Mobile Capital, Local Economic Regulation, and the Democratic City

66 Pages Posted: 17 Sep 2009

See all articles by Richard Schragger

Richard Schragger

University of Virginia School of Law


This Article examines local efforts to regulate mobile capital. Despite the conventional wisdom that sub-national governments cannot effectively control or redistribute capital, cities have increasingly sought to do just that. This Article describes these efforts, which include putting conditions on the entry of development dollars through contract, excluding capital through anti-chain and anti-big box store laws, and redistributing from capital to labor through local minimum wage laws and other labor-friendly legislation. The Article describes the economic and political factors that have given rise to these local regulatory efforts and assesses their viability. In the course of doing so, I argue that the mobility of capital drives a set of local political pathologies, all of which revolve around the governmental promotion of, participation in, and subsidization of private commercial enterprise. Geographically fixed cities are both inclined to give too much away in trying to attract mobile capital and to extract too much from capital once it has become fixed in place. These two political problems - giveaways and exploitation - explain the historical development of local government law as well as current approaches to the division of labor among levels of government - city, state, and federal. The new "regulatory localism" challenges the proposition that industrial policy, redistribution, and other responses to global economic restructuring must be addressed at the national level. It also challenges the proposition that local economic development policies must necessarily be biased in favor of corporate capital.

Keywords: local government, minimum wage, living wage, anti-chain store, city, mobile capital, globalization, Wal Mart, community benefit agreements

JEL Classification: K30, K31, K39

Suggested Citation

Schragger, Richard, Mobile Capital, Local Economic Regulation, and the Democratic City. Harvard Law Review, Forthcoming, Virginia Public Law and Legal Theory Research Paper No. 2009-03, Available at SSRN: or

Richard Schragger (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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