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LEGAL THEORY
ON STARE DECISIS
Roscoe Pound (1941). ‘What of Stare Decisis?’ Fordham Law Review, Vol. X, No. 1, pp.
1-13.
What of stare decisis indeed?
This paper is an attempt to summarize what Dean Roscoe Pound of the Harvard
Law School has to teach us about the doctrine of stare decisis in an essay that he
published in the Fordham Law Review in 1941.
The concept of stare decisis is interesting for a number of reasons. Let me mention a
few.
It explains the basic assumption on which cases are decided in the common law.
The concept of stare decisis is also interesting because it is a defence against all forms
of political and judicial absolutism.
In other words, while the legal system must incorporate change, it must also ensure
that there is continuity between the past, present, and the future.
Stare decisis is the legal mechanism that makes this possible.
That is why it is not possible to have a legal system in which every case is a chance to
re-invent the fire and the wheel of legal reasoning on a case-by-case basis.
So it is not a case as such that matters in the context of legal reasoning; it is the
family resemblance between cases that helps judges to resolve cases.
Besides, the behaviour of judges and the legal system must be ‘reckonable’ to at least
some extent.
If that were not the case, law-abiding citizens will not be able to arrange their
business and personal affairs in any economy.

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When Pound wrote this essay in 1941, there was a crying need for change. That
prompted him to say that ‘the thought of today is as intolerant of limited
governmental power as that of the last century was of absolute power.’
What then should be the scope of stare decisis?
How much should change and how much should stay the same in any given
generation of legal reasoning and conflict resolution?
There have been a number of attempts to confine judicial interventions to ‘fixed
rules’ though this has not succeeded.
The judiciary has always broken through these constraints in the form of rules
because stare decisis does not function in a reductive way.
While there are family resemblances between cases, it still takes a seasoned judicial
mind to determine that to be the case. Besides, as the growing literature on stare
decisis attests, there are a number of conceptual dimensions to its application in
practice.
That is why a simple mechanical approach will not suffice.
The controversies around the concept of stare decisis are analogous to the analytic
distinction between rules and discretion in the determination of key interest rates by
central banks.
There are those who believe that central banking is reducible – or ought to be
reducible to simple rules (like the Taylor Rule) - and that the monetary authorities
should do away with discretion altogether.
This approach stems not only from the assumption that monetary policy can become
a science, but also from the fear of political interference in the context of monetary
policy interventions.
If the authorities do away with discretionary interventions in their entirety, then, the
monetary fantasy is that it might be possible to fly the economy on auto-pilot.
But this fantasy eludes the monetary authorities given that the economy is prone to
crises which demands that they go beyond the traditional approaches to monetary
policy and adopt unconventional approaches.
Given that economics is more of an exact science than the law and that economics is
used to explain the law rather than vice-versa, it is hard to believe that the concept of
stare decisis is reducible to simple rules.

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Those who are against a discretionary approach in law and economics are haunted
by the possibility that the authorities will seek to usurp more power than is
rightfully theirs.
What is not understood is that unconventional monetary policy in recent years was
based on the Federal Reserve’s emergency powers under Section 13(3) of the Federal
Reserve Act of 1913 and did not stem from the usurpation of legislative powers by
the Fed.
It is not, to reiterate, that the Federal Reserve usurped these powers; it is more a case
of the Fed having used its emergency powers for the first time as it did in the recent
crisis and then using its communications policy to explain and justify what it did.
What the history of the common law and monetary policy demonstrate is that it is
not possible to take a reductive approach to policy-based interventions though it is
tempting to believe that it should be possible to do so.
Though Pound does not include any reference to monetary policy in this paper, the
rules versus discretion problem is relevant in both law and economics.
That is why the Fed’s recent interventions have been described in the language of
monetary policy precedents.
What the Dodd-Frank Act of 2010 tried to do however was to ensure that many of
these interventions will not sediment into precedents for the future.
That is why the Fed will not be able to bail out banks in the next crisis like it was able
to do so in 2008.
Likewise, we find that legislatures are tempted to use the statutory mechanism to do
away with those legal precedents that they feel have sedimented into the common
law through their attempts at legal reform.
The justification for doing so was provided by the analytic school of jurisprudence.
It is important to remember that during the revolution, many American courts also
served as administrative agencies. It was only later that the difference between the
judicial and administrative function was recognized by the American people.
Even now, when courts assume an administrative function like they did in the
context of the school-busing cases, there is a lot of resistance from stakeholders.
Precedents, to summarize the argument so far, are not reducible to rules; they are
not necessarily ‘binding’ either. They have mainly a persuasive function in legal
reasoning.

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Furthermore, it is not the case that litigants know which of the precedents will be
applicable in any given case prima facie since the invocation of a precedent will have
to find the approval of the presiding judge in a given case.
The family resemblance between cases – however important – is not given, but has
to be actively sought for and demonstrated by the litigants during oral arguments.
That is why precedents cannot be defined reductively as simple rules.
The judge exercises his discretion when he applies his mind on whether or not a
given precedent is applicable in the context of a given case.
The main source of misunderstanding on the function of precedents, according to
Pound, is the fantasy that they are reducible to not only rules, but to the rule of
property or the rule of negligence.
As far as discretion is concerned, the courts have always understood the need to
define judge-made law as limited to filling in the gaps in the common law.
There is no question of doing away with statutes in their entirety. Justice Holmes
addressed this point explicitly when he pointed out that ‘judicial law making is
interstitial only.’
The reason that the judiciary is much more cautious in their approach is that judicial
decisions become precedents in a way that statutory legislation does not since
‘statutes make rules only for the cases within their purview.’
In other words, the unintended consequences of judicial decision making are more
in number than those that are caused by deviations or errors in statutory legislation.
Hence, Roscoe Pound concludes his essay by reminding us of what St. Paul said to
Timothy: ‘We know that a law is good if a man use it lawfully.’

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But a man can use it lawfully only if he has the discretionary power to do so
irrespective of whether he does so in law or economics.
SHIVA KUMAR SRINIVASAN