Reclaiming Public Fiscal Power for Transforming Precarity

Reclaiming Public Fiscal Power for Transforming Precarity

NB: This post is part of the “Piercing the Monetary Veil” symposium. Other contributions can be found here.

Martha T. McCluskey–

Basic legal ideas about taxation stand in the way of proposals for ambitious fiscal policies to address pervasive economic insecurity among both middle class and lower income households.

The conventional legal framework posits two primary functions for taxation. First, taxes raise revenue to finance government goods and services. Second, taxes redistribute resources, transferring money from some private interests to others based on ideas about distributional equity. Taxes also regulate private economic behavior, but this third function is generally treated as supplementary and subordinate, with economic ordering mainly directed by basic legal rules and the administrative state.

In orthodox law and economics, “optimal” tax policy achieves the two primary goals with the least “distortion” of private value-maximizing decisions in a presumed efficient and equitable market unsullied by taxes. This optimal tax theory aims to replicate a mythical market where money passively realizes and measures an underlying value fixed by barter-like exchanges of real goods, and services.

This seemingly benign conceptual frame implicitly locates economic productivity in a distinct and underlying private market sphere, with government taxing and spending cast as taking value from those who have created it. From this starting point, households can receive public support either as beneficiaries of forced public charity or as responsible consumers willing and able to pay an equivalent amount in taxes. If progressive taxing and spending programs are construed as involuntary, inherently inefficient, transfers of money from productive market winners to support less capable market losers, then that public support will tend to appear to generally inscribe rather than relieve conditions of precarity and powerlessness.

This conventional frame obscures how taxation creates money as a means for generating and distributing economic power and insecurity. Tax theory tends to ignore how law constructs and governs money, treating money as a neutral measure of social contribution.

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Financial Regulation and Social Reproduction

Financial Regulation and Social Reproduction

NB: This post is part of the “Piercing the Monetary Veil” symposium. Other contributions can be found here.

Donatella Alessandrini —

Even amongst critical scholars, there is a tendency to treat international regulation of money and finance as “strictly economic”, distinct from the “social” domains of labor, the environment, and socio-economic rights. This conceptual separation cedes the realm of finance to the “neutral” neoliberal technocracy while occluding interrelationships between finance, production, and social reproduction. Placing social reproduction at the center of our analysis forces us to overcome these false dichotomies and confront finance’s role in the shaping of the “social”.

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Money and Property

Money and Property

NB: This post is part of the “Piercing the Monetary Veil” symposium. Other contributions can be found here.

Lua Yuille and Rohan Grey —

Money and property law are mutually constitutive. Property rights are defined and valued in terms of their relationship to monetary instruments, while whether something counts as a monetary instrument for this or that purpose is itself a result of bundling property rights a certain way. Yet property law treats money as opaque: a neutral measuring stick that happens to prove useful in the process of doing the real work of property.* This is partly because money is grossly under-theorized and misunderstood by property law scholars. In property law, “money provides the unit in which prices appear, supplies a medium of exchange, and acts as a store of value”, but it does so as if by magic. Unlike students of economics, who are introduced to money through the self-consciously ahistorical fable that money evolved as an evolutionary response to the inefficiency and inadequacy of barter, American law students are not formally introduced to money at all. Money is taken as an idea that needs no articulation or unpacking. The result is a  ‘functional monetary illiteracy’ that fails to conceptualize the complicated relationship between money and property law, serving to obscure the role of the state and of private power in defining each.**

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The Legal Construction of Value

The Legal Construction of Value

NB: This post is part of the “Piercing the Monetary Veil” symposium. Other contributions can be found here.

Roy Kreitner —

Legal realists and their heirs made it into a truism: law is constantly entangled in value judgment. The statement is typically aimed at undermining one sense of the claim that law and legal judgment are or even could be neutral, value-free. But that is no the full extent of the realist point.

Beyond the issue of neutrality lies the question of how law constitutes value in the first place. It is not just that legal decisionmaking necessitates underlying values, it is that legal decisions shape the process of attributing, assigning, or creating value. Of course, there are multiple modes of valuation, and some are (thankfully) quite distant from the law (think friendship). But modern market societies overwhelmingly value resources, goods, services, and benefits of almost every stripe through money, and money is made of law. This may seem a simple point, but exploring its implications should disorient—and perhaps reorient—how we think about the relationship between law, values, and markets.

