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.

Continue reading

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”.

Continue reading

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.**

Continue reading

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.

Continue reading

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.

Continue reading

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.

Envisioning Worker Voice in the Private Government(s) of the Twenty-First Century

This post is part of a symposium on Elizabeth Anderson’s Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It). Read the complete symposium here.

Amanda Jaret –

anderson book cover

For those of us who are interested in law and political economy, seeing a political philosopher of Elizabeth Anderson’s stature dedicate her Tanner Lectures to labor issues is deeply gratifying. In the lectures, Anderson forcefully argues that the state plays a constitutive role in shaping the “private government” of the workplace by establishing rules that preserve space for employers’ exercise of “private, arbitrary, unaccountable” power over workers. As a participant in the “marginalized academic subfields” of labor law and labor history—which Anderson notes are among the only disciplines which consistently raise questions about the normative implications of power disparities in the workplace—I think she is to be commended for addressing the curious invisibility of employers’ regulatory authority over workers’ lives and its broader implications for those who share Anderson’s egalitarian commitments. Nevertheless, I worry that Anderson’s analysis ultimately misses the mark, because it pays insufficient heed to structural economic changes that have transformed “private government” in the past few decades, with consequences that threaten the viability of her vision of ensuring worker voice in the governance of private firms.

Continue reading

On Reuniting Legal Realism with Moral Pragmatism

This post is part of a symposium on Elizabeth Anderson’s Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It). Read the complete symposium here.

Luke Herrine 

anderson book cover

In 1987 Robert Gordon recounted finding among those “in the center or left of American liberalism…this paralysis, founded in their sense that legal and social realities are frozen, that we have reached the end of history and that the possibility of fundamental change is now forever closed to us.” Gordon’s experience is not unique, of course. The critical project of “unfreezing legal reality” to make it more pliable for egalitarian restructuring has had to confront not only the legal system’s own defense mechanisms but a set of discourses that make it hard to think outside the current system.

As many members of this blog have noted, neoclassical economics has been the most powerful such discourse, but moral philosophy—even that produced by egalitarians—has been similarly unforgiving. Most debates in Anglo-American moral and political philosophy have taken place in the realm of the ideal. Political morality amounts to articulating the constitution reasonable persons would agree to ideal conditions. Legal reasoning requires “rational reconstruction” of existing institutions to understand their moral structure. Egalitarianism is about figuring out how to set up idealized (read: using neoclassical assumptions) insurance markets to correct for inequalities of luck while maintaining room for agency. The idealizations of the debates tend to vacillate between being so unlike our actual world as to be difficult to make sense of or so like our actual world as to “freeze” it by moralizing existing institutions. They may help clear up some of our ideas, but they do not give us much to work with in the project of dismantling oppressive institutions and building democratic ones in their place.

Many critical legal theorists sought alternatives in deconstructive theories, which more often than not were so totalizing that they left little sense that one anybody (except perhaps judges) could do anything productive to reshape society.

Elizabeth Anderson has been the foremost advocate of a pragmatic alternative that treats moral theory like realists treat law: as a going concern. Following a venerable American tradition starting with Peirce, James, and Dewey, she understands moral debate as happening in media res, between socially and historically situated actors attempting to make sense of their attitudes about the world in the process of acting on it. Concepts like “freedom”, “equality”, and “exploitation” evolve out of historically embedded attempts to express attitudes about certain institutional arrangement; they necessarily evolve as arrangements change and as we reflect on what we really ought to care about regarding them. Moral philosophy is merely an extension of everyday reflective and discursive practices, and, if it strays too far from those practices, it results in concepts and arguments that have little or confused relevance to the real world. The process of deciding on ends is not separated from the evaluation of available means in any given context, and both are tied to our evolving understandings of how the world works. It is a process of ongoing recalibration.

Continue reading

Rethinking Public and Private Power: Anderson’s Private Government and Labor Law Reform

This post is part of a symposium on Elizabeth Anderson’s Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It). Read the complete symposium here.

Catherine L. Fisk –

anderson-book-cover.jpg

Elizabeth Anderson has gained rock star status as the leading philosopher-critic of rising economic inequality and its threat to democratic society. In her second Tanner Lecture, Anderson provides one of the most exciting theoretical justifications for labor law reform since the demise of popular interest in Marxist theory. Anderson’s work inspires me to think about the importance of worker control of access to jobs, co-determination of workplace and corporate governance, and the importance of inclusive unionism along the entirety of a supply chain.

The Industrial Revolution, Anderson says, shattered eighteenth century egalitarian theorists’ hope that “a free society of equals might be built through a market society.” Employment in large enterprises for the vast majority of workers after the Industrial Revolution, whether in a Ford factory in 1930 or in McDonald’s today, was to subject oneself to a dictatorship for most of one’s waking hours. The only real freedom the worker enjoys is to quit. The freedom to quit is not much freedom. (After all, Anderson points out, Mussolini was no less a dictator because Italians could emigrate.)

Labor unions are the only mechanism in history that institutionalized what Anderson identifies as the four essential ways to protect “the liberties and interests of the governed under any type of government.” These are (1) an effective use of the threat of exit (as by striking or enabling workers to leave a job without being blacklisted or unemployed), (2) the rule of law (effective enforcement of contractual and statutory rights to minimum standards and fair treatment), (3) substantive constitutional rights (rights at work), and (4) voice (a say over working conditions). Unions are the only institution that achieved nationwide scale and a sustainable funding mechanism to enable consistent performance of these four functions by and on behalf of workers. Other worker formations (worker organizations like ROC United in the restaurant industry or the National Domestic Worker Alliance in domestic work) could play many of these functions, and already do on a limited scale, but they have yet to achieve meaningful voice in the workplace.

Continue reading

Workplace Autocracy in an Era of Fissuring

This post is part of a symposium on Elizabeth Anderson’s Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It). Read the complete symposium here.

Cynthia Estlund

anderson-book-cover.jpg

Elizabeth Anderson’s deeply thoughtful book, Private Government, aims to bring the problem of workplace hierarchy and “the pervasiveness of authoritarian governance in our work and off-hours lives” back onto the front burner of political and philosophical discourse, where it resided a century ago. She reframes the problem as one of “private government” – that is, a government “under which its subjects are unfree,” and which “has arbitrary, unaccountable power over those it governs.” “It is high time,” says Anderson, “that political theorists turned their attention to the private governments of the workplace.”

The problem of employer domination has long occupied legions of labor and employment law scholars. Unfortunately, Anderson’s welcome effort to reignite stalled debates (which I review at greater length here) might come too late, given decades-long trends in the organization of work that are transforming the landscape of work and destabilizing the very concept of workplace governance.

Continue reading