The Brazilian procuracy is a single, unitary organization, and its prosecutors repeatedly describe the agency and themselves as pursuing a unified mission, namely ‘to enforce the law’. And yet, beneath this veneer of unity and homogeneity lies two organizations that follow different organizing logics and pursue different ambitions. One of these organizations is composed of prosecutors who embrace a cautious, formulaic, ritualistic and reactive case-processing approach. These individuals work primarily in their offices responding to cases as they arrive from other law enforcement agencies, and their main concern is to manage the case flow. In fact, this attitude is typical of many procuracies and street-level bureaucracies around the world. Intertwined with it one finds another organization composed of prosecutors who firmly believe that they should use their professional status, public legitimacy, and legal powers to engage in root-cause analysis and effective problem-solving. These individuals find time within their busy routines to leave their offices, engage with NGOs, social movements, labor unions, university researchers, and a variety of other social actors, and openly and purposefully search for (but not always find) viable solutions to complicated problems of regulatory compliance.
Although the existing empirical research literature on the organization of public institutions does not emphasize this kind of plurality within a single agency, theoretical models have anticipated this dialectical entwining. March (1991) referred to formalistic implementation as exploitation of old certainties (he also called it “refinement, choice, production, efficiency, selection, implementation, and execution”). And he described the second, more inquisitive model as exploration of new possibilities (he also called it “search, variation, risk taking, experimentation, play, flexibility, discovery, and innovation”). Using systems dynamics, Repenning and Stearman (2001) modeled these same practices and labeled them respectively the “work-harder” and “work-smarter” loops of the system.
In March’s words (1991) “both exploration and exploitation are essential for organizations, but they compete for scarce resources.” This is undoubtedly true for the Brazilian Ministério Público. While representatives from these two factions show a unified external face, they also fight with passion in a variety of internal settings. This competition shines through even in the vocabulary that they use to refer to themselves. The advocates of a proactive and innovative approach regularly claim to be ‘good’ or ‘real’ prosecutors, and say of colleagues that do not espouse their principles and preferences as ‘office-bound’ or ‘public-servant’ prosecutors. In practice, representatives from these two groups try to reshape the overarching organization – its structures, policies, incentives, and constraints – in a way that favors their preferred mode of action.
And yet, perhaps even more striking that the competition between these two factions is the fact that these two logics tacitly support each other and the organization as a whole is better off by having both. When Repenning and Stearman (2001) modeled the two loops, which they called ‘work harder’ and ‘work smarter’, they suggested that they are self-reinforcing but exclusive. In other words, according to their model, organizations follow one of the two modes, and it is difficult to change from one to the other. March (1991), on the other hand, suggests that organizations are better off by having a balance of the two. The first mode of action, which he calls exploitation, allows for optimization of practices and short-term, immediate and certain benefits. However, it may lock the organization in suboptimal practices and outdated routines. The second mode of action, which March calls exploration, exposes the organization to higher risks, as it incurs all the costs associated with experimentation without its benefits. Results are uncertain but perhaps more obtainable in the long-run.
As stated by March (1991), “maintaining an appropriate balance between exploration and exploitation is a primary factor in system survival and prosperity.” The present study of the Brazilian Ministerio Publico advances this theoretical model by providing both an empirically-based description of these two loops – and the types of enforcement action that each engenders – within a regulatory bureaucracy, and greater specification of what ‘exploration’ or ‘work-smarter’ might consist. Specifically, it suggests that when enforcement agents see their work and themselves as links in a complex web of interactions and processes rather than as offices of delimited responsibilities and interests, they produce recognizably different kinds of regulation. Whether one calls this ‘stitching it together’, as the Brazilian prosecutors do, relational regulation (Silbey 2009) or ‘sociological citizenship’ (Silbey, Huising and Coslovsky 2008), the fact of the matter is that these agents are reorganizing their work and effort, building networks of interested others, and harnessing those relationships in the service of their public mandate.
5 – CONCLUSIONS This dissertation stems from a simple question: how do Brazilian prosecutors enforce labor and environmental laws? This query would not be interesting if prosecutors did not face a serious dilemma. On one side, it is part of the prosecutors’ job to confront a wide array of violations. For instance, some firms within their jurisdictions may pollute too much, others may engage in illegal deforestation, and some may employ machines that are unsafe for workers or rely on child labor. The list of violations can be endless, but the problem of compliance with protective regulations often boils down to a matter of costs. As stated by the manager of a private firm: “these things are expensive; if I comply I will be unable to compete.”
