From Market Contracts to the Circular Economy—Law and Increasingly Holistic Conceptualizations of Production
22 Pages Posted: 3 Dec 2020
Date Written: December 3, 2020
In this paper we chart how society-at-large and private law in particular strive to understand production and related responsibilities and liabilities from a holistic perspective. Technological, ideological, and legal developments have led to the rise of new forms of institutionalized production, ranging from local and global variants of markets, mass production, distribution networks, value chains, digital platforms, and circular economies. Each of these new forms of production tackles a successively broader conceptualization of what it means to produce. Starting from local, individual contractual and corporate relationships, moving on to transnational production-side supply chains and corporate groups, and further to full-service digital marketplaces governed by platform operators, the current pinnacle of this development seems to be the fusing-together of production, use, and end-of-use phases through the servitization, financialization, and informatization of goods.
Building on a basic understanding of legal-organizational elements such as contract, property, and corporation, scholars have tried to understand the foundational parameters, technologies, ideologies, and motives underlying developments related to new forms of production. Under transaction-cost economics, focus was initially on individual contractual and corporate relationships and their comparative efficiency, later expanding to a broader, multitiered array of corporate, contractual, and hybrid or network governance. Under world-systems theory, focus shifted both from nationally emanating production to a more global perspective and from individual firms or contracts to the diverse interconnected inputs by different actors and phases of labour that go into the production of a good. Building on these earlier models, several chain and network focused approaches such as global commodity chain theory, global value chain theory, global wealth chain theory, and global production network theory, to name just a few, have focused on systematizing not only complex global production structures but also their manifold effects on e.g. development and inequality. At the same time, considerations of economic efficiency have pushed lead firms to tackle not only the production phase but also the use- and end-of-use phases of products. Coupled with the rise of social, environmental, cultural, and economic sustainability as an ideological counterweight to purely ‘internal’ economic efficiency, the end result is a holistic conceptualization of production as a circular economy.
Despite their origins in law, these extra-legal conceptualizations of production have been slow to work their way back into law. We develop a methodology for understanding this two-way function of law as an enabler and regulator in relation to societal developments. In particular, we focus on how a functional separation within law of private governance, public regulation, and private law doctrine allows us to understand the intertwined development of production and its economic and legal conceptualization. The proposed methodology, we argue, will help us understand the developmental tendencies of new forms of production and possibilities for their private and/or public regulation. The methodology also highlights holistic production governance not as a thing of the future, as in much circular economy literature, but rather as an economic reality that already deeply pervades society and relies on constant co-governance by actors ranging from producers to financers to consumers. This inevitably leads to the further dispersion of entity boundaries when classical dichotomies, such as consumer/producer, contract/ownership, product/service, and internal efficiency/external contingencies, dissolve into one another. At the same time, it results in a need for law to counter this fragmentation through a holistic reconceptualization of newly fragmented entities.
Keywords: Environmental sustainability, new forms of production, new forms of governance, private law
JEL Classification: K10, K32, M10
Suggested Citation: Suggested Citation