Reshaping markets : economic governance, the global financial crisis and liberal utopia / edited by Bertram Lomfeld (Professor of Private Law and Legal Philosophy, Free University of Berlin), Alessandro Somma (Professor of Comparative Law, University of Ferrara, Italy), Peer Zumbansen (Professor of Transnational Law, King's College, London).
2016
K487.E3 R469 2016 (Map It)
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Title
Reshaping markets : economic governance, the global financial crisis and liberal utopia / edited by Bertram Lomfeld (Professor of Private Law and Legal Philosophy, Free University of Berlin), Alessandro Somma (Professor of Comparative Law, University of Ferrara, Italy), Peer Zumbansen (Professor of Transnational Law, King's College, London).
Published
Cambridge, United Kingdom : Cambridge University Press, 2016.
Copyright
©2016
Call Number
K487.E3 R469 2016
ISBN
9781107095908 (hardback)
1107095905 (hardback)
1107095905 (hardback)
Description
xv, 370 pages ; 24 cm
System Control No.
(OCoLC)929586107
Summary
"Set against the origins and consequences of the global financial crisis, this timely book offers an enriching and revealing narrative of the role that the state plays in regulating markets. Focusing on core areas of private law such as corporate, labour and banking law, the contributors offer a conceptual framework in which to examine the central tenets of the role of private law in today's global economy. In the current climate of ever increasing economic inequality and austerity measures, the authors highlight the urgent need for a comprehensive analysis of the continuing tension between ideas of market liberalism and theories of society. With a focus on both the domestic and transnational dimensions of market governance, the authors offer a crucial insight into the co-existence and interaction between state and market-based economic governance"-- Provided by publisher.
"It is a matter of grave concern that the explanation of the 2007-8 financial markets crash which continues to exert the largest political influence upon the attempts being made to reform the financial system is based on the concept of deregulation. The crash was a disaster the groundwork for which was laid by the highly aggressive and utterly incompetent government restructuring of the financial sector called in the UK the 'Big Bang'. It took place whilst that sector was under the supervision of multiple regulatory agencies, against a background of legal and economic policies which gave every inducement to reckless (and much inducement to fraudulent) trade. It is by no means to exonerate private actors from their responsibility for the disaster to say that to regard the appalling government failure as an episode of deregulation is a major obstacle to the explanation of the crash and the formulation of an adequate policy for relief of the ensuing depression. I have argued this elsewhere on numerous occasions (most recently in criticism of Richard Posner's version of the concept of deregulation (Campbell 2010a; 2012)), and do not propose to do so again"-- Provided by publisher.
"It is a matter of grave concern that the explanation of the 2007-8 financial markets crash which continues to exert the largest political influence upon the attempts being made to reform the financial system is based on the concept of deregulation. The crash was a disaster the groundwork for which was laid by the highly aggressive and utterly incompetent government restructuring of the financial sector called in the UK the 'Big Bang'. It took place whilst that sector was under the supervision of multiple regulatory agencies, against a background of legal and economic policies which gave every inducement to reckless (and much inducement to fraudulent) trade. It is by no means to exonerate private actors from their responsibility for the disaster to say that to regard the appalling government failure as an episode of deregulation is a major obstacle to the explanation of the crash and the formulation of an adequate policy for relief of the ensuing depression. I have argued this elsewhere on numerous occasions (most recently in criticism of Richard Posner's version of the concept of deregulation (Campbell 2010a; 2012)), and do not propose to do so again"-- Provided by publisher.
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Table of Contents
List of figures
xi
List of contributors
xii
Introduction: reshaping markets and the question of agency / Peer Zumbansen
1
pt. I
Crisis and normality in transnational market regulation
7
1.
central problems of Marx's economics and the nature of market regulation / David Campbell
9
1.1.
Introduction
9
1.2.
meaning of `regulation'
10
1.3.
Left-wing criticism of the free market
13
1.4.
Early British left-wing criticism of the labour theory of value
16
1.4.1.
Shaw and Keynes on Marx
16
1.4.2.
Wicksteed on Marx
21
1.5.
critique of capitalism in light of the labour theory
23
1.5.1.
Supply and demand
23
1.5.2.
Competition
31
1.5.3.
Planning
33
1.6.
Conclusion: the form of value
36
2.
Contract law, securitization and the pre-crisis transformation of banking / James `Jay' Varellas
45
2.1.
Introduction
45
2.2.
Liberal contract law and the development of the securitization market
47
2.2.1.
historical development of securitization
47
2.2.2.
laissez-faire institution of contract law
49
2.2.3.