Many of these firms operate in poor areas and employ people that desperately need their jobs. By stating the problem of compliance as a trade-off, private firms return the problem to the prosecutor. Forced to choose between compliance and competitiveness, what do they do? This dissertation examines this question at two levels. First, it examines the prosecutor-in-action, i.e. how individual prosecutors, in practice, try to overcome this seemingly inescapable trade-off between compliance and competitiveness. To this end, it examines four concrete cases – the production of granite tiles, farmed shrimp, charcoal for pig-iron, and sugarcane – in which Brazilian prosecutors have struggled over the proper way to enforce protective regulations. Then, it uses the advances and setbacks in compliance and competitiveness in each of these cases to identify a pattern of prosecutorial action that has not been identified or described before. Appropriating an expression sometimes used by prosecutors themselves, I call this mode of action “to stitch solutions together”.
And second, this dissertation examines the organization that hosts and enables this type of action. Many people, including prosecutors, attribute this type of proactive, creative, and results-oriented behavior to personal proclivities of the individuals in charge. Supposedly, some people are so committed, so enthusiastic, so devoted to a mission, that they will do whatever it takes to get things done independent on surrounding conditions and other intervening variables. These critics dismiss the importance of organizations – the formal and informal structures, policies, pressures, incentives, and constraints – that make certain actions easier to perform while others become difficult. Of course, ceteris paribus, the former is bound to prevail, and anyone interested in understanding how individuals within an organization behave must pay attention to these features that are so easily – but erroneously – dismissed.
There is a sizeable academic literature devoted to studying styles of regulatory enforcement, corporate social responsibility, and the reasons why some firms comply or even go beyond compliance. This literature identifies a number of styles and variables that determine compliance. Many of these concepts overlap, and one who summarizes this diverse literature identifies the following styles of enforcement / drivers of compliance:
(a) Deterrence, in which the enforcement agents impose a tax on non-compliance; they raise the cost of violating the laws, usually through fines or lawsuits, until it makes sense for firms to comply;
(b) Pedagogy, in which enforcement agents act as technical consultants, teaching firms about the laws and how to comply;
(c) Managerial approach, in which enforcement agents help firms improve their managerial systems so firms can eliminate harmful and wasteful practices and explore socially-desirable opportunities;
(d) Market-based approach, in which the government establishes entitlements and property rights and then encourages the parties and anybody who cares (such as environmentally-conscious consumers) to negotiate mutually acceptable solutions on their own;
All these approaches have their own advantages and drawbacks. In some occasions they work, but in others they can be utterly ineffective. More basically, they are based on assumptions that do not always hold. The deterrence, pedagogy, and managerial approaches assume that surrounding conditions (i.e. the environment in which firms operate) is fixed and that problems can be solved one firm at a time. Moreover, these approaches ignore market failures such as split incentives and free-riding and the difficulties of collective action. The market-based approach assumes that transaction costs are minimal or non-existent so parties will trade freely, and ignores problems such as bounded rationality, asymmetrical information, and incomplete markets.
The findings on the prosecutor-in-action
As one would expect, prosecutors often adopt one of these standard approaches, are particularly prone to deploying the deterrence mode of enforcement, which constitute their ‘business-as-usual’. And yet, some prosecutors, in some occasions, depart from this mode of action and do something else altogether. They realize that, in some instances, compliance requires costly and risky changes in business practices that private firms are unable or unwilling to undertake on their own. Rather than impose a harsh penalty, which they anticipate will eliminate jobs and undermine business profitability, or clarify the law, which they fear will be futile, prosecutors reach out, search for partners, and eventually assemble a network of institutions eager or capable to cover some of the costs and insure some of the risks associated with compliance.
