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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Coming of Age at the End of History

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

John Whitlow – 

social-movementsIn 1989, in the midst of the collapse of the Soviet Union and just before the fall of the Berlin Wall, Francis Fukuyama argued, famously, that we had reached “the End of History.’ Echoing Margaret Thatcher’s dictum that ‘there is no alternative’ to neoliberal capitalism, Fukuyama averred that the triad of free markets, liberal democracy, and consumerist culture had become universal, enveloping the planet so thoroughly as to flatten historical time. There would be no more revolutionary upheaval, no more transformative social change. An ever-expanding capitalism, governed by some variant of representative democracy, was the only game in town, and it was here to stay.

I was fifteen when Fukuyama penned “The End of History,” and – as much as I am loathe to admit it – I am a child of neoliberalism. I was born at the end of 1974, just as New York City entered its fateful descent into fiscal crisis. I grew up in Baltimore during the Reagan years, a witness to the ways in which racial capitalism eviscerated the city’s black and white working class, leaving many of my friends and their families adrift in an economy and a place that had been structurally abandoned. All the while, I was indoctrinated into a public policy common sense of austerity, privatization, and an expanding carceral state; as well as a hollowed-out notion of citizenship in which our subjectivities are constructed primarily through individual-entrepreneurial, rather than solidaristic-democratic, terms.

Looking back, I am struck by how much of this I’ve imbibed, how much it has ordered what I’ve regarded as accepted knowledge, even as I’ve attempted to resist it. For most of my adult life, I’ve been a poverty lawyer/movement lawyer/community lawyer (the terminological distinctions matter, but not so much for the purposes of this essay), and, at times (especially recently) I have found myself questioning how I’ve gone about my work. Of course I knew that the pronouncements of Fukuyama and Thatcher were bankrupt – that they were the product of a politicized theology – but to what extent have my own political, intellectual, and professional horizons been limited by an unwitting, silent acceptance of that same theology?

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What Role for Global Finance in a Course on International Trade Law?

David Singh Grewal –

Most years, I teach an introductory course on International Trade Law. And every year since I began I’ve included a session on the international financial architecture, on the view that this architecture is intimately bound up with the functioning of the trade regime.

Euro Dollar The European Union United States

I begin the course predictably enough with a series of sessions on the history and political economy of international trade before we get into what I call the “guts of the GATT.” Here, we study the key articles of the General Agreement on Tariffs and Trade (GATT) and the main disputes that have arisen concerning their interpretation, both before and after the establishment of the World Trade Organization (WTO). Any course on international trade law would have to introduce core elements such as “most favored nation” status (Art. I), “national treatment” (Art. III), key exceptions (for example, as elaborated in Article XX), and the main “annex agreements” of the WTO (such as the TRIPS agreement, which Amy Kapczynski has discussed on this blog), as well as the various remedies and safeguards available to states facing disruptions from international trade. But toward the end of the course, I bring my friend and colleague, Robert Hockett, to discuss the international financial architecture underpinning economic globalization as a whole.

I suspect few international trade law courses address international finance as an integral part of an introduction to trade liberalization. Given the evolution of international economic law, this choice is probably unsurprising. Neither in the treaty text of the GATT (nor in the other “annex agreements” that make up the WTO) is financial architecture explicitly regulated. By contrast with international trade law, international financial law is elaborated through a different set of governing texts, institutions, and international monetary practices—prominently, the IMF Articles of Agreement, the IMF itself, and the practices that have developed among affiliated national central banks and finance ministries. Trade law scholars may be understandably wary of bringing such complex or seemingly extraneous considerations into a course that will already be full enough.

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The Movement for Black Lives Offers an Abolitionist Approach to Police Reform

Amna Akbar – 

For several years, I have been thinking about the rise of racial justice movements that account for political economy—specifically, those with anti-capitalist commitments. I am thinking of the Movement for Black Lives, and aspects of the immigrant justice movement. These social movements mark the revival of anti-capitalist racial justice politics in the United States in a way that we have not seen since the civil rights, Black power, and Chicano movements of the 1960s and 1970s. As these movements continue to organize in the face of growing global inequality and right-wing populism, they offer another way forward.Black_Lives_Matter_logo.svg.png

To illustrate the creative potential of studying radical social movements, consider the question of policing. The Movement for Black Lives is the leading example of a contemporary racial justice movement with an analysis of political economy and a vision to transform the state. In my forthcoming article, Toward a Radical Imagination of Law, 93 N.Y.U. L. Rev. (forthcoming 2018), I consider policing through the lens of the Movement for Black Lives policy platform, “A Vision for Black Lives: Policy Demands for Black Power, Freedom, and Justice.”