Contract law and the pre-crisis speed-up of securitization markets
50
2.3.
Securitization and the rise of market-based banking
52
2.3.1.
Securitization and the eclipse of the post-World War II banking regime
52
2.3.2.
rise of market-based banking and its consequences
53
2.3.3.
Market-based banking and the problem of the "coordinated market economy"
54
2.4.
Conclusion
56
3.
`Inside' and `outside' the firm: corporate law and contract governance as regulatory theories / Peer Zumbansen
60
3.1.
Introduction
60
3.2.
Studying the corporation
53
3.3.
lawyer's mindset and the new twist in law and economics
66
3.4.
promises (and pitfalls) of contract governance
70
3.5.
Coming full circle? The corporation and contract governance
72
3.5.1.
conundrum of agency in contemporary contract and corporate theory
73
3.5.2.
Beyond public versus private: the promise of relational contract theory for a new theory of the firm
75
3.5.3.
many bases of contracts
78
3.6.
Conclusion
81
pt. II
Austerity woes: trials and tribulations of debt
95
4.
Greek crisis: a critical narrative / Iannis Michos
97
4.1.
Prologue: the biggest sovereign insolvency in history
97
4.2.
Foucault's `tool box'
99
4.2.1.
Crisis and reform
100
4.2.2.
event and the quest for a single cause
101
4.2.3.
use of data
101
4.3.
What did really happen?
102
4.3.1.
years 1990--2005: availability of cheap labour and profit margins
102
4.3.2.
Greece in the Eurozone: living with a strong currency
105
4.3.3.
Governance issues within Greece and the Eurozone
107
4.3.4.
`inefficient' markets: eurozone or euro country?
110
4.4.
Epilogue: The shaping of a new paradigm
112
5.
biopolitics of debt-economy: market order, ascetic and hedonistic morality / Alessandro Somma
115
5.1.
Accumulation regimes, hedonism and asceticism
115
5.2.
emerging of a debt-economy
117
5.3.
morality of debt relations as power relations
119
5.4.
Sovereign debt restructuring and morality: citizens' asceticism
121
5.5.
German experience: Hartz-reforms and invisible poverty
124
5.6.
Cooperation and workers' asceticism
126
5.7.
From consumers' hedonism to communitarianism
128
6.
Credit contracts and the political economy of debt / Andreas Leidinger
133
6.1.
Introduction
133
6.2.
Three stages of a decline? A historical political economy of debt
134
6.2.1.
social emdeddedness of debt
134
6.2.2.
Great Transformation Part I: credit contracts and the regulatory state
135
6.2.3.
Great Transformation Part II: trading risks
137
6.2.3.1.
Making risk `disappear': the example of CDS trading
138
6.2.3.2.
Making the law more risk-sensitive: the example of close-out netting
139
6.2.3.3.
shift from normative to cognitive expectation structures?
141
6.3.
Reembedding debt? The constitution of a political economy beyond the state
142
6.3.1.
ISDA's development and functioning
142
6.3.2.
ISDA's part in the cognitivation of financial markets
143
6.3.3.
evolution of ISDA's position in the derivatives market
144
6.3.3.1.
Internal centralisation -- The 2009 Supplement to the Master Agreement
144
6.3.3.2.
External lobbying -- the example of close-out netting
145
6.3.4.
Reembedding debt?
147
6.3.4.1.
Is there a reembedding of debt at all?
147
6.3.4.2.
Are ISDA's standards democratically legitimate?
148
6.3.4.3.
Societal regulatory authorities and the nation-state -- a complementary relationship
153
6.4.
Conclusion
154
pt. III
Reforming finance: systemic risk and accountability
159
7.
Why manager liability fails at controlling systemic risk / Andreas Engert
161
7.1.
Introduction
161
7.2.
Manager liability: not strict but fault-based
162
7.2.1.
Strict liability is inconsistent with managers' role as agents
163
7.2.2.
Incentive distortions from strict liability
164
7.3.
Defining the standard of care
166
7.3.1.
Objective: limiting the probability of bank insolvency
167
7.3.2.
Defining the standard ex ante
169
7.3.3.
Defining the standard ex post
174
7.4.
consequences of uncertain care standards
176
7.4.1.
case for restricting manager liability
177
7.4.2.
Objections
179
7.5.
Conclusion
180
8.
How special are they? Targeting systemic risk by regulating shadow banking / Tobias Troger
185
8.1.
Introduction
185
8.2.
rationale underpinning current regulatory initiatives to cover non-bank credit intermediation
188
8.2.1.
