Reshaping Markets Set against the origins and consequences of the global financial crisis, this timely book offers an enriching and revealing narrative of the role that the state plays in regulating markets Focusing on core areas of private law such as corporate, labour and banking law, the contributors offer a conceptual framework in which to examine the central tenets of the role of private law in today’s global economy In the current climate of ever-increasing economic inequality and austerity measures, the authors highlight the urgent need for a comprehensive analysis of the continuing tension between ideas of market liberalism and theories of society With a focus on both the domestic and transnational dimensions of market governance, the authors offer a crucial insight into the co-existence and interaction between state and market-based economic governance bertram lomfeld is Professor of Private Law and Legal Philosophy at Free University of Berlin alessandro somma is Professor of Comparative Law at the University of Ferrara, Italy peer zumbansen is the inaugural Professor of Transnational Law at The Dickson Poon School of Law, King’s College, London, where he directs the Transnational Law Institute Reshaping Markets Economic Governance, the Global Financial Crisis and Liberal Utopia Edited by Bertram Lomfeld Professor of Private Law and Legal Philosophy Free University of Berlin Alessandro Somma Professor of Comparative Law University of Ferrara, Italy Peer Zumbansen Professor of Transnational Law King’s College, London University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press is part of the University of Cambridge It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning and research at the highest international levels of excellence www.cambridge.org Information on this title: www.cambridge.org/9781107095908 © Cambridge University Press 2016 This publication is in copyright Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press First published 2016 A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Lomfeld, Bertram, editor | Somma, Alessandro, editor | Zumbansen, Peer, 1966– Reshaping markets : economic governance, the global financial crisis and liberal utopia / edited by Bertram Lomfeld, Alessandro Somma, Peer Zumbansen Cambridge, United Kingdom : Cambridge University Press, 2016 LCCN 2015047141 | ISBN 9781107095908 (hardback) LCSH: Law – Economic aspects | Financial institutions – Law and legislation | Trade regulation | BISAC: LAW / Corporate LCC K487.E3 R469 2016 | DDC 343.08–dc23 LC record available at http://lccn.loc.gov/2015047141 ISBN 978-1-107-09590-8 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate Contents List of figures page xi List of contributors xii Introduction: reshaping markets and the question of agency peer zumbansen Part I Crisis and normality in transnational market regulation The central problems of Marx’s economics and the nature of market regulation david campbell 1.1 1.2 1.3 1.4 Introduction The meaning of ‘regulation’ Left-wing criticism of the free market Early British left-wing criticism of the labour theory of value 1.4.1 Shaw and Keynes on Marx 1.4.2 Wicksteed on Marx The critique of capitalism in light of the labour theory 1.5.1 Supply and demand 1.5.2 Competition 1.5.3 Planning Conclusion: the form of value 10 13 16 16 21 23 23 31 33 36 Contract law, securitization and the pre-crisis transformation of banking james ‘jay’ varellas iii 45 1.5 1.6 2.1 2.2 2.3 Introduction Liberal contract law and the development of the securitization market 2.2.1 The historical development of securitization 2.2.2 The laissez-faire institution of contract law 2.2.3 Contract law and the pre-crisis speed-up of securitization markets Securitization and the rise of market-based banking 2.3.1 Securitization and the eclipse of the post–World War II banking regime 2.3.2 The rise of market-based banking and its consequences 