In some cases, this reassignment happens strictly within the supply chain in which the harm is produced. For instance, prosecutors have used a legal precedent called TST-331 concerning the misclassification of workers to reassign the costs of hiring, providing mandatory benefits, and firing seasonal sugarcane laborers away from independent labor contractors and onto the sugar mills. In other cases, this reassignment requires the participation of other institutional actors that need to be identified and brought in. For instance, in their attempt to relocate shrimp farmers away from riparian areas, prosecutors have counted with the support of the state-level environmental agency (which conducted and paid for a census to identify eligible farmers), the land tenure agency (which identified a suitable plot of land), and the governor’s office (which donated the land to the farmers).
Many institutional actors other than prosecutors can perform this role, but prosecutors occupy a position within the Brazilian legal system that makes them especially apt to do this job. First, they can use their knowledge of the laws, and the fact that legal codes are so often vague and contradictory, to claim jurisdiction over practically any controversy they want. Second, they can interpret the codes narrowly or broadly so as to split and reassign legal rights and duties and reassign costs, benefits, and risks to those most willing or able to afford them. And finally, they can grant an informal but effective seal of legality to the final arrangement, effectively shielding it from further legal contestation. Of course, prosecutors do not have to perform all these roles in all cases for the initiative to succeed, and in some instances they do not even participate at all. But overall, and given their privileged position as gatekeepers of the Brazilian judicial system, and the absence of an active private class-action bar, they are instrumental actors in performing this type of intervention.
Throughout the course of this research I tried to find the right name, analogy, or theoretical frame for this kind of action. In different opportunities I described these activities as ‘brokering’, ‘mediating’, ‘deal-making’, ‘coalition-building’, or ‘problem-solving’. At some point, I likened this type of intervention to a home cook preparing a meal. In deciding the menu, the cook checks the pantry to decide what can be prepared with the ingredients at hand. At the same time, the cook envisions which ingredients ought to be acquired so he can prepare the meal he wants. To put it briefly, these individuals are both searching for new resources and optimizing the resources that they have. Some call this mode of action “bricolage” (Cunha 2005), others call it “search routines” (Sabel 2006) or “puzzle-solving” (Winship 2008). Eventually, I accepted the terms that prosecutors themselves sometimes use; they call this type of intervention “to assemble a network” [montar uma rede] or “to stitch a solution together” [costurar uma solução].
On a larger canvass, this type of engagement conforms to the ideas advanced by the literature on “varieties of capitalism” (Schneider 2009), that in different polities economic and political institutions combine and support each other in intricate and hard-to-predict ways. This body of work also suggests that institutions come in bundles and any single practice cannot be understood or reformed on its own. Mindful of this mutual interdependence of institutions but unsure of the relative position and strength of the various links, prosecutors go about mapping this maze (or network) of connections until they identify leverage points that allow for meaningful reform.
And yet, in many ways, the best analogy is to compare the prosecutor to an entrepreneur trying to create a business venture, an investment banker trying to engineer an M&A deal, a real-estate developer trying to build an edifice, or a producer trying to put together a movie or a play. All these agents are trying to create money where it does not exist, and to succeed they must bring together a variety of other actors – for instance, lenders, venture capitalists, patent-holders, manufacturers, wholesalers, distributors, retailers, union leaders and others – who will contribute to the joint-effort in exchange for a share of the proceeds.
If everything works, the new business venture, the M&A deal, the urban development, the play or the movie will come to life through a web or network of contracts, and lawyers are often involved. And even if these professionals are sometimes vilified as dead-weight loss to the economy, observers of the legal profession have noted that, in many occasions, and particularly when “engineering” transactions (Howarth 2004), they not only redistribute but also “create value” (Gilson 1984). Also, they act as “transaction-cost engineers” (Bernstein 1995), “enterprise architects” (Dent 2008), “facilitators” (Suchman and Cahill 1996), or “architects of social structures” (Fuller 1981, see also Hertogh 1999, Soltan 1999).
That is exactly what the prosecutors I studied do. While private transaction lawyers help their clients appropriate the largest possible share of a potential surplus, prosecutors create costs by demanding that firms internalize their negative externalities, and then redistribute these costs to an ad hoc network of agents and institutions in a way that makes compliance acceptable, sometimes even desirable, to all. Like private business lawyers, they spend their days not in litigation, but in the engineering of transactions. The difference is that, instead of enlarging and sharing revenue, they minimize and share investments or expenditures. They are practicing an advanced version of what Susan Silbey (2009) has called “relational regulation”.