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Money as a Constitutional Medium

Money as a Constitutional Medium

NB: This post is part of the “Piercing the Monetary Veil” symposium. Other contributions can be found here.

Christine Desan —

In 2017, the Federal Reserve Bank of New York published a comic book on the origins of money. The story, called “Once Upon a Dime,” unspools sweetly. Far far away, on the planet Novus, a community of good-willed humanoids live together, trading what they have for what they need – mustard for fish, wheels for cakes. In good time, the inconveniences of barter push them to innovate. All agree to give and take artfully carved river stones as money. That eases their trade; they can “Do It More Efficiently” (thus the “dime”) and the little community prospers. People soon warehouse their rocks with a caretaker, who begins allowing customers to transfer rocks from one account to another by check. The caretaker also advances some of the funds he has “stored here at the bank.” Inter-bank loans follow naturally, as does a run on the banks. In the end, the group establishes a central bank to monitor the other banks and lend them money during emergencies.  In short, “first money replaced barter,” then banks developed “as storehouses” and as lenders, then the group appoints a central bank to supervise the banks.

“Once Upon a Dime” does not stray from the conventional story about money. To the contrary, it reinforces the tale, teaching it at a primary level and in living color. That makes the comic all the more arresting: it makes a constitutional argument about the nature of money and its place in society even as it deflects attention by casting the medium as a mechanical fix for a private problem.

Consider, first, the way the comic locates money firmly within the sphere of individual choice as opposed to the political will: money is the product of entrepreneurial initiative (the proposal to use rocks as a medium), adopted by social acclaim (convention as opposed to public authority), and targeted at a technical problem (awkward exchange). Distribution is assumed; the river rocks somehow spread around society. Banks evolve from a storage mechanism, a phenomenon of convenience more than credit. As for credit, it simply shifts resources, rather than creating new value, a service like any other. The central bank is only ambiguously “public,” an institution that will enforce self-evident standards of practice and provide occasional rescue.

Consider, in turn, the way the narrative diverts our attention as lawyers. By locating money as an inert medium and banks as the mechanism that pools and shifts the medium, the story asserts them only and emphatically as technologies of exchange.   Public authority surfaces only as a coordinating mechanism, occasioned to resolve a predictable collision of individual demand. If money operates on earth as it operates on Novus, there is really nothing much for us to see.

That is where the story falls apart.

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Piercing the Monetary Veil

Piercing the Monetary Veil

NB: This post is part of the “Piercing the Monetary Veil” symposium. Other contributions can be found here.

Luke Herrine —

This blog has already hosted several examples of re-thinkings of the nature of money and its relationship to law and power, most recently in a symposium on LPE Contributor Mehrsa Baradaran’s book on money and Black capitalism. This may seem like a niche project that those without an interest in finance can afford to ignore or leave to others. But that would be to ignore a fundamental principle: cash rules everything around us. Especially in capitalist societies, power is channeled through money and vice versa.

And justifications of power rely on mystification about money. If anything can be called the core of the neoliberal project it is the proposition that cash should rule us. Hayek’s foundational argument, after all, is that allocation via the price mechanism is the essence self governance. Making all resources and activities interchangeable with money enables each person to pursue her own version of the good life in a way that interferes with others’ only as much as they consent to while simultaneously directing resources towards their most valuable use (see here for instance). Payment of money is how we each individually express how much we value different resources and how much of others’ interference we are willing to bear. Price is the aggregation of those individual valuations. Money thus serves as the common currency that enables us to commensurate our processes of valuation without deliberating and without forcing anything on anybody else.

But that’s not how money works. Treating money as a neutral arbiter of values that the legal system can simply take for granted is a classic example of “transcendental nonsense“. As with any form of such nonsense, explaining why requires a careful analysis of how law structures money, tracing who has the power to shape that law, and exploring the dialectic relationship between the law, money, and the markets they coordinate. A small but growing group of scholars has been undertaking this task. Many of these scholars have begun to converge in a new international network called the Law and Money Initiative. An overlapping group will also be launching a new site at just-money.org.

Over the next two weeks, we will host a symposium on how close attention to the role of money in law and political economy changes one’s analysis of a whole range of areas of society, with a particular focus on how the legal infrastructure of money shapes areas of non-financial law. The idea is to open up conversations about how power shapes law to conversations about how money and law shape each other, and vice versa.