I compare the Movement’s analysis with the Department of Justice’s (DOJ) Ferguson and Baltimore reports. The Vision and DOJ reports offer alternate conceptualizations of the problem of policing and the appropriate approach to law reform. The comparison offers a study in the difference between an abolitionist approach to police reform, and a more traditional one.

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The New Majority: Uniting the Old and New Working Class

Daria Roithmayr – 

This post picks up where Angela Harris and Noah Zatz left off in the conversation about race and class. The arguments in this post preview arguments I will be making in a new book, entitled “The New Majority.” It will surprise no one that I decided to write the book in November of 2016.

So here’s the central argument. To end inequality, and to defuse white working class backlash, progressives should work to unite both the old and new working class on issues that those two groups share—like the concentration of power at the top, economic precarity in the middle and bottom, access to health care, job growth, wages and quality, freedom from violence and addiction, and reducing exploitation. To name just a few.

If there is a silver lining to the 2016 election and the trail of destruction that has followed, it is this: in the midst of the chaos, progressives have begun a serious conversation about inequality, and about race and class. To be sure, the conversation doesn’t look all that illuminating at the moment. On one side, people like Mark Lilla and others on the economic left (or left of center, or okay, center) make totalizing claims that locate class as the centerpiece in the conversation about inequality. They argue that Democrats have failed to address the concerns of the white working class. They claim, for example, that the experience of plant closings in key districts, explains why many people in battle ground states voted for the GOP. Some in this group argue that progressives ought to jettison “identity politics” in favor of some more universalist principles of fairness or economic justice.

On the other side, Ta-Nehisi Coates and others on the cultural/material left make totalizing claims that race and racism are what stands in the way of true equality. This group argues that anti-black racism and anti-immigrant resentment drove last November’s results—after all, poor and working class voted disproportionately for Clinton, and voters who expressed fear of people of color were far more likely to have voted for Trump, even when they had voted for Obama or for Democrats in years past.

In addition to making totalizing claims, both sides appear to accept the common wisdom that long-standing racial divisions make a unified working class impossible. I want to challenge all of that. More specifically, I want to argue for the possibility of uniting the old and new working class around progressive commitments to things like shared prosperity and the end of precarity, access to health care, an end to violence and a lower cost of debt. This doesn’t mean that I side with the class folks—far from it. Or with race folks. It’s more accurate to say that I side with both. To unite the old and new working class, we must understand the way in which race and class interact, for a particular group of people at a particular historical moment in time. Continue reading

Division, Distraction, and Domination: Revisiting The Miner’s Canary

Frank Pasquale – 

A magazine owned by billionaire Michael Bloomberg recently reported on workers’ declining share of national income. “Why don’t workers get the full benefit of rising productivity? No one has good answers,” it stated, to the merriment of left Twitter. A raft of memes reminded Bloomberg Businessweek of the lessons of Piketty, Marx, and political economy generally. Of course capitalism is going to disproportionately reward the owners of the means of production. Surplus value helps r > g, those gains are partially reinvested in the political system, which produces even more inequality—self-reinforcing domination without end, amen.

On the other hand, there are many varieties of capitalism. Some states are much better at democratizing financial security than others. The US and UK are both savagely unequal societies, but at least the latter has a National Health Service. Germany and France do more than either the US or UK to reduce inequality through taxes. Timing matters, too: the US of the mid-1960s had far more hope of durable egalitarianism than the US of the mid 2010s. As David Grewal has argued, “Understanding why r > g has generally held — and why it briefly did not — requires an account of capitalism as a socioeconomic system structured through law.” And we cannot tell that story without, as Angela Harris argues, looking at the role of race in structuring both economic and political opportunity.

Harris’s post focuses on the history of exploitative relations between central and peripheral powers. She argues:

Part of the mission of “law and political economy,” as I see it, is to broaden our investigation of the relationship between “race” and “economics” both spatially and temporally – beyond the bounds of America as a nation-state, and beyond slavery as a starting point. The proposition is that race is foundational to “law,” to “the political,” and to “the economy.”

Both social science graduate schools, and law schools, can use the pursuit of parsimony as an excuse to abstract away from the racial context of so much of what we study. Harris is right to bring race to the center. Many of the works she cites should be in the canon of law and political economy. They help us better explain the past, while illuminating troubling trends of the present. We need to elevate research that does this vital work, exposing the role of racecraft in distracting individuals from their real interests, to pursue some contrived purity or superiority.

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