This insight provides an obvious link to the work of Ronald Coase (1937, 1960). A typical description of the Coasean bargain is that, in the absence of transaction costs and as long as entitlements are properly defined, the parties involved in a negative externality will trade and redistribute costs and benefits on their own, maximizing aggregate social welfare in the process. The typical example is that of community members who pay a firm not to pollute, or the firm that pays its neighbors for the right to pollute. This may work in theory, but the real-world cases examined in this dissertation show that transaction costs are not minimal and entitlements are rarely defined in a way that allows for spontaneous trading. A variety of market failures prevent this version of the Coasean bargain from taking place, and these failures create an opportunity for the prosecutor to give the market a hand. To say it differently, they often act as catalysts of a Coasean bargain219, i.e. they clarify entitlements, identify winners and losers, and compel the former to compensate the latter. In many cases, this bargain involves more than two parties and ends up creating a network of agents that both pay and receive, not necessarily in cash, but also in goods, services, technology, or contracts to decrease risks and uncertainty.
Over time, Coase’s insight has given rise to a variety of conflictive interpretations. Some see it as an advocacy of the free market, an impetus for the abolishment of regulation, and a justification for the maintenance of the status quo. My understanding of Coase’s insight and my suggestion that prosecutors are catalysts of a Coasean bargain dovetails with a different school of economic thought. According to Dahlman (1979), a correct interpretation of Coase “suggest(s) employing taxes, legislative action, standards, prohibitions, agencies, or whatever else can be thought of that will achieve the allocation of resources we have already decided is preferred. The implication of status quo is simply not there: the theory says to find practicable ways of diminishing transaction costs, by whatever kind of action is necessary, including governmental action.” Likewise, McCloskey (1998) suggests that “the true Coase theorem implies that one cannot in general efficiently internalize an externality by taxing / subsidizing whoever is generating the negative / positive externalities, because (in light of transactions costs) this would generally not result in the right to the resource affected going to the person who values it the most”. So, “rather than implying that the state ought to get out of the business of dealing with externalities… this implies that the state ought to concentrate on defining and transferring property rights instead of taxing / subsidizing … getting the entitlements right rather than getting the prices right” – and then, on top of that, McCloskey adds that “Ronald Coase is a postmodern economist. And his theorem, a post-modern one, is about the difficulty of knowing what is to be done”. Prosecutors know all about this difficulty, and the challenges associated with the search.
Also important, what Brazilian prosecutors are doing is not necessarily unique. There is a large body of work, in the US, on structural reform litigation (Garrett 2007), regulation by prosecution (Barkow 2009), prosecutors as problem solvers (Goldstock 1991), complex litigation (“Complex Enforcement”, 1981, Chayes 1976), community prosecution, and problem-solving courts. In all these instances, litigators and adjudicators detach themselves from their typical role assignments and strive to find and resolve the root causes of complex problems such as securities and consumer fraud, abuse of inmates, petty crime, unequal access to public schools, and racial discrimination.
The realization that law enforcers often perform a role that is not exactly what an uninformed observer would expect of them raises an obvious follow-up question: why do Brazilian prosecutors attempt to ‘stitch solutions together’ at all? What kind of organization hosts and encourages this kind of proactive, creative, results-oriented but rather risky behavior?
5.2 - The organizational roots of prosecutorial action
The second part of this dissertation examines the inner-workings of the Ministério Público, and tries to understand how the organization recruits, trains, empowers, supports, and rewards proactive, creative, and results-oriented regulatory enforcement behavior. This quest is composed of three segments: history of transformation; the covert, overlaid, and mostly informal organization that encourages prosecutors to ‘stitch solutions together’, and the mechanisms through which this behavior reproduce itself.
It was only over the past 30 years that the MP accumulated the powers, status, and legitimacy that allow prosecutors to engage in ‘stitching solutions together’. While the prevailing account claims that this transformation was an internal process that produced a homogeneous organization, I suggest it depended on a tacit truce between reformist and traditional prosecutors and an alliance between reformist prosecutors and external actors such as NGOs, unions, and social movements. The result was an idiosyncratic and divided organization that empowers prosecutors to engage in ‘stitching’ but, in formal and explicit terms, negates them most of the support and incentives they need to do so.