45 47 47 49 50 52 52 53 v Contents vi Market-based banking and the problem of the “coordinated market economy” 2.4 Conclusion 2.3.3 ‘Inside’ and ‘outside’ the firm: corporate law and contract governance as regulatory theories peer zumbansen 3.1 3.2 3.3 3.4 3.5 54 56 60 Introduction Studying the corporation The lawyer’s mindset and the new twist in law and economics The promises (and pitfalls) of contract governance Coming full circle? The corporation and contract governance 3.5.1 The conundrum of agency in contemporary contract and corporate theory 3.5.2 Beyond public versus private: the promise of relational contract theory for a new theory of the firm 3.5.3 The many bases of contracts 3.6 Conclusion 75 78 81 Part II Austerity woes: trials and tribulations of debt 95 The Greek crisis: a critical narrative iannis michos 4.1 Prologue: the biggest sovereign insolvency in history 4.2 Foucault’s ‘tool box’ 4.2.1 Crisis and reform 4.2.2 An event and the quest for a single cause 4.2.3 The use of data 4.3 What did really happen? 4.3.1 The years 1990–2005: availability of cheap labour and profit margins 4.3.2 Greece in the Eurozone: living with a strong currency 4.3.3 Governance issues within Greece and the Eurozone 4.3.4 The ‘inefficient’ markets: eurozone or euro country? 4.4 Epilogue: The shaping of a new paradigm The biopolitics of debt-economy: market order, ascetic and hedonistic morality alessandro somma 5.1 5.2 5.3 5.4 5.5 5.6 5.7 Accumulation regimes, hedonism and asceticism The emerging of a debt-economy The morality of debt relations as power relations Sovereign debt restructuring and morality: citizens’ asceticism The German experience: Hartz-reforms and invisible poverty Cooperation and workers’ asceticism From consumers’ hedonism to communitarianism 60 63 66 70 72 73 97 97 99 100 101 101 102 102 105 107 110 112 115 115 117 119 121 124 126 128 Contents vii Credit contracts and the political economy of debt moritz renner and andreas leidinger 6.1 6.2 6.3 Introduction Three stages of a decline? A historical political economy of debt 6.2.1 The social emdeddedness of debt 6.2.2 The Great Transformation Part I: credit contracts and the regulatory state 6.2.3 The Great Transformation Part II: trading risks Making risk ‘disappear’: the example of CDS trading 138 Making the law more risk-sensitive: the example of close-out netting 139 141 142 142 143 144 Internal centralisation – The 2009 Supplement to the Master Agreement 144 6.3.3.2 External lobbying – the example of close-out netting Reembedding debt? 145 147 6.3.4.1 Is there a reembedding of debt at all? 147 6.3.4.2 Are ISDA’s standards democratically legitimate? 148 6.3.4.3 Societal regulatory authorities and the nation-state – a complementary relationship Conclusion Part III 135 137 6.2.3.1 6.3.3.1 6.4 133 134 134 6.2.3.2 6.2.3.3 A shift from normative to cognitive expectation structures? Reembedding debt? The constitution of a political economy beyond the state 6.3.1 ISDA’s development and functioning 6.3.2 ISDA’s part in the cognitivation of financial markets 6.3.3 The evolution of ISDA’s position in the derivatives market 6.3.4 133 Reforming finance: systemic risk and accountability Why manager liability fails at controlling systemic risk andreas engert 7.1 Introduction 7.2 Manager liability: not strict but fault-based 7.2.1 Strict liability is inconsistent with managers’ role as agents 7.2.2 Incentive distortions from strict liability 7.3 Defining the standard of care 7.3.1 Objective: limiting the probability of bank insolvency 7.3.2 Defining the standard ex ante 7.3.3 Defining the standard ex post 7.4 The consequences of uncertain care standards 7.4.1 The case for restricting manager liability 7.4.2 Objections 7.5 Conclusion 153 154 159 161 161 162 163 164 166 167 169 174 176 177 179 180 viii Contents How special are they? Targeting systemic risk by regulating shadow banking tobias troă ger 8.1 Introduction 