How Lochner Became Disembedded: Legal Anxieties in a Global Context, or: Law’s Changing DNA. ROMA TRE Superior Graduate School Seminario Diritto Globale 27 February 2014 Professor Peer Zumbansen Osgoode Hall Law School / Yale Law School. Hard Cases Make Bad Law I. Illustration 1:
Superior Graduate School
Seminario Diritto Globale
27 February 2014
Professor Peer Zumbansen
Osgoode Hall Law School / Yale Law School
Lochner v. New York (US Supreme Court, 1905)
At issue: maximum working hours at bakery
Background: State legislature caps hours, plaintiff claims violation of constitutional rights (‚freedom of contract‘)
Majority opinion: strikes down law with reference to constitutional rights of contracting parties
Dissent (Justice Holmes): no such constitutional protection of economic freedom
Dissent (Justice Harlan): issue not domestication of economic warfare, but safety at work: deferral to SepPowers & Knowledge
Legacy: Lochner is THE economic laissez faire decision, which will only be reversed during New Deal Era of progressive market regulation. In 1990s, early 2000s, Lochner re-emerges as ‘good‘ law...
Australian Federal Court convicts S&P for fraud (Nov. 2012)
Issue: AAA Rating for financial instruments, issued in 2006
S&P: Less than 1% chance to default...W/in 6mo lost 90%
Decision: Triple A rating for “grotesquely complicated“ instrument should not have been given by “reasonably competent“ rating agency.
Rating was “misleading and deceptive“
Assessment / Consequences?
But, are Lochner and S&P ‘hard cases‘?
Issues/interests pitted against each other:
LOCHNER: Employees v Employer
Court v Legislator
Market v State
S&P: CRA v Buyer/Investor
Private party v public/private party
LOCHNER: Opposed views on state-market relations, regulation of freedom and the role of the state (public v private interests?)
S&P: Market analyst v investors (private interests?)
At issue, really:
Actors‘ positionings in a changing landscape
From....national regulatory systems, identifiable political positions, different options available for political market “interventions“
To....overlapping public/private, national/global regimes, broken legitimacy chains, competing competences and interest representations
Transnational Lift-off and National Touchdown (R.Wai)
But, what is the national framework today?
Context of transnational legal regulation today
....................................Pluralist / Regulatory / “Governance“
....................................Direct & Indirect Approaches
Contextualize through ‘Translation Categories‘
Theorize societal conflicts as ‘case studies‘
Questions to build case studies as laboratories of transnational regulatory governance:
1. Before the Australian decision, what is the “case“ arising from CRAs‘ activities (eg after downgrading of US, grading allocation to risky financial instruments issued to private and public investors)
2. Which interests are pitted against each other? What is at stake?
3. Who are the actors and what is their status? Which functions / responsibilities do they assume?
CRAs as “de facto market“ regulators
CRAs are relied upon by public regulators eg, - - when determining capital adequacy requirements for financial institutions
- when determining disclosure requirements
Disclosure and Information
Specific to rated entities:
Status and function are assessed and contested in context:
What is the context?
Globalized markets for goods, services & capital
.... and policy direction setting
Bye, bye to Ruggie‘s “Embedded Liberalism“?
Who defines and occupies the context?
Who has agency?
Where are the fora to theorize and contest agency?
Transnational Governance Context and the (Elusive?) Quest for a Political Framework
Complementing analysis of Norms, Actors & Processes: civil society and knowledge brokers:
See, eg, Stiglitz‘ http://policydialogue.org/about/
“The Initiative for Policy Dialogue works to broaden dialogue and explore trade-offs in development policy by bringing the best ideas in development to policymakers facing globalization’s complex challenges and opportunities. We strive to contribute to a more equitably governed world by democratizing the production and use of knowledge.”
“The Initiative for Policy Dialogue works to broaden dialogue and explore trade-offs in development policy by bringing the best ideas in development to policymakers facing globalization’s complex challenges and opportunities. We strive to contribute to a more equitably governed world by democratizing the production anduse of knowledge.”
Is this what Justice Harlan dreamed of?
Transnational Legal Pluralism
Transnational Legal Pluralism
The Move to Methodology:
As Law becomes (remains) elusive, its study must incorporate its emergence in context of different, overlapping and intersecting societal processes.
Focus on Actors, Norms, Processes:
Actors: e.g. World Social Forum
Norms: e.g. UN Global Compact
Processes: e.g. Consultation, Code making, Transnational Private Regulatory Governance
Towards: Transnational Law as Methodology of public/private, state-non-state norm making in a Global Knowledge Society