In search of an operative definition
188
8.2.2.
Goals of banking regulation revisited: substance
191
8.2.2.1.
Safeguarding the supply of liquidity as the paramount end in prudential bank regulation
191
8.2.2.2.
Risk-insensitive funding as the core problem
193
8.2.3.
Synthesising the debates
194
8.3.
Legislators' and supervisors' `formalist' implementation of the policy prescriptions
196
8.3.1.
Securitisation and off-balance sheet conduits
197
8.3.2.
Mutual money market funds and repo
198
8.4.
Enhancing prudential regulation's assertiveness in a normative approach
199
8.4.1.
idea of an internal solution without permanent law reform
199
8.4.2.
Actual and alleged limits of a normative approach
200
8.5.
Conclusion
202
9.
Fixing Finance 2.0 / Cynthia A. Williams
208
9.1.
Introduction
208
9.2.
Too big to fail banks are still a concern
210
9.2.1.
Why is "too big to fail" a problem?
211
9.2.2.
Relevant provisions of Dodd-Frank
212
9.3.
Executive compensation
214
9.4.
Why the gaps?
216
9.5.
Culture, organizational psychology and regulation
219
9.5.1.
Project finance as a model of public/private co-regulation
221
9.5.2.
Dutch Central Bank psychological interventions
222
9.6.
co-regulation model
223
9.7.
Conclusion
224
10.
Regulating financial markets: what we might learn from sovereign wealth funds / Larry Cata Backer
229
10.1.
Introduction
229
10.2.
operation of the Norwegian Sovereign Wealth Fund: private actor, international actor, and sovereign
231
10.2.1.
Organization of the NSWF
232
10.2.2.
Responsible investing and active ownership
233
10.3.
Juridification of investment: the emerging jurisprudence of the ethics council
236
10.3.1.
NSWF ethical guidelines
236
10.3.2.
Operationalizing the Ethics Guidelines - the structure and functions of the NSWF Council on Ethics
238
10.4.
Cooperative and inter-systemic governance: its strength and fragility
243
10.5.
Conclusion
247
pt. IV
Transforming contract
255
11.
Sustainable contracting: how standard terms could govern markets / Bertram Lomfeld
257
11.1.
Two problems: limits to growth and limits to law
257
11.2.
One answer: sustainable contracts by standard terms
260
11.3.
Why global sustainability terms could help
262
11.3.1.
Economic mechanism design
262
11.3.2.
Systemic structural coupling
264
11.3.3.
Deliberative passage
265
11.3.4.
Cultural corporate myth
265
11.3.5.
Constitutional fragment
266
11.4.
What adequate terms of sustainability could be
267
11.4.1.
Natural (ecological) sustainability standards
269
11.4.2.
Social (cultural) sustainability standards
270
11.4.3.
Economic sustainability standards
271
11.4.4.
Procedural (political sustainability) standards
272
11.5.
How sustainable contracting could (really) work
273
11.5.1.
Myth production by classification, labelling and certification
274
11.5.2.
Structural couplings to domestic and international law
274
11.5.3.
Deliberative hubs for local and global stakeholders
275
11.5.4.
Economic incentives through graded interest rates and prices
276
11.5.5.
Constirutionalising sustainability by judicial control
276
11.6.
vision: sustainable private self-governance
277
12.
Anti-discrimination law and social policy-making / Sonja Haberl
283
12.1.
Old and new questions in modern anti-discrimination law
283
12.2.
Equal treatment in the construction of a common market
286
12.3.
Towards a new approach in EU anti-discrimination law?
289
12.4.
limits and shortcomings of anti-discrimination law as an instrument of social policy-making
293
13.
European or American style? Cultures of contract regulation / Daniela Caruso
298
13.1.
Introduction
298
13.2.
American commentary in context
301
13.2.1.
neo-classical critique of the CESL
302
13.2.2.
CESL and behavioural law and economics
303
13.3.
burden of proof: origins and questions
307
13.4.
Private law, redistribution and behavioural inquiry
309
pt. V
Conceptual Utopia: the market after the market
317
14.
Truth of the market / Maria Rosaria Ferrarese
319
14.1.
Presentation and main ideas
319
14.2.
"truth" of the market and some of its implications
320
14.3.
How do markets tell the truth? Between competition and efficiency
322
14.4.
Finance and mathematical economics
326
14.5.
Which "free market" after the crisis? Truths and untruths
328
14.6.
Free markets and state capitalism
332
14.7.
Global markets, governance and new institutional trends
335
Epilogue: the power of law to reshape markets / Bertram Lomfeld
347
Index
357