Basically, the MP used to be a bureaucracy devoted to criminal prosecution while prosecutors had always aspired to becoming professionals. For decades, their strategy was to fight for the responsibility to write non-binding legal opinions in an ever-growing variety of civil cases concerning individuals incapable of defending themselves (‘custos legis’). This strategy produced many results, and the MP amassed powers and attributions. And then, in the late 1970’s, a small group of reformist prosecutors started allying themselves with NGOs, unions, and social movements mainly around environmental causes. Soon all prosecutors discovered that these alliances, and the role of defender of society, provided them with a much better avenue for professional status.
Success was fairly swift. From the early 1980s to the early 1990s, the MP transformed itself radically, and achieved its crowning moment in 1988, when Brazil adopted a new constitution that granted a series of powers and privileges to prosecutors. Yet, by the early 1990s the agreement between a minority of reformist and all the traditional prosecutors came apart, and the organization retained its structures, internal policies, incentives, and constraints. Ultimately, the newly empowered prosecutors ended up housed in an organization that encourages them to be cautious, stay in their offices, process cases one at a time, and interact with the world mostly through adversarial proceedings in a court of law.
Neither reformist prosecutors nor their allies – NGOs, social movements, unions, and other groups – stayed still. Instead, they started to build a mostly covert, overlaid, and informal organization that recruits, trains, supports, and rewards those prosecutors who adopt a proactive, creative, results-oriented, problem-solving approach. This informal organization has managed to produce a few inroads into the formal structures and policies of the MP, and has reshaped some parts of the procuracy to support the type of action that the reformists favor. But even more important, these prosecutors and their allies – similar to regulatory agents elsewhere – purposefully build feedback loops that help strengthen this organization within the organization, for instance by using legal settlements to acquire the resources that they need.
Ultimately, the MP ended up housing two modes of action. Most prosecutors, most of the time, stick to a reactive, formalistic, and risk-averse case-processing approach. But some of them, in some occasions, adopt a totally different attitude, let go off this ‘business-as-usual’ and engage in a proactive, creative, and somewhat risky search for root problems and their respective solutions. Neither of these modes of action can be attributed solely to the individual preference of prosecutors. Rather, both are actively promoted by an organization in flux.
The literature on the organizational behavior of public sector organizations identifies three different visions of the front-line official at work:
(a) Michael Lipsky (1980) suggests that street-level bureaucrats are so chronically overwhelmed with a demand for their work that they have no option other than to routinize, systematize, and simplify their practices. For this reason, they always adopt a reactive, formalistic, case-processing approach (see also Silbey 1981 for an assessment of this same phenomenon at the Massachusetts Attorney’s General Office);
(b) Herbert Kaufman (1960) suggests that front-line officials can be full-blown professionals who retain their discretion and use it to advance the goals of the organization. And yet, they may use their power in disparaging ways unless the organization deploys a series of well-designed structures, practices, incentives, and heuristic devices to ensure that they will behave in unison;
(c) Public choice theory suggests that front-line officials will maximize their own welfare, either by taking bribes or shirking work, unless they receive the proper incentives and face the proper constraints.
While all these theories found some resonance in the reality uncovered by my fieldwork, they all portray organizations as internally homogeneous. Contrasting with this view, my empirical examination of the inner-workings of the Ministério Público revealed an organization that houses at least two divergent modes of action in its midst, and both modes are stable and not likely to go away. To understand this proposition, I resort to the model of organizational behavior proposed by Repenning and Stearman’s (2001). These authors differentiate between a ‘work-harder’ or a ‘work-smarter’ loop. The ‘work-harder’ loop is characterized by agents who are always overwhelmed and trying to catch up. They behave exactly like Michael Lipsky’s (1980) street-level bureaucrats. And yet, albeit prevalent, this mode of action is not destiny. Rather, some organizations find ways to operate in the ‘work-smarter’ mode, which is characterized by agents who find enough slack in their daily routines to launch a process of continuous improvement. Luckily, this process systematically reinforces itself and creates additional slack, which allows for additional improvement.
