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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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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The Constitution and Democratic Insurgency

Aziz Rana—

One of today’s most urgent questions is how to combine an analysis of capitalism with an analysis of democracy.  The rolling socio-economic crises of the last decade, highlighted by the global financial meltdown, have laid bare the extent to which American society is marked by fundamental and irreconcilable conflicts between those enjoying economic power and those subject to the vagaries of the market.  At the same time, the constitutional system, plagued by legislative dysfunction and extreme counter-majoritarianism, is incapable of implementing popular policy—let alone resolving endemic collective problems.  American capitalism generates profound social and material dispossession, yet American democracy either facilitates these developments or seems helpless to address them.  Why is this the case? And to what extent is the existing constitutional order—its basic ideological and institutional terms—at least partly to blame?

Since the forging of Cold War liberalism in the mid-twentieth century, elites have offered the same, familiar account—in both electoral politics and in the study of constitutional law—of the relationship between the constitutional order and the economy. The prevailing theory is that the structures of legal-political decision-making do not favor particular social groups. Instead, through an intricate system of checks and balances—overseen by a Supreme Court enjoying powers of judicial review—the constitutional process produces essentially just outcomes while ensuring that no single political or social actor wields overwhelming authority.  This structure of constraint substantively pushes decisions away from the extremes of fascism and communism and toward a moderate middle ground of ameliorative reform and steady collective improvement.

Although some may be suspicious of the Whiggish story of progress, a bedrock assumption underlying this account has been widely held—even among left-liberal circles.  This is the idea that the constitutional structure and its discursive traditions remain essentially agnostic as to existing distributional battles.  They can be used productively to pursue virtually any end—up to and including socialism.  As the New Deal victories seemed to confirm, constitutional process and language carry no essential theory of political economy.  To the extent that legal-political outcomes have remained in line with a vision of market capitalism and a limited welfare state, this is simply the product of popular will: the complex balance of views expressed across the constitutional system.

But this account ignores a fundamental critique of the constitutional order, one leveled by labor and black radicalism in the first four decades of the twentieth century before Cold War ideas took such an extreme hold. For those activists, the history of sustained racial, indigenous, gender, and class subordination made clear that the country was not then and had never truly been democratic.  Rather, the constitutional order systematically operated to expand the strength of a racial and economic minority.

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Toward a Law and Political Economy of Gender Violence

Martha T. McCluskey –

What does political economy have to do with the issue of gender violence that roiled Kavanaugh’s Supreme Court confirmation?  One answer is that law should not separate economics from the social inequalities that mediate power.  Violent enforcement of social hierarchies has long been a core capitalist strategy for securing selective economic advantage, as Angela Harris and Frank Pasquale have written in this blog.

The recent #Metoo movement suggests the strong arm and insidious shadow of physical force is common, not marginal, to the everyday economic lives of many women, a factor to bargain with in the process of securing opportunities for education or work, housing or health care.  Conventional law and economics tends to assume a background of private voluntary exchange that belies continuing contests over the power to gain through violence. In contrast, a political economy perspective recognizes that government does not monopolize force. Instead, government enables and distributes private force by how law defines, punishes, monetizes, and immunizes private acts of violence.  Neither formal law nor social norms have firmly settled the questions of what forcible acts and impacts count as normal, excusable, trivial, implausible, or invisible.

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The New Class-Blindness

Cary Franklin —

Legal advocates have scored some major class-related victories in 2018. In January, an appellate court held that the administration of California’s money bail system violated the Fourteenth Amendment rights of indigent defendants. In February, the Fifth Circuit held Harris County’s money bail procedures unconstitutional on the ground that they keep the “poor arrestee” behind bars “simply because he has less money than his wealthy counterpart.” But holdings that explicitly vindicate the constitutional rights of people without financial resources remain rare, and that rarity bolsters the widespread perception that Fourteenth Amendment law offers virtually no protection against class-based discrimination.

