One of the areas in which the intersection of law and space has been relatively well explored is in that of varieties of capitalism. Below are my study notes for this particular class in my law and geography course.
Notes on geographic-regulatory implications of varieties of capitalism and variegated capitalism
The state is often thought of in terms of political jurisdictions. But the territory of the state is not simply political, it is also in significant ways ‘economic’. Particularly since the coming of the industrial revolution in the 19th century, states have been able to delineate themselves economically as well as political. Perhaps the first example of this is found in the United States, which devoted at least two constitutional provisions – the commerce clause and the contract clause – specifically to the need to unite the full territory of the country into a common market.
Today, national economic space is most commonly thought of as coming in three possible flavours. These are ‘liberal market economies’, ‘coordinated market economies’, and ‘state capitalism’. The difference lies in the relationship between the state and its national market. In liberal market economies, the state uses markets solely for the generation of wealth – questions of redistribution and spending on public goods is solely for the state using public revenue. In coordinated market economies, states enlist markets to help the state realize social welfare goals (such as through providing full employment). In state-capitalist economies, such as that of the People’s Republic of China, the state also uses the capitalist economy to promote state interests.
A state’s choice of its kind of capitalism is primarily historical and political, but it has real regulatory consequences, which we will (obviously) be exploring. In the first reading, we look at how the industrialization of the national economy give state access to a much wider diversity of regulatory instruments than are enjoys by lesser industrialized countries. In the second reading, my Mark Roe, we explore how liberal market economies and coordinated market economies have different regulatory needs, particularly in the area of corporate governance. In the next reading, we see that the homogeneity of national economies is somewhat illusory, and explore how the phenomenon of variegated capitalism – i.e, when one national economy actually evinces a number of different kinds of capitalisms – has important implications for how markets need to be regulated, implications that are not widely recognized in the Anglophone literature on market regulation in particular. Finally, there is a short introduction to Karl Polanyi’s classic notion of the double movement, a phenomenon through which societies naturally seek to protect themselves from the social damage caused by capitalist marketization. This is particularly relevant to the third and fourth questions listed below.
The fifth, optional reading just a summary over view the main ways that states have historically sought to structure their national economies. We’ll talk more about this in class. The sixth reading, also optional, explores how the difference between a liberal market economy and a coordinated market economy impact consumer protection regulation.
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1. Dowdle, Michael W. "Public accountability in alien terrain." in M.Dowdle, ed., Public Accountability: Designs, Dilemmas and Experiences (CUP 2006): 329-357.
2. Roe, Mark J. "Political preconditions to separating ownership from corporate control." Stanford Law Review (2000): 539-606.
3. Dowdle, Michael W. "On the Innately Political Character of Market Regulation," Revista Direito e Práxis, Vol. 07, N. 16, 2016, p. 416-446.
4. Notes explaining Polanyi's double movement
5. Noted on 'economic constitutionalism'
6. Teubner, Gunther. "Legal Irritants: Good Faith in British Law, or How Unifying Law Ends up in New Divergences." The Modern Law Review 61.1 (1998): 11-32.
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In reading through these materials, think about the following:
- Is capitalism, as a regulatory phenomenon, more
in the form of a synthetic or organic jurisdiction (and why is this question
important)? OR are some more synthetic
or more organic (particularly in the context of the different kinds of
capitalisms that constitute variegated capitalism). What factors impact on this question?
- Particularly with regards to the third reading
on variegated capitalism, what types of regulatory instruments are associated
with what kinds of capitalisms. Notice
in particular, the strong structural correspondence between rule of law and
industrialization. What happens when the
regulatory instrument that is being used to regulate some particular form of
capitalism is not suited for that particular form? Legalization, socialization, mutual
indifference? What factors would push
the system to one or the other of these corners?
- Note that in fact, legalization is often the
preferred and even intended consequent of regulation. We often pass laws hoping that they will
cause the regulatory environment to adjust to their vision of the world. I think this is especially true in the area
of economic regulation, particularly as it is promoted in developing countries
by the ‘law and development’ movement.
What are some of the unintended consequences (both economic and social) of
the ‘if you build it they will come’ approach to this strategy for economic
- With regards to the third question, think about
this specifically in the context of Polanyi’s notion of the double
movement. Polanyi’s notion argues that
liberal marketization along the line of a liberal market economy will
spontaneously provoke a counter-movement with regards to some other part of
society that seek maintain the social solidarity that is disrupted by making key
materials of social life subject to impersonal (and therefore asocial) market
forces. As you are looking at the
different kinds of capitalisms, try to identify their social components, and
think about how regulatory ‘colonization’ of that market might provoke
counter-movements elsewhere in society, and would this be desirable?
- The final reading also suggests that we might be able to regulate this double-movement through what it calls ‘political regulation’ (alternatively, it could be read as suggesting that political regulation is itself a kind of countermovement).