Harvard Law School, Spring 2022
Professor Christine Desan
An integrated political economy now covers much of the globe. This course focuses on the monetary structure of that phenomenon as a matter created and contested in law. Trade, extraction, exchange, debt, and economic development – for centuries, all have depended on money as their medium. By examining the changing legal design of money, we will study globalization as a material, ideological, and distributive event of enormous significance.
Early sovereigns prioritized domestic law, both public and private, in developing the rules that provide the basic matrix for exchange. Those rules created the mediums that carry value – including money, credit, and circulating capital. Nation-states today still claim sovereignty over those decisions; they are basic to self-determination and economic development. But the latitude for those decisions had changed. New monetary and financial relations now bind states, individuals, and other entities together and reconfigure the possibilities for their interaction. Tracking money takes us, in other words, from law at the local level to the law and legal regimes that determine how money flows at the international level.
Starting from the local level, we consider why and how political communities create money and financial institutions both for public ends (like defense and social welfare) and for the decentralized exchange of their members. That focus exposes how central money’s design is to governance; we consider the design of money and the institutions around it as decisions that penetrate the character of modern political societies. In turn, we attend to the challenges that occur as different sovereign projects collide, interact, or compete with one another, and the character of the international orders that have resulted, including those of early Europe, the era of the Gold Standard, the Bretton Woods period, and the contemporary system.
We will focus, in particular, on the advent and development of modern money, a form of liquidity created by central banks, based on sovereign debt, and expanded by commercial banks and capital markets. We discuss how that bank-based money defines value, authority, and markets in the modern world, with attention to the way it has shaped and is shaped by international law and international financial institutions, its role as the medium for much of modern globalization, its implications for economic development, and its impact on global and domestic inequality.
The crisis brought by COVID-19 heightens the stakes. In October, 2020, the World Bank forecast that the crisis has moved 150 million people into extreme poverty and greatly increased the debt burdens on poor countries. The Bank’s president later listed the challenges to recovery. Note how many of them depend on monetary design: “While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges — in public health, debt management, budget policies, central banking and structural reforms — as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth.”
Two features of the course are worth particular mention. First, as presently constructed, the course is Euro-centric. On the one hand, that emphasis acknowledges and conveys the dominance of selective monetary forms and western international law in the contemporary world. The spread of those forms and law becomes one of the issues we must track and debate; finance is a powerful vector of imperialism. On the other hand, the emphasis means that we engage few other monetary designs and debates. In response, I am working to expand our frame to recognize non-European alternatives and to develop comparative resources, for this and other classes. If you are interested in working on that project, now or in the future, please meet with me to talk.
A second challenge haunts those mapping the legal design of money and monetary globalization: given money’s elemental importance to economics, that discipline dominates much of the writing about money, importing terms and assumptions that are unfamiliar to lawyers and law students. We will decode those terms and assumptions as we go – the course does not presume or require background knowledge in economics. Our focus, by contrast, is on the legal structures, conceptions, and practices that animate money, as well as debates about those phenomena. Having said that, the disciplinary differences are real and create difficulty for many of us. You are invited to flag terms or models that are confusing, in class and/or in office hours and we’ll work to decipher what we need to do our own work.