8.2 The rationale underpinning current regulatory initiatives to cover non-bank credit intermediation 8.2.1 In search of an operative definition 8.2.2 Goals of banking regulation revisited: substance Safeguarding the supply of liquidity as the paramount end in prudential bank regulation 8.2.2.2 Risk-insensitive funding as the core problem 8.2.3 Synthesising the debates 8.3 Legislators’ and supervisors’ ‘formalist’ implementation of the policy prescriptions 8.3.1 Securitisation and off-balance sheet conduits 8.3.2 Mutual money market funds and repo 8.4 Enhancing prudential regulation’s assertiveness in a normative approach 8.4.1 The idea of an internal solution without permanent law reform 8.4.2 Actual and alleged limits of a normative approach 8.5 Conclusion 185 185 188 188 191 8.2.2.1 Fixing Finance 2.0 john m conley and cynthia a williams 9.1 Introduction 9.2 Too big to fail banks are still a concern 9.2.1 Why is “too big to fail” a problem? 9.2.2 Relevant provisions of Dodd-Frank 9.3 Executive compensation 9.4 Why the gaps? 9.5 Culture, organizational psychology and regulation 9.5.1 Project finance as a model of public/private co-regulation 9.5.2 Dutch Central Bank psychological interventions 9.6 A co-regulation model 9.7 Conclusion 10 Regulating financial markets: what we might learn from sovereign wealth funds larry cata´ backer 10.1 Introduction 10.2 The operation of the Norwegian Sovereign Wealth Fund: private actor, international actor, and sovereign 10.2.1 Organization of the NSWF 10.2.2 Responsible investing and active ownership 10.3 Juridification of investment: the emerging jurisprudence of the ethics council 10.3.1 The NSWF ethical guidelines 10.3.2 Operationalizing the Ethics Guidelines – the structure and functions of the NSWF Council on Ethics 191 193 194 196 197 198 199 199 200 202 208 208 210 211 212 214 216 219 221 222 223 224 229 229 231 232 233 236 236 238 356 Bertram Lomfeld Polanyi, K 1944 The Great Transformation Boston: Beacon Press 2002 Prindle, D 2006 The Paradox of Democratic Capitalism: Politics and Economics in American Thought Baltimore: John Hopkins University Press Rawls, J 2001 Justice as Fairness Cambridge, MA: Harvard University Press Ruggie, J 1982 ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order’, International Organization 36: 379 Saller, R 2007 ‘Household and Gender’, in Scheidel, W/ Morris, I/ Saller, R (eds.), The Cambridge Economic History of the Greco-Roman World Cambridge University Press Smith, A 1776 Inquiry into the Nature and Causes of the Wealth of Nations Cambridge: Clarendon Press 1979 Streeck, W 2011a ‘The Crisis of Democratic Capitalism’, New Left Review 71: Streeck, W 2011b ‘Taking Capitalism Seriously: Towards an Institutionalist Approach to Contemporary Political Economy’, Socio-Economic Review 9: 137 Streeck, W 2014 Buying Time: The Delayed Crisis of Democratic Capitalism London: Verso Supiot, A 2007 Homo Juridicus: On the Anthropological Function of the Law London: Verso Temin, P 2013 Roman Market Economy Princeton University Press Wielsch, D 2012 ‘Global Law’s Toolbox: Private Regulation by Standards’, American Journal of Comparative Law 60: 1075 Zumbansen, P 2011 ‘Corporate Governance, Capital Market Regulation and the Challenge of Disembedded Markets’, in Sun, W/Stewart, J & Pollard, D (eds.), Corporate Governance and the global financial crisis Cambridge University Press Zumbansen, P & Calliess, GP (eds.) 2011 Law, Economics and Evolutionary Theory Cheltenham: Edward Elgar Index The ABC of Communism (Preobrazhensky and Bukharin), 29 ABCP See asset-backed commercial paper ABS See asset-backed securities accumulation regimes, 115–117 active ownership ethical guidelines for, 237–238 Norges Bank and, 240–241 in NSWF, 234–235, 237–238 agency, in law theory, 73–75 agonistic pluralism, 151 Alpha Bank, 103–104 Amsterdam Treaty of 1997, 284 anti-discrimination law Amsterdam Treaty of 1997 and, 