Professor Christine Desan (profile)
Harvard Law School – Fall 2021
Course Description:
According to one of the framers, the “soul of the Constitution” is the clause allocating authority over money. And for good reason:Every political community faces an elemental challenge: how will it mobilize resources for its own use? Just as importantly, how will it enable individuals to measure and move value between themselves?The way modern societies make and manage money determines much about how we work and what we produce, what wealth looks like and how we distribute it, who gets credit and who is shut out, who prospers and whom we fail, even what we regard as “private” and how we understand the “public” community. Money is, in other words, governance at the material level.
Through a series of constitutional debates and dramas, the United States engineered a distinctive design for its monetary system. The national government claims sovereignty over money (“the United States dollar”), disallowing state competition. In turn, the national government assigns authority over creating and diffusing the public medium to an array of banks and shadow banks. The design was new in the modern era. In fact, that monetary hardwiring came to characterize capitalism across the globe.
This course focuses on the constitutional struggles that have produced modern capitalism and its monetary hardwiring.The COVID–19 Crisis dramatized the importance of that conjunction. Which industries and investors the Federal Reserve rescues, how Congress gets and spends money, how that money reaches distressed workers, why banks dominate the credit industry, whom they select and whom they reject for credit, when communities get life–giving resources and when they are left aside–all are elemental governance decisions.We approach them as a profoundly “legal” story of constitutional powers, public delegations, private privileges, and effective disenfranchisement. Americans have been arguing in law over the monetary “soul” of our society from the beginning.We follow that story in the course.
As we will see, American struggles over money’s design and distribution shaped and reshaped the state and federal roles (federalism), configured the character of public obligation (the Contracts Clause and the failure of Reconstruction), and defined the reach of congressional authority (Article I and enumerated powers).The design of money also became a terrain on which the federal government and private actors fueled the rise of commercial banking, experimented with the corporate form, constructed and contested a segregated society, and improvised a powerful administrative state. We take the constitutional drama forward to the last decade, reaching the COVID–19 Crisis and the profound public policy challenges we face, including such issues as the relationship between finance and inequality, credit allocation and the unbanked, and the relationship between democracy, the Federal Reserve, and representative government.