Law and Political Economy

Course in the Module "Globalisation, the Economy and Sociology of Law" (3 ECTS)

Theories about the nature and operations of markets have traditionally been dominated by economists. Neoclassical economics understands market mechanisms to operate most efficiently if they are unhindered by state regulation. The influence of neoclassical economic thinking on market design and regulatory policy, and the centrality of its core prescripts to other leading schools of economic thought, like new institutional economics (NIE), has been one of the factors that has spurred on the globalisation of the economy. The logic of enhancing market efficiency and fostering economic growth that is core to economic theory has shaped the evolution of international economic law, and underpins developments that have been key to economic globalisation, including the reduction of national barriers to the trade of goods and services, the removal of controls on the cross-border movement of capital, the creation of specialised courts to enforce the rights of foreign investors, and efforts to enhance labour mobility.

In this course, we aim to examine the role law plays in the construction of global markets. Drawing from legal realism, critical legal studies, and socio-legal approaches, we advance a Law and Political Economy (LPE) approach that challenges neoclassical and mainstream understandings of globalisation as an autonomous process initiated by private actors and beyond the control of public power. We will also challenge the normative underpinnings of this vision of globalisation – efficiency and economic growth. In our analysis, law does not simply regulate ‘natural’ or ‘spontaneous’ markets but provides the building blocks for their creation in their first place – having concrete distributive and power-conferring effects through its allocation of legal entitlements and coercive powers. Central to an LPE perspective is an understanding that markets are ‘legally constituted’, and that states are responsible for instituting and operationalising contemporary market designs that generate social and economic inequalities, and that lead to negative environmental impacts. In the course, we will explore the significance of understanding the constitutive role of law in globalised markets for regulatory initiatives that seek to change market outcomes, and we will consider the extent to which law can be a tool to reshape the global political economy and to achieve positive social change. 

In the seminars in the course, we will draw on LPE literature to examine topics including theories of regulation, international economic law, global value chains, financial liberalisation, and alternative models for economic development.