Economic Thinking About Transnational Governance: Blind Spots and Historical Perspectives

Abstract

The notion of 'transnational governance' refers to systems in which private actors and other nonstate institutions participate in setting and enforcing norms for cross-border transactions in trade, finance and other business. While the term is modern, the co-evolution of world markets and hybrid regulation has been discussed since the time of pre-classical and classical political economy. Yet, while transnational governance is a hot issue in other disciplines, it is almost a non-theme in current economics.

This paper explores the development of economic thinking about transnational governance in three steps. It starts with a description of transnationalization and a typology of transnational governance. Thereafter it relates the historical causes and analytical choices that make it difficult to deal with transnational governance in terms of modern economics. The blind spots in current frameworks of economic thinking raise the question whether more substantial reflections about transnational governance can be found in the history of economic thought, in the periods when economics as an academic discipline developed along with the emergence of nation states and the global system of markets. In the third step relevant ideas of Adam Smith, Friedrich List, Max Weber, John Hicks and many others are discussed and evaluated in the contexts of city states, trading companies, crossborder finance and self‐regulation.

Keywords: Transnational governance, private ordering, co‐regulation, cross‐border finance, city states, trading companies

JEL Classification: B12, B15, B25, D02, F59, F6, K2