The Rational and the Reasonable in the Aig Bonus Controversy

Chaim Perelman's (1979a) landmark essay, "The Rational and the Reasonable," provided an account of what occurs in the legal field when a ruling that aligns with the dictates of legislation and precedent fails to coincide with the public's common sense of what seems reasonable within the context of the ruling. After the publication of this essay, observers raised questions about the intended scope of the theory as articulated by Perelman, as well as about its possible application in fields other than the law (Bertea, 2004; Bruner, 2006). Many of those who have read his essay may be unaware that, after its original presentation, there was a lengthy discussion period in which Perelman responded to a number of questions and challenges from his audience. His on-site questioners at the International Symposium on "Rationality To-day" held at the University of Ottawa in 1977 included Jurgen Habermas, Louis Dupre, Hans-Georg Gadamer, and J. Vuillemin. (1) The purpose of this essay is to extend our understanding of his theory by considering the relations between the rational and the reasonable as Perelman explained them in that venue and applying his analysis to a specific case-the American International Group bonus controversy that occurred in the United States in the Spring and early Summer of 2009. The questions posed during the Ottawa discussion session concerned such matters as the nature and function of the reasonable, its viability as a concept, its relation to the rational, and how the two come together in a dialectical relationship in national and international law. In responding to questions on these issues, Perelman reminded his audience that "law is in the domain not in the sense of the analytical but in the sense of the dialectical, the result of dialogue, discourse, and common opinion, the equitable" (Perelman, 1979a, p. 220). The question then remains of how dialogue and discourse come to play a role in this dialectic. THE NATURE AND FUNCTIONS OF THE RATIONAL AND THE REASONABLE Before turning to an analysis of the 2008 bonus controversy, it would be beneficial to consider Perelman's conceptions of the rational and the reasonable. There are two frameworks that can be used to consider his explanation of these terms: legal realism, which is a systems-level perspective on the workings of law in society, and Perelman's conception, which personifies the functioning of the rational and the reasonable specifically in light of human behavior. The legal realist framework, which initially was a reaction to legal positivism in the early twentieth century, denounced the established legal principle that had held that judicial systems should be deducible from legal rules and involve no creative activity on the part of the judge. The legal realists held that instead the primary concern of the law was not logical certainty but socially desirable consequences (Rogat, 1967). The legal realists discounted precedent as the sole controlling force in legal decisions, and they held that judges make decisions in accordance with the circumstances of a case and their own personal sense of justice (Hample, 1979). Perelman's concepts of the rational and the reasonable were sympathetic to the legal realists' perspective, except that he focused on the reasonable as a check on exclusive systematic focus on the rational, and he conceived of it instead as a socially-embedded moral construct (Perelman, 1979b). Furthermore, he operationalized the reasonable in terms of human moral behavior. He noted that it is grounded in context and situation (Perelman 1979a, p. 117); conforms to principles of action acceptable to everyone (p. 118); can take different forms in different cultural contexts (p. 119); and has an existence that "makes it impossible to reduce the legal system to a formal and positivistic concept" (p. 121). He was also explicit in noting that the tension between the rational and the reasonable is not limited to the field of law. …