It is true that class-based discrimination does not trigger heightened scrutiny under equal protection in the way that race-based and sex-based discrimination do. Fifty years ago—in the era of Gideon v. Wainwright and Harper v. Virginia Board of Elections—it looked to many as if the Court was poised to recognize the poor as a protected class (or perhaps, as Frank Michelman famously argued, to recognize a constitutional right to some form of minimum welfare). But in San Antonio v. Rodriguez and the abortion funding decisions, the Burger Court both declined to recognize the poor as a protected class and rejected the idea that the Constitution guarantees minimum welfare.

Scholars have often viewed those decisions as excising all class-related concerns from Fourteenth Amendment law. But that view has obscured an important and ongoing form of class-related constitutional protection: one that resides not in equal protection but in fundamental rights doctrine. My new article (The New Class-Blindness, forthcoming in the Yale Law Journal) examines the long-standing and often overlooked forms of class-related constitutional protection the Court has developed in the fundamental rights context. These protections have played an important role in some areas of Fourteenth Amendment law for over half a century. But they are now under attack by conservative judges, who have begun to argue, for the first time, that it is impermissible for courts to consider class at all when adjudicating Fourteenth Amendment claims.

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Masterpiece Cakeshop and the Constitutionalization of “Both Sides”-ism

Noah Zatz

mastercakeAt first glance, Masterpiece Cakeshop v. Colorado Civil Rights Commission appears not to be among the more important of this past term’s disastrous Supreme Court opinions. It was issued much earlier than the June blockbusters and has widely been treated as a bullet dodged, allowing a Christian conservative baker to refuse to make a cake for a same-sex wedding but not setting much of a precedent. But something more insidious may be seen at work if one revisits Masterpiece Cakeshop (allowing anti-gay discrimination if it is religiously motivated) in light of not only the travel ban opinion (allowing anti-Muslim discrimination if it is adorned with paperwork) but also the recent “civility” eruption.

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Gender Equality as Social Reproduction Infrastructure

Julie Suk —

On May 30, 2018 the Illinois legislature voted to ratify the ERA. Thirty-seven states have now ratified the sex equality amendment to the U.S. Constitution, just one state shy of the three-quarters required by Article V to validly amend the Constitution. Legal commentary following this news is primarily focused on questions about the amendment’s legitimacy, such as the status of post-deadline ratifications and attempted rescissions, the constitutionality of ratification deadlines for amendments, and the validity of legislation eliminating the deadline. But it is equally important to contemplate how the ERA could change the political economy of gender inequality. It can be more than a symbol that locks in the sex discrimination law we already have. We can take some inspiration from feminist constitutionalism around the world to imagine a twenty-first century ERA that catalyzes new gender-equal infrastructures, particularly for biological and social reproduction, compatible with a sustainable and more humane political economy.

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Artificial Sovereigns: A Quasi-Constitutional Moment for Tech?

K. Sabeel Rahman –

Consider the following developments:

  • In recent weeks, the explosive revelations about Cambridge Analytica and its systemic data-mining of Facebook profiles has cast into relief the way in which our contemporary digitized public sphere is not a neutral system of communication but rather a privately built and operated system of mass surveillance and content manipulation.46038488 - law concept: circuit board with  scales icon, 3d render
  • Meanwhile, Alphabet has announced that its subsidiary, Sidewalk Labs, will take over management of a major redevelopment of part of Toronto’s waterfront, in an effort to build from the ground up a modern “smart city.”
  • These developments come amidst the longer-term development of new forms of technological transformations of our political economy, from the rise of Amazon to its position as the modern infrastructure for the retail economy, to the ways in which technology is transforming the nature of work and the social safety net.