284 contract law influenced by, 283–284, 290–291 development of, 284–286 economic market development and, 286–289 empowerment through, 293–294 EU citizenship and, 286–287 Framework Directive and, 284 gender equality as result of, 287–288, 291–292 Gender Goods and Services Directive and, 284 in Germany, 285 global scope of, 283–286 indirect discrimination under, 286–289 limitations of, 293–295 under Lisbon Treaty, 289–290 under Maastricht Treaty, 286–287 private law and, 291 Race Directive and, 283–284 redistributive dimension of, 293 social policy-making through, 293–295 under Treaty of Rome, 286 antitrust movement, 324 Arrighi, G., 334 ascetism debt-economy and, 115–117 development of, 118 hedonism morality in conflict with, 117–118 labour markets and, 126–127 sovereign debt restructuring and, 121–124 asset-backed commercial paper (ABCP), 171–172 shadow banking and, 194–195 asset-backed securities (ABS), 48 Athens Stock Exchange, 103–104 austerity ideology, 122–123 See also ascetism Australia, banking systems in, 211–212 backstop requirements, 194 Bakunin, Michael, 34–35 balance states, free markets and, 321 bank credits, money creation through, 192 bank insolvency correlated tail risks and, 168–169 diversification as strategy against, 168 fault-based liability and, 167–169 banking regulations See also finance, modern cultural approaches to, 218–219 under Dodd-Frank Act, 212–214, 216–219 formalist implementation of policy, 196–199 under Glass-Steagall Act, 216–217, 336 off-balance sheet conduits and, 197–198 representation hypothesis and, 193–194 securitization in, 197–198 for shadow banking, 188–196 definition of, 188–191 goals of, 191–194 liquidity supply and, 191–193, 194 risk-insensitive funding in, 193–194 banking systems See also too-big-to-fail banks ABCPs and, 171–172 in Australia, 211–212 in Canada, 211–212 in CMEs, 54–56 in common law countries, 211–212 under Dodd-Frank Act, 49, 51–52, 186 embedded liberalism and, 52–53 FASB for, 196 funding gaps and, 47 357 358 Index banking systems (cont.) instability of, historical development of, 45–47 in LMEs, 54–56 market-based, 46–47 market-to-market accounting rules and, 47 originate-and-hold model, 214–215 originate-to-distribute model, 214–215 during post-World War II era, 52–53 risk management in, 167–169 securitization as historical influence on, 45–47 shadow banking as influence on, 196 short-term funding and, 47 subprime lending crisis, 174–175 3–6–3 model, 46 traditional, breakdown of, 52–53 under Volcker Rule, 218 bankruptcy, of Greece, 97 Bar-Gill, Oren, 300, 303–308 See also Common European Sales Law behavioural economics, 309–310 behavioural law, 303–307 economics and, 307–309 Ben-Shahar, Omri, 300, 303–307 See also Common European Sales Law Big Bang, bilateral investment treaties (BITs), 260 biopolitics, economic, 120–121, 352 BITs See bilateral investment treaties Blair, Tony, 124–125 bluewashing, 274 Bolshevism, 28–29 bond security in Germany, 111 in Greece, 111 Brandeis, Louis, 324 Bretton Woods system, 336 Broome, Lissa, 213 Bukharin, Nikolai, 28–29 New Economic Policy and, 28 War Communism and, 28–29 Canada, banking systems in, 211–212 Capital, 19–20 capital, centralisation of, 36–37 capitalism See also Casino Capitalism competition and, 31–33 constraints within, 35 democratic, 348 diversity of capitalism theory, 332–333 embedded, 349–350 human relationship with nature and, 24 Marx’s critique of, 23–36 as mode of production, 36–37, 39 as social form, 39 socialism as transition to, 34 state, 332–335 supercapitalism, 324 supply and demand and, 23–30 capitalists, 24–25 Carney, Mark, 219 Caruana, Jaime, 188–189 Casino Capitalism, 323 CCP transactions See collateralized commercial paper transactions CDOs See collateralized debt obligations CDS See credit default swaps CESL See Common European Sales Law Charter of Fundamental Rights, 294 Chicago School, 325–326 China FDI in, 334 open door policy in, 