While Repenning and Stearman (2001) suggest that organizations operate in either the ‘work-harder’ or the ‘work-smarter’ loop, the Brazilian Ministério Público maintains both in tandem, and this is likely to be a good thing. James March (1991) gave each of these loops a slightly different name – he called them the ‘exploitation of old certainties’ and the ‘exploration of new possibilities’, and unlike Repenning and Stearman (2001), he did not assume that one of these modes ought to prevail. To the opposite, March (1991) suggested that one is better off when the two modes operate in tandem. In his own words, systems that “engage in exploration to the exclusion of exploitation are likely to find that they suffer the costs of experimentation without gaining many of its benefits. They exhibit too many undeveloped new ideas and too little distinctive competence. Conversely, systems that engage in exploitation to the exclusion of exploration are likely to find themselves trapped in suboptimal equilibria. As a result, maintaining an appropriate balance between exploration and exploitation is a primary factor in system survival and prosperity”.
This conclusion clearly applies to the Brazilian Ministério Público. Both the reactive case-processing (which is akin to the ‘work-harder’ or ‘exploitation’ modes) and the proactive ‘stitching’ of solutions together (which is akin to the ‘work-smarter’ or ‘exploration’ modes of action) find their place within the MP. And even though these modes compete with each other for resources and primacy at both the individual and organizational levels, the performance of the overall system is increased, and the public legitimacy of the actions fortified, because of this coexistence. Of course, it is impossible to ascertain what is the existing balance or distribution between the two modes, and it is equally impossible to determine, from the outside, what would be the ideal balance. But the identification of this heterogeneity provides some hints to those willing to experiment and try to further enhance the quality of enforcement.
5.3 – Policy Implications
None of the points advanced in this dissertation are entirely new or groundbreaking. Brazilian prosecutors themselves often disguise their proactive inclinations under the generic rubric of ‘I’m just enforcing the law’. And some do not always have the concepts or vocabulary to differentiate between the case-processing and ‘stitching’ modes of action that they deploy. Still, it is my understanding that they tacitly know all that I have described, and hopefully will recognize themselves and their institution in this dissertation. Moreover, the literature on the organizational behavior of the legal profession has also pointed out that some lawyers are litigators while others are more like engineers. The prosecutors I studied are no exception, and fall into these same categories.
To put the contribution of this research in its proper context, one ought to take a step back and reassess the state of international development theory and practice today. Even now, this body of knowledge all too often depicts protective regulations and the agents who enforce them as disruptive obstacles to development and creators of transactions costs. Of course, this depiction is substantiated by the occasional prosecutor who acts unreasonably and creates serious hurdles for business growth. But in many other occasions prosecutors strive to perform a much more constructive role, i.e. they try – even if unconsciously - to act as catalysts of a Coasean bargain. They search for ways in which negative externalities such as labor abuse and environmental degradation can be internalized (and therefore decreased) in a way that does not detract from the firms’ ability to compete. In this sense, they are acting as “shock troops of sustainable development” (Piore and Schrank 2008), and provide a type of public intervention in the economy that has not been adequately examined or understood.
In general, whenever scholars or policy-makers think about interventions to promote development, they suggest the addition of ingredients, such as physical, human, or social capital, or the following of certain recipes, which are lists of ingredients to be added in a certain quantity and order (Sabel 2007). Both these approaches have the advantage of being scalable and reproducible. They preserve the hope that one can find either the right ingredient or the right recipe, and then disseminate it widely. In practice, these strategies often fail because they do not take context into account. As practitioners know all too well, lack of private sector development on country A may have a different source than lack of private sector development on country B. Even within the same country, the crucial bottleneck that prevents village C from progressing may be different from the bottleneck that afflicts neighboring village D. To put it simply, it is not enough for an approach to be scalable, systematizable, and reproducible. As stated by Hausmann, Rodrik, and Velasco (2005), “the trick is to identify the binding constraint”. Interventions will only work if they take context into account.
But how can an intervention be simultaneously scalable so it can be reproduced and context-specific so it actually works? This research suggests that, instead of paying attention to ingredients or recipes, development scholars and practitioners ought to pay attention to those public agents who are out in the field, using their discretion to reshape businesses practices along more equitable and sustainable lines. In addition to being the long arm of the state and “shock troops of sustainable development” (Piore and Schrank 2008), they are also architects and engineers of experimentalist organizations (Sabel 2006) that can become the engine of a new developmental state.