There has been a growing sense of concern about the twin crises of twenty-first-century democracy on the one hand and of the growing problems of inequality and insecurity on the other. Technological change is at the heart of both of these transformations. Technological change alters the distribution and dynamics of political and economic power, creating new forms of “functional sovereignty”—state-like powers concentrated in entities and systems that are not subject to the institutional and moral checks and balances that we associate with the exercise of public power. Such arbitrary power represents a kind of quasi-sovereignty that, left unchecked, poses a threat of domination.

The rich scholarly debate on law and technology has surfaced a range of approaches for addressing some of these concerns, from legal standards for privacy and data use to antitrust and public utility regulation, and more. These proposals and interventions can be reframed as part of a broader challenge of defusing the threat of domination created by these technological systems. Regulating and responding to new technologies and modern forms of economic and political power thus represent a variation on familiar questions of public law and constitutional design: how to structure the exercise of potentially arbitrary, state-like power, rendering it contestable, and therefore legitimate.

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No Democracy

David Singh Grewal and Jedediah Purdy – 

What would it mean to make economic and political life more democratic? One way toward an answer is by getting more precise about how they are now undemocratic. Avoidance of democracy runs very deep in American law, and perhaps in the modern legal and political order generally. This is so despite the fact that constitutionalism and other forms of legal and political order all rest on claims to democratic legitimacy.

“Democracy” retains the core sense of its Greek root: “the people rule.”  That is, in a democracy it must be true in some real sense that people have authorized the rules, institutions, and multifarious exercises of power that they must live with, and which deeply shape their lives. What would it mean to “reinvent” democracy today—and what would the legal structure for such a democracy look like? In an essay forthcoming in the Yale Law Journal, we explore the answers to this question suggested by a recently published book, The Sleeping Sovereign, by Richard Tuck.

Tuck’s book sheds new light on the relationship between popular sovereignty and constitutional government. He argues that the modern constitution is a unique contribution to the practice of democracy, not because it constrains majorities – the usual picture – but rather because it enables them to act. Contrary to the popular myth that European monarchies exercised the “divine right of kings,” most medieval and early-modern rulers claimed some kind of authorization from “the people” – rooted in history, ongoing consultation among elites who claimed to speak for popular interests, and devotion to the well-being of the land. More or less everyone agreed, though, that it was impossible for large populations to rule themselves collectively in any ongoing way: what the citizens of small city-states of the ancient world had done, especially in Athens, was out of reach in a territory as vast as France or England.

Tuck traces a line of thought that began with sixteenth-century French jurist Jean Bodin and received crucial later formulations from Thomas Hobbes and Jean-Jacques Rousseau – and, more to the point, was understood in practice by the late eighteenth century to be a way of recapturing democratic self-rule in large, complex countries. The heart of the idea was to distinguish everyday rule, which thinkers in this line called “government,” from the decisions that established and authorized the basic form and terms of political control, which they called “sovereignty.” If a people authorized its form of government, its sovereignty was democratic, even if everyday business was carried out by other means – courts, ministers, etc. The great innovation that made this idea real was the written constitution, authorized by direct majority vote (or, less ideally, some other popular procedure such as elected conventions). A constitution contained the decisions of a democratic (i.e., “popular”) sovereign, granting power to the government it created while also shaping and constraining that government.

So far so good: It sounds like the U.S. Constitution, more or less (if you can stomach, for the moment, overlooking how limited the franchise was in most states). But pretty much everyone in this tradition agreed, for very powerful reasons, that sovereignty was democratic only if a people could regularly revisit its fundamental law, either to reauthorize it or to change it. Only if constitutional amendment was a real, live option would it make sense to say that the living had authorized the constitutional regime they were born into, rather than simply inheriting it. In other words, the original conception of constitutional self-rule incorporated both the basic commitment of today’s “originalism” (the democratic authorship of the constitution in the first instance) and the basic commitment of today’s “living constitutionalism” (the regular updating of constitutional authorization, by reaffirmation or change). Popular sovereignty was meaningful only if it included both, and to achieve that a people had to adopt a constitution with a viable procedure for ongoing amendment. Continue reading