Democracy, Law and Global Finance: An Example of a Research Agenda for a New Practice of Law and Economics
21 Pages Posted: 22 May 2014 Last revised: 9 Aug 2014
Date Written: May 16, 2014
Abstract
Finance has become more a problem than a solution to what the world most wants: socially inclusive economic growth. It has become a source of crises that threaten the development of the real economy. It has escaped accountability to democratic institutions and often helped, instead, to influence and corrupt them. Its potential to contribute to broad-based opportunity-expanding growth has been largely and massively squandered.
In this piece and in a developing body of writing, I seek to understand not only how this failure manifests itself in some of the major countries and regions of the world, but also, how it can be corrected. One of the positive programmatic outcomes should be a toolbox of legal-institutional arrangements to use and organize finance in the service of socially inclusive growth.
These innovations do not amount to a confining, universal blueprint. They are nevertheless applicable, with suitable adjustments, to a wide range of contemporary economies. Moreover, we can develop them with conceptual and institutional materials that are already at hand, in contemporary experience. To identify these resources for legal and institutional innovation through comparative analysis, thus forms another goal of the intellectual agenda.
My method of analysis gives pride of place to institutional alternatives and innovations, expressed in the detailed materials of law. It is comparative law turned into a practice of micro-institutional analysis. We expand our sense of institutional alternatives as we begin to grasp the institutional variations already at hand. From small variations, we may begin to imagine larger variations, informed and inspired by a progressive programmatic imagination.
Keywords: financial crisis, financial regulation, market microstructure, shadow banking, systemic risk, law and finance, law and economics, political economy, democracy, democratic theory, comparative law, institutional analysis, institutional innovation, economic development, structural reform
JEL Classification: A12, B10, B15, B40, E42, E44, G1, G2, G15, G20, G25, K0, K230, K23, L5, N20, P1, P5
Suggested Citation: Suggested Citation