333 state capitalism in, 332–333 SWFs in, 230 Citizens United v Federal Election Comm’n, 215 civil law tradition, 123–124 Clayton Act, 324 Clinton, Bill, 124–125 clock states, free markets and, 321 close-out netting, 139–140, 145–147 See also reembedding debt debt and, 139–140 in Germany, 140 ISDA and, 139–140, 145–147 under Model Netting Act, 146 pacta sunt servanda principle, 140 CMEs See coordinated market economies CNAV See constant net asset value Coffee, John, 210 cognitive expectation structures debt and, 141–142 ISDA role in, 143–144 collateralized commercial paper (CCP) transactions, 198–199 collateralized debt obligations (CDOs), 195 commodities See also consumption fetishism of, 25 Marx on value of, 23 Common European Sales Law (CESL), 298 behavioural law and, 303–307 consumer protection goals under, 301–302 mandatory disclosure in, 308–309 neo-classical critique of, 302–303 price theory and, 304–305 as redistributive justice, 309–311 U.S commentary on, 301–307 common law tradition, 123–124 Index banking systems under, 211–212 communism environmental impact of, 34 labour under, 34, 35 socialism as transition from, 34 The Communist Manifesto (Marx and Engels), 25, 37 communitarianism, 128–129 debt-economy as influence on, 129 competition See also open markets capitalism and, 31–33 under Clayton Act, 324 consumer demands and, 32 Marx on, 31–32 during Merger Movement, 324 planning as alternative to, 33–36 under Sherman Act, 324 under Treaty on the Functioning of the European Union, 324 constant net asset value (CNAV), 195–196 constitution of interests, 321 Consumer Financial Protection Bureau, 301 consumer protection laws, 79 CESL, 301–302 hedonistic morality and, 118 myths of, 304 consumers accumulation regimes and, 115–117 competition and, 32 hedonism and, 115–117, 128–129 prosumption and, 128 protection laws for, 79 consumption Marx on, 25–26 production compared to, 128 contract governance, 70–72, 338–340 agency in, 73–75 corporations and, 60–81 embeddedness of, 71 social norms and, 71–72 contract law anti-discrimination law and, 283–284, 290–291 harmonisation of, in EU, 304 judge-made law and, 337–338 as laissez faire institution, 49–50, 52, 56 liberal, 47–52 materialization of, 70 MBS and, 46 political structures in, 351 re-regulation of, 49–50 securitization market and, 47–52 contracts See also sustainable contracting deconstruction of, 351 in free markets, 350–351 359 historical development of, 136–137 Legal Realism and, 136 loan agreements, 137 private law and, 136 protective framework for, development of, 78–81 A Contribution to the Critique of Classical Political Economy (Marx), 31–32, 37, 38 cooperative governance in Norway, 244 NSWF and, 243–247 SWFs and, 231, 243–247 coordinated market economies (CMEs), 54–56 as debt-economy, 117–118 LMEs compared to, 54–56 corporate culture Dutch Central Bank psychological interventions, 222–223 instrumental motives for, 219–220 moral motives for, 219–220 project financing and Equator Principles for, 221–222, 223–224 IFC role in, 221 non-recourse lending and, 222 relational motives for, 219–220 in TBTF banks, 210, 219–223 corporate governance theory, 61 agency in, 73–75 scholarly research in, 65 shareholders and, 164, 193 corporate income tax, 103 corporate law theory, 60–63 agency in, 73–75 divergence as part of, 62 economic regulation and, 61 hybrid nature of, 79 open-mindedness of, 64 relational contract theory and, 75–78 self-regulation in, 80 welfare state and, 61 corporate social responsibility (CSR), 65 GSTs and, 261, 265–266 corporations anthropological theories about, 72–73 contract governance and, 60–81 globalization of, 64–65 in Greece, tax rates for, 103 historical development of, 63–66 private nature of, 77, 80, 81 public nature of, 77, 80, 81 recontractualization of, 77 reference systems of meaning in, 77 regulatory influences on, 65–66 relational contract theory for, 75–78 360 Index corporations (cont.) as social form, 63 stakeholders in, 77 theories of firm for, 76 corrective taxation, 30 correlated tail risks, 168–169 Creative Commons movement, 354 credit contracts, 135–137 private law and, 137 credit default swaps (CDS), 138–139 credit intermediation See shadow banking credit ratings for Eurozone countries, 113 for Greece, 110–112 for TBTF banks, 212 credit risk CDS and, 138–139 close-out netting and, 139–140 Crouch, Colin, 29 CSR See corporate social responsibility cultural sustainability standards, 270–271 currency See drachma; Euro Davidson, Peter, 20–21 debt See also reembedding debt CDS and, 138–139 close-out netting and, 139–140 cognitive expectation structures and, 141–142 credit contracts and, 135–137 disembedding, 154 EC Treaty and, 133–134 Graeber on, 134, 135 historical political economy of, 134–142 in regulatory states, 135–137 social embeddedness of, 134–135 debt relations, 117 morality of, 119–121 as power relations, 118, 119–121 debt-economy accumulation regimes and, 115–117 ascetism and, 115–117 biopolitical function of, 121, 352 CMEs as, 117–118 communitarian morality as result of, 129 emergence of, 117–118 hedonism and, 115–117 LMEs as, 117–118 self-entrepreneurship and, 121 sovereign debt restructuring, 121–124 de-growth, as new economic culture, 258 Deleuze, G., 100 deliberative democracy, 150–151 democracy deliberative, 150–151 voting standards, 149–150 democratic capitalism, 348 deregulation economic policy formation influenced by, 9–10 free markets and, 9–10 necessary peacefulness and, 12–13 social choice and, 15 2007–2008 financial crash and, derivatives market, ISDA in, 144–147 disembedding debt, 154 divergence theory, 62 diversity of capitalism theory, 332–333 Dobb, Maurice, 20 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), 49, 51–52, 186 bank restructuring under, 217 executive compensation under, 215–216 Federal Reserve Bank Board and, 218 regulatory gaps in, 216–219 regulatory provisions of, 212–214 TBTF banks under, 211 Volcker Rule in, 218 domestic law, structural couplings to, 274–276 drachma compared to other EU currencies, 106 exchange rates for, with Euro, 105–106 Draghi, Mario, 112 Dudley, Bill, 219 EC Treaty, 133–134 ecocide, 34 ecological economics, 264 ecological sustainability standards, 269–270 Economic and Philosophical Manuscripts, 33 economic biopolitics See biopolitics, economic economic efficiency theory, 72–73 economic governance See also corporate governance theory Foucault on, 99–102 legal structures of, 352–354 resource allocation and, 201 economic policy behavioural law and, 307–309 Chicago School, 325–326 deregulation as influence on, 9–10 GFC as influence on, 347 law theory as influence on, 66–70 for Marx, 10 economic reform, 100–101 economic regulation See regulation, economic economics finance, 326–328 Index mathematical, 326–328 quantitative, 327 The Economics of Welfare (Pigou), 17 effective history, 101 efficiency market hypothesis (EMH), 325 Ekeloeve-Syldal, Beate, 246 embedded capitalism, 349–350 embedded liberalism banking systems and, 52–53 GFC and, 47 EMH See efficiency market hypothesis Engels, Friedrich, 25, 37 on economic planning, 33–36 on poverty, 27–28 Enron, collapse of, Equator Principles, 221–222, 223–224, 262 Essays in Fabian Socialism (Shaw), 19, 20 Ethical Guidelines, for NWSF, 236–238 Norges Bank and, 240–241 operationalization of, 238–243 ethics active ownership and, 237–238 for SWFs, 236–243 Ethics Council, for NWSF, 241–243, 244–247 EU See European Union Euro exchange rates with Greek drachma, 105–106 in Greece, 107–110 European Commission on behavioural economics, 309–310 response to Greek crisis, 98 European Stability Mechanism, 122 European Union (EU) See also specific countries anti-discrimination law in Amsterdam Treaty of 1997 and, 284 citizenship regulations in, 286–287 contract law influenced by, 283–284, 290–291 development of, 284–286 economic market