The Constitutional Theory of the Business Enterprise: Toward a Monetary Theory of Production

This post is part of a series on the Methods of Political Economy.

Jamee K. Moudud

Neoclassical economists see-saw between the twin poles of perfect markets and “market failure” in either advocating laissez faire or state intervention.  And yet this dichotomy rests on a fundamental mischaracterization of the business enterprise, its role in society, and markets more generally. This essay draws out a heterodox theory of the firm and argues that real-world business behavior can only be understood in light of insights from the Law and Political Economy (LPE) tradition. I draw on the classical economists as well as the Oxford Economists’ Research Group (OERG), especially P.W.S. Andrews.  The constitutional theory of the business enterprise (“small-c constitutional” as used by Sabeel Rahman and Christine Desan) discussed here fuses this economics literature with the Legal Realist framework, thereby creating a bridge between microeconomics, macroeconomics, and law. Development of this theory and its implications ought to be central to LPE approaches to understanding how firms do and might operate.

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The Sociology of Markets: an Alternative Political Economy

This post is part of a series on the Methods of Political Economy.

Neil Fligstein – 

For the past 35 years (and certainly before that), scholars across disciplines have offered critiques of neoclassical theory and its variants of political economy. As a result, there is a great deal of theoretical work done on issues of the linkages between states and markets, the comparative study of capitalism across countries, and on understanding how markets are the product of social interactions between market actors—an approach known as the sociology of markets. All of these perspectives share the view that the economy is embedded in political, social, and cultural processes. The upshot of these perspectives is to counter neoclassical political economy’s claim that there is one best or “efficient” way to arrange markets. Instead, markets reflect the relative power of governments, firms, and workers to structure the production of goods and services. The outcome of these interactions produces stability for incumbent firms, a stability that reflects a resolution of these political conflicts. This perspective exposes theoretical arguments that assume efficiency as both incomplete and misleading. Such arguments miss that because there are multiple ways in which these arrangements can be negotiated, there are multiple paths to create stable markets.

These perspectives have been used to understand many empirical contexts including the rise of shareholder value capitalism in the U.S., the rise of finance in the U.S. and around the globe, and the implications of all of this for increasing income and wealth inequality. This literature is well known in political science, sociology, and business studies but less well known in the rest of the academy, particularly in parts of legal studies. My goal here is to introduce the perspective I have contributed by explaining a few of the key ideas and a couple of insights based on using those ideas to make sense of important features of markets.

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Privatizing Sovereignty, Socializing Property: What Economics Doesn’t Teach You About the Corporation

This post is part of a series on the Methods of Political Economy.

David Ciepley – 

We imagine we live in a bourgeois capitalist economy, in which the means of production are owned by natural persons, the “capitalists” of capitalism.  On this, the Marxist economist, the liberal economist, and the neoliberal economist agree.  But we do not.  Ours is a corporate economy.  Overwhelmingly, the means of production are owned, not by natural persons, but by abstract legal entities—corporations.  Marx was thus right in predicting that the fetters of bourgeois, individually-owned property would be burst asunder to be replaced by socialized property.  But it is not at the level of the state that productive property has been socialized.  It is at the level of the corporation.  It is, notes Paddy Ireland, “capitalism without the capitalist.”  The implications of this are manifold and take us outside the confines of what conventional economics can illuminate.

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Stocking the Toolshed: A Symposium on Methods of Political Economy

This is the introductory post in a series on the Methods of Political Economy.

In their Law & Economics textbook, Robert Cooter and Thomas Ulen ask: “Why has the economic analysis of law succeeded?” Their answer: “Economics provide[s] a scientific theory to predict the effects of legal sanctions on behavior….This theory surpasses intuition, just as science surpasses common sense.” Moreover, “economics provides a useful normative standard for evaluating law and policy….Efficiency [that standard] is always relevant to policymaking, because it is always better to achieve any given policy at lower cost than at higher cost.”

This is, to quote a wag, pure ideology.

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After Money Bail: Lifting the Veil on Pretrial Detention

Click here to read all posts in our Money Bail series, including the introductory post presenting an LPE perspective on pretrial detention.

Sandra G. Mayson —

Ending money bail will not itself produce an effective and just pretrial system. The wonderful prior posts in this series have explored several reasons why this is so. I would like to add one more: Ending money bail will not itself produce justice because we have been using money bail, and the detention it produces, to meet a host of social needs. Forsaking it will require us to find better ways to meet them.

The purported function of money bail is release. It is supposed to balance our competing interests in liberty, security, and the effective administration of justice by ensuring that people at liberty show up for court. In fact, though, money bail also operates as a mechanism of detention. And we have been using it that way: to detain those who seem dangerous, to inflict punishment, to encourage guilty pleas, and to impose short-term restraint on disruptive people. Sometimes we have done these things intentionally. Sometimes we have done them inadvertently. What we have not done is admit what we are doing. The apparent rationality of a financial incentive mechanism has obscured the functions that money bail actually serves. It has enabled us to use jails as a first-line response to social problems without deliberation, accountability, or acknowledgement.

Ending money bail will eliminate a profound source of inequality in the criminal legal system. But it will also expose the difficult social, political and legal questions that money bail has obscured. At risk of oversimplification, here are a few of them. Continue reading

LPE at RebLaw!

If you’re at (or on your way to) RebLaw, you should definitely go to the two events hosted by LPE student groups on Saturday! To wit,

10:15 a.m. in Room 129: “Reclaiming Our Legal Education: Alternatives By and For Progressive Law Students” (a panel featuring current law students and practitioners)

12:00 p.m. in Room 127: “Bringing LPE to Your Campus” (a breakout group for students interested in creating a home for LPE on their campus)

 

Reading Bail Reform Through a Critical Race Lens

Click here to read all posts in our Money Bail series, including the introductory post presenting an LPE perspective on pretrial detention.