Join us!

Luke Herrine is a PhD Student at Yale Law School.

Restorative Justice and Moral Neoliberalism

Amy J. Cohen – 

Today, groups of left organizers who wish to abolish the current penal system are practicing community mediation. They facilitate dialogic processes where people who have caused harm engage in active listening, relationship-building, and intensive forms of emotional, spiritual, and material reparations. These processes, variously called restorative justice or more often transformative justice and community-based accountability, are both practical and radical. Practical because while organizers wage political battles against the penal state for racial and economic justice, they simultaneously create spaces for people to opt out—to manage conflict and violence by cultivating love and forgiveness as well as armistice, separation, and safety through relationships and forms of reparations meaningful to them. Radical because these mediations prefigure an alternative just society, one in which individual and systemic change are co-constitutive processes.

As I outline in a forthcoming article, these organizers recall a small group of community mediation advocates in the 1970s and 1980s who linked delegalization and decentralization to left visionary politics. As I also outline, however, informal, anti-authoritarian practices of dispute resolution have often attracted bedfellows across a political spectrum. Likewise today, restorative justice enjoys growing support among Republican policymakers, evangelical conservative Christians, and libertarian thinktanks and organizations. Restorative justice is thus intriguing not only for how left organizers use it to advance prison abolition but also for how libertarian and conservative reformers have fashioned it into a tool of American neoliberalism.  Continue reading

Organizing Towards a New Vision of Community Justice

NB: This post is part of an ongoing series on LPE & Social Movements. For the framing pieces, see here and here

Raj Jayadev and Pilar Weiss – 

social-movementsThe current criminal legal system has consistently weaponized the role of “the community” in its proceedings – often claiming that decisions have been made to achieve justice for “the community” or to protect “community” safety. As increased awareness of the incarceration crisis across the country has changed some of the dynamics in our public discourse, similar patterns invoking “the community” have remained. Mainstream political candidates openly claim they are progressive and offer reformist reforms in the name of “the community.” The experiences of people of color, the poor, the LGBTQ community, and immigrants in the criminal legal system have of course been that these claims of action and reform in the name of “the community” are not reflective of their actual needs or priorities.

In contrast, all across the country, activists and organizers are building a grassroots movement that is seeking to realize a different vision of justice, one that is based on a radical repositioning of “the community” and its power. This is a fight based on survival but also one seeking to shift power from those who have historically held it to those who have been historically disempowered, under-resourced, targeted by the system, and most impacted by structural inequalities. Law professor Jocelyn Simonson has written previously on the place of “the people” in criminal procedure, reimagining a more inclusive role of the public in the criminal process. Similarly, as the movement to end incarceration continues to develop and gains momentum, the organizing that fuels it is actively contesting the place of “community.” This repositioning of community extends beyond the immediate actions in front of us; it situates the community as the drivers of what the ultimate realization of a new vision of justice, healing, and power will look like.

In this piece, we hope to describe some examples of the spectrum of organizing tactics and practices that are currently part of both the repositioning of community and the creation of pathways towards the transformative vision abolitionist organizers have set out. As two long-time community organizers who work with dozens of community-based organizations and hundreds of organizers and families through our work with Silicon Valley De-Bug, the Community Justice Exchange, the National Participatory Defense Network, and the National Bail Fund Network, we are privileged to be part of the daily work and also see a developing arc. When we, as organizers, refer to “the community,” we are referring to individuals and their families, neighborhood, and those with a common interest and/or shared identity who are all directly impacted by structural inequalities. We don’t assume that there are any definitive answers at this point, but instead that we are in the middle of a process of finding ways to take power and define what justice in the name of “community” actually means.

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Ten Theses on LPE of Foreign Policy

Ganesh Sitaraman – 

In many areas of law and policy, political economy thinking has not yet become mainstream. People often separate politics from economics to a degree that is unrealistic, and they undervalue how economic power can be used for political ends. American foreign policy today, I think, suffers from these problems. Over at the American Prospect, I’ve offered ten theses on the relationship between political economy and foreign policy. They are stylized for effect, and thus leave out some nuance, but my hope is to start a conversation on what the consequences are of placing political economy at the center of foreign policy thinking.

Ganesh Sitaraman is a Chancellor Faculty Fellow, Professor of Law, and Director of the Program in Law and Government at Vanderbilt Law School.