Lawless Capitalism and the Dangerous Rule of the Corporate Elite
17 Pages Posted: 20 Apr 2014
Date Written: April 18, 2014
The global financial market crisis of 2008 proved decisively that the Law and Economics movement that seized American economic policy over the past several decades is morally and macroeconomically bankrupt. According to law professor Steven Ramirez, twenty years of deteriorating capital markets regulation and the steady evisceration of the economic rule of law in the United States, as inspired by neoclassical Law and Economics, led directly to the most severe global economic crisis since the Great Depression. Professor Ramirez argues "[g]enerations of legal minds and policymakers have been inculcated in this dogma. Law and Economics served to imbue lawyers with misguided ideology parading as sound economic policy." This inculcation offered up the platform for elites, lawyers, and policymakers to erode the rule of law to the point that global financial markets nearly collapsed in the fall of 2008.
Much has been written about the global financial meltdown of 2008. Economists, financial news reporters, politicians, task forces, and academics have all weighed in on the causes and failures exposed in the global meltdown. However, precious few books and surprisingly little legal attention have been paid to the incredible failures of the rule of law that precipitated the mortgage meltdown and global crisis. Into this vacuum steps Ramirez and his bold and relentless book "Lawless Capitalism: The Subprime Crisis and the Case for an Economic Rule of Law." In "Lawless Capitalism," Ramirez painstakingly records the breakdown of the rule of law dating back to the 1970s tracing the deregulatory trend in federal law and policy that led in great measure to the mortgage bubble, its bursting, and the reckless trading surrounding the housing market, all of which has led to the greatest financial crisis of our generation.
"Lawless Capitalism" provides a fearless examination of the causes and symptoms of the financial market meltdown of 2008. Not content with simply exposing the ways that the rule of law failed in the decades precipitating the mortgage crisis, Professor Ramirez sets about prescribing an antidote to the sickness that gripped American economic policy in the decades leading up to the mortgage crisis, namely the elites’ manipulation of capital markets for profit. When corporate and political elites are allowed to remove regulation from the financial sector, in the name of efficiency and unfettered markets, the result is very clearly market disruption and capital corruption. Ramirez makes a compelling case that neoclassical law and economics is a failed economic theory and one that deserves a proper send off.
Keywords: lawless capitalism, deregulation, law and economics, financial market crisis
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