Sean Allan Hill II—

Recent years have seen an explosion in calls to reform bail laws across the country. California and New York, among other states, witnessed the launch of grassroots campaigns made up of, and led by, traditional actors like public defenders and non-profit leaders, as well as the formerly incarcerated and their loved ones. These campaigns sought new bail schemes that would facilitate, rather than impede, pretrial release. In California, this took the form of SB10, while in New York, coalitions lent their support to A10137-A. While the California bill incorporated pretrial risk assessment instruments (PRAIs)—tools that rely on computer algorithms to predict the probability of selected outcomes—into bail proceedings, the New York bill did not.

Critical race theory can supply a framework for interpreting the progression of bail reform in the respective states. This framework implicates carceral policies in the persistence of racial and class hierarchies, and seeks to assess how the law generates racist ideologies that normalize the over-representation of Black people in the criminal legal system. Whether the decarceral objectives of grassroots coalitions will be achieved, or compromised, is therefore a question of how well they recognize and address the relationship between PRAIs and longstanding perceptions of Blacks as exceptionally dangerous. Continue reading

Community Bail Funds as a Tool for Prison Abolition

Click here to read all posts in our Money Bail series, including the introductory post presenting an LPE perspective on pretrial detention and Part I of this post on “Moving from Ending Money Bail to Demanding Pretrial Freedom.”

Brett Davidson, Elisabeth Epps, Sharlyn Grace, and Atara Rich-Shea—

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(endmoneybond.org)

We direct bail funds in Chicago, Colorado, Connecticut, and Massachusetts that are deep in the fight to end wealth-based incarceration. Collectively, our four community bail funds have purchased the freedom of more than 4,000 people at a cost of over $3 million. Our organizations intervene at the point of release, paying bail for those who cannot pay themselves and developing strategies to end pretrial incarceration. When people are free while awaiting trial, they have better case and life outcomes, which makes bailing people out one effective way to lessen the impact of criminalization on individuals, families, and communities.

But bail funds do much more than just pay bail: we are organizing hubs in community and key players in the larger movement for prison abolition. In total, more than 60 community bail funds across the country play leadership roles through diverse tactics running the gamut from policy development and courtwatching to direct action and participatory defense campaigns. The mission of community bail funds is to organize to make ourselves obsolete—not only because there are no more bails to pay, but because we have ended pretrial incarceration and supervision. Continue reading

Moving from Ending Money Bail to Demanding Pretrial Freedom

Click here to read all posts in our Money Bail series, including the introductory post presenting an LPE perspective on pretrial detention.

Brett Davidson, Elisabeth Epps, Sharlyn Grace, and Atara Rich-Shea—

CJEWebsitediagrams2As directors of community bail funds in Chicago, Colorado, Connecticut, and Massachusetts, we know that money bail is not and has never been the entire or only problem. As tempting as it is to believe that ending money bail is the cure to pretrial injustice, we must recognize it as merely one piece of a much larger system of racialized social control. If money bail were eliminated tomorrow, the state would maintain many other insidious ways to punish people awaiting trial, such as through home confinement, financial penalties, surveillance and monitoring, allegations of “violations,” and jailing through outright denial of release.

As the public increasingly understands and rejects money bail, the system is attempting to regain legitimacy by shifting around resources and co-opting movement messaging. Over the past five years, many system stakeholders and elected officials have responded to the call to end money bail by proposing or adopting versions of “bail reform” that pluck money bail from the larger conversation about pretrial incarceration and supervision, and focus on only the most basic injustices. Efforts that create new pretrial supervision structures, implement risk assessment tools that put people into detention and release categories, and abolish the use of money bail for only “low-level” charges can all result in increased surveillance and supervision by the criminal legal system. These changes also further the idea that only some people deserve to be released while awaiting trial and frequently fail to result in any actual decarceration. Most importantly, these policy changes rarely, if ever, involve the courts relinquishing power over the marginalized people they harm. The next phase of pretrial advocacy must transform the simple call to “End Money Bail” into a vision of expanded pretrial freedom for all—moving our society closer to a future where we do not respond to all harm or inconvenience with cops, courts, and cages. Continue reading

“Bail Reform” & Carceral Control: A Critique of New York’s New Bail Laws

Click here to read all posts in our Money Bail series, including the introductory post presenting an LPE perspective on pretrial detention.

Survived & Punished NY—

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Criminal punishment system reforms and reformers have gained traction in jurisdictions across the United States. At the same time, movements for prison-industrial complex (PIC) abolition have grown in size and visibility. New York State has experienced both of these trends. While New York officials have passed bail, sentencing, discovery, and other reforms at both state and city levels, various abolitionist collectives have begun targeting New York politicians to demand more structural change.

We are members of Survived & Punished NY, a grassroots, prison abolitionist organization dedicated to ending the criminalization of survivors of gender-based violence. Here, we present an abolitionist critique of New York’s recent bail reform statute, and call for a bolder vision of freedom and a broader scope of change. Legitimating pretrial incarceration and supervision, the bail reform statute is an example of a “reformist” reform that entrenches and will likely spawn new manifestations of the PIC.

Passed on April 1, 2019, the legislative bail reform package took effect in January 2020. Its stated purpose is to eliminate money bail and traditional jailing for many people charged with, but not convicted of, a crime. Under the New York legislative bail reform package, fewer people should be sent to jail pretrial. However, even if implemented to its fullest extent, the bail reform is not genuinely transformative because it divides people into categories of deserving/not deserving, it allows for growth in other forms of carceral control aside from traditional jailing, and, ultimately, it does not challenge the premise of pretrial incarceration. Continue reading