achieved, but not the possible highestlevel, one hundred percent. In this instance, we can only choose the moderate lawenforcement input, which can achieve the moderate law-abiding level, and have to allow ofthe existence of large quantity of illegal acts. Then demonstrate that, in some special instance,such as the administrative law enforcement departments which have been predominanted bythe GDP supremacist, maybe allow the existence of larger quantity of such illegal acts,because they undervalue the social harm brought by the illegal acts which do not affect theincrease of the GDP.Third, the adaptive process of the new law. Because the new law’s enforcement directlybreaks the old pattern of the distribution of benefits, and the special effect of the new lawshould be testified by time, inevitably some subject will be suspicious and misconceive it.And in such instance, must result in many kinds of illegal acts during the adaptive process ofthe new law. In Chapter4, at the beginning, the neccesity of the existence of the adaptiveprocess of the new law has been illustrated through the linearity analysis, then the new “Labor Contract Law” has been selected as an illustration, the cause why its enforcement can bringthe enterprise into the illegal acts has been detailed analyzed, in order to prove that suchillegal acts are produced by the adaptive process of the new law. The same as the moderateexistence of the adaptive process of the new law is accord with the principle of efficientallocation of resources, the moderate existence of such illegal behavior is conforming with theprinciple of efficient allocation of resources, too.Forth，the game with deficiency of state influence. In Chapter5, this thesis points outthat, as the deficiency of state influence because of the limited resources, the patterns of thesubject’s acts are determined by the result of the game among the subject, other subjects ofthe same kind and vulnerable groups under legal protection. According to the free-rider theory,because of the cost advantage of the free-rider, it’s impossible that the enterprise don’t try itsbest to be the free-rider. According to the single-plank bridge theory model, as the greatdisparity in strength between the legal subjects, the weak being infringed often give up.Because of these factors, as the state influence is deficiency, in order to maximize their ownbenefits, the subjects will make illegal chioces, such as circumventing the law, even flagrantlyillegal behavior. In order to change the models of these games, state must input moreresources. Because of the limited state resources, the illegal acts that come from the games offree-rider and single-plank bridge has its space to exist.Fifth, the psychological effects of behavioral economic further strengthen the illegal actschoices. In Chapter6, some behavioral economic theories which are suit to analyze theenterprise’s illegal acts has been selected, such as the Extremeness Aversion Theory, theCertainty Effect Theory, the Reflection Effect Theory, the Case-based Decesions Theory andthe Endowment Effect under the Loss Aversion Theory. Through the above analysis, we cansee that, because of the great disparity in strength between the legal subjects, the greatdisparity will be further strengthed by a series of effects of behavioral economic during thedispute resolution process. Then, we can better explain, when state influence is deficiency,why the subjects make illegal choices to maximize their own benefits.According the above analysis, in Chapter7, this thesis proposes somecountermeasures to build a harmonious labor relations. At present, the most important reasonfor the unharmonious labor relations comes from the imperfection of the national rule of law.We can see the imperfection from four aspects, such as excessive legislation defects,inadequate law enforcement input, publicity of the law and the great disparity in strength between the legal subjects. So, we must continuously improve the legislative, increase the lawenforcement input, strengthen the publicity of the law, and unite the vulnerable groups to acertain extent. Then, we can achieve the ideal goals, such as the achieved legislative purpose,the harmonious labor relations, enterprises’ sustainable development, the maximum socialbenefits.Then, in Chapter8, according to the above economic analysis about the law-abidingbehavior when the enterprises deal with the labor relation, this thesis demonstrates the sixconditions necessity for the legal subjects’ good law-abiding behavior, namely, the law isaccord to the principle of efficiently deploying the resource, moderate law enforcement input,reduce the adaptive cost of the new law, the effective cost restriction between legal subjects,moderate market intervention, affordable relief proceedings.Finally，in the Conclusion, this thsis point out that, according to the above analysis,because of the limited resources of our society and the principal of the maximum socialbenefits, we can draw several different conclusions from the traditional absolute law-abidingtheory: First, also the most imprtant conclusion, the purpose of our society with limitedresources should be the moderate law-abiding, but not the absolut law-abiding required by thetraditional theory. Second, the standard of the good law, shoule be the law according to theprinciple of efficiently deploying the resource, but not the ideal perfect law according to theabsolut justice. Third, for the maximum social benefits, the principal of “strictly enforce law”,should be the law being moderately strictly enforcement, but not as strict as possible. Fourth,to the legal subjects, the most appropriate economic choice for their benefits, should also bethe moderate law-abiding, not the idea citizen absolutely abided by the law.