Law is a bedrock for economic prosperity and social stability. But developing optimal legal structures in a global market requires deep understanding of the complexities that inform these frameworks.
Around the world, various legal systems operate based upon different perspectives on the relationship between markets and law. These differences even extend to considerations about whether good governance and human rights should form an integral part of efficient government and legal systems.
For example, the United States and European Union regularly include legal and institutional mechanisms that balance political and market power with social and human rights objectives. By comparison, some countries in the Middle East have hybrid systems where Islamic law governs certain legal issues, while secular and international law informs other issues. Meanwhile, China is implementing market reforms, yet it is not bound by regional human rights agreements. Its growing national economic clout allows China greater latitude to construct its own set of global economic arrangements.
These differences lead to some important questions that Northwestern experts are exploring: What are the different legal infrastructures around the world and across time that help markets to function effectively? What is the relationship between productive markets and political stability? What happens if economic regimes are detached from the Western goals of good governance and human rights?
Does such detachment contribute to political instability?
These and related considerations are among those being addressed by the Global Capitalism and Law Research Group, created in 2015 within Northwestern’s Buffett Institute for Global Studies and made possible by Roberta Buffett Elliott’s transformative $100 million gift.
The group’s scholars — currently 20 — examine the relationships between international and domestic law. “When we were deciding how to translate the gift into programmatic initiatives, this was an obvious direction to pursue, given the importance of the subject and its far-ranging implications,” says Bruce Carruthers, John D. MacArthur Chair and Professor of Sociology, who directs the group with Cristina Lafont, philosophy, and Karen J. Alter, political science and law.
Selecting directors from across different fields was a strategic choice that aligns with Northwestern’s overarching research strengths.
“We want to look historically and comparatively at how law holds together market authorities in diverse ways,” says Alter. “There really is not a single discipline that does that.”
Each director brings a particular expertise to the group. While Carruthers studies what modern derivatives markets reveal about the relationship between law and capitalism, Lafont focuses on the intersection between human rights and the laws that shape capitalism. The Buffett gift was important and timely for Alter, who says that the group presents an opportunity for her to reorient her focus on international courts towards questions of political economy, and help her integrate her existing global legal expertise with the subject of comparative capitalism. These diverse but related backgrounds, Carruthers says, make for an “obvious alliance.”
The group’s predominant goal is to investigate the political, social, legal, and normative underpinnings of successful and politically sustainable local, national, and global markets. Such information will prove vital when examining the financial crisis in Argentina, for instance. The country is currently being held in contempt of a Manhattan court for refusing to repay its $23 billion debt to a group of New York hedge funds. The dispute is of interest to the Buffett research team since the disagreement involves determining which laws are applicable in the case. Alter says there’s a necessity to “re-understand the role that law has had in capitalism’s construction, now that national and international legal institutions are holding countries accountable to global legal obligations.”
The varied definitions of law and capitalism are why Lafont, like her colleagues, believes it is important for the research team to contribute different disciplinary strengths to the enterprise: “Global governance frameworks must be addressed from multiple perspectives,” she says. “The current global economic order is plagued with problems whose long-term solution depends on coming up with creative legal developments that will allow markets to be part of the solution rather than the problem.” Lafont says that creative legal developments are urgently needed to spur solutions that efficiently tackle climate change, provide access to essential medicines for citizens of poor countries, or prevent illicit financial flows.
The complexities of such modern global challenges require purposeful cross-disciplinary scholarship.
“The idea is to create a community of researchers who are already deeply invested in issues at the intersection of global capitalism and law,” says Lafont. “This is a bottom-up approach driven by researchers themselves,” she says. “We are trying to create a network so that each one of us can profit from the perspectives, knowledge, and research outcomes of those working within the other relevant disciplines.”
To help advance this goal and share knowledge more broadly, the steering committee selects experts from various fields to deliver a master class to the researchers, bringing new perspectives to familiar subjects. Harvard development economist Dani Rodrick addressed the scholars in 2015 while Duke law professor Mitu Gulati and Northwestern economic historian Joel Mokyr are scheduled to deliver master classes in early 2016.
With the research team forming in September, a temporary informal “shadow” graduate course was also created. Lafont and Alter plan to co-teach a related graduate course in winter 2016, intending to impart the high-impact value and best practices of interdisciplinary work to their students. “We want our students to be able to convey their research insights, and the importance of those insights, powerfully and to broader audiences,” Alter says. “One of the greatest things about this initiative is that it brings a sense of intellectual excitement that’s really fun to participate in and can be extremely fruitful,” says Carruthers. Over the next three years — the term of the initial investment in the research group — the team intends to meet monthly, with the gift then funding public events and further master classes, with Alter and Lafont’s co-taught class and potential co-published papers to follow. The team also hopes that its efforts will eventually result in a full research center dedicated to the study of global capitalism and law.
For now, the research group has found the initial months of brainstorming and planning to be very productive. Alter believes the Northwestern scholars have already succeeded in creating a community across the University and beyond. “We want to attract an even wider array of talented people who are interested in this topic,” she says, “and make Northwestern a true knowledge hub for the study
of this important topic.”