development and, 286–289 empowerment through, 293–294 Framework Directive and, 284 gender equality as result of, 287–288, 291–292 Gender Goods and Services Directive and, 284 in Germany, 285 global scope of, 283–286 indirect discrimination under, 286–289 limitations of, 293–295 under Lisbon Treaty, 289–290 361 under Maastricht Treaty, 286–287 private law and, 291 Race Directive and, 283–284 redistributive dimension of, 293 social policy-making through, 293–295 under Treaty of Rome, 286 CESL in, 299 consumer credit regulation in, 298–299 contract law in, harmonisation of, 304 executive compensation regulation strategies in, 223–224 free movement of capital principle in, 138 governmentality as political style in, 321, 340 private law in, social justice through, 299 Eurozone, 98 asset household value in, 113 GDP rates throughout, 108 governance issues within, 107–110 Greece’s entry into, 105–107 rating agencies’ assessment of, 113 wages and salaries in, 104 evolutionary theory, 68 ex ante regulation, 12, 13 social, 14 ex ante standard of care, 169–173 ex post regulation, 12 social, 12 ex post standard of care, 174–176 executive compensation issues, 214–216 under Dodd-Frank Act, 215–216 regulations for, global strategies for, 223–224 external debt, for Greece, 111 Fabian Society, 19, 30 Fabianism, 19, 20 Fannie Mae See Federal National Mortgage Association FASB See Financial Accounting Standards Board fault-based liability manager liability as, 162–166 standard of care and bank insolvency limitations under, 167–169 defined, 166–176 ex ante, 169–173 ex post, 174–176 hindsight bias in, 176 regulatory rules for, 170 faux frais (incidental expenses) of production, 25–26, 28 FDI See foreign direct investment 362 Index Federal Home Loan Mortgage Corporation (Freddie Mac), 215–216 Federal National Mortgage Association (Fannie Mae), 215–216 Federal Reserve Bank Board, 218 FIH See Financial Instability Hypothesis finance, modern See also project financing; too-big-to-fail banks Citizens United v Federal Election Comm’n, 215 corporate culture and Dutch Central Bank psychological interventions, 222–223 instrumental motives for, 219–220 moral motives for, 219–220 in TBTF banks, 210, 219–223 cultural approaches to, 209 executive compensation issues, 214–216 GDP function of, 208–209 overview of, 208–210 public welfare function of, 208–209 rational-choice theory for, 210 speculative function of, 209 utility function of, 208–209 finance economics, 326–328 Financial Accounting Standards Board (FASB), 196 Financial Instability Hypothesis (FIH), 325 Financial Stability Board (FSB) Task Force, 185, 188–191 financialization of economy, 209 first theorem of welfare, 11 Fiscal Compacts, 121–124 FOIA See Freedom of Information Act Fordist accumulation regimes, 115–116 foreign direct investment (FDI) in China, 334 by U.S., 333–334 Foreign Investment Act, 333 Forest Stewardship Council (FSC) certificate, 261 Foucault, Michel economic governance theory for, 99–102 effective history and, 101 on economic reform, 100–101 on government styles, 321–322 on governmentality, 321, 340 on indebtedness, 100 on neoliberalism, 120–121 on prison reform, 100–101 on “truth” of free market, 320–322 Framework Directive, 284 Freddie Mac See Federal Home Loan Mortgage Corporation free markets See also open markets anti-discrimination law and, 286–289 balance states, 321 clock states, 321 contract governance in, 338–340 contracts as necessity in, 350–351 deregulation and, 9–10 efficiency of, 324–326 after GFC, 328–332 globalization of, 332–335 governance and, 335–340 great transformation of, 349 left-wing criticism of, 13–16 natural prices and, 322–323 new mercantilism and, 334 property rights as necessity in, 350–351 reform strategies for, 329 shadow banking and, 328–329 SSM and, 329 state capitalism and, 332–335 truth of, 320–326 wealth of networks and, 340 world 1, 319–320 world 3, 319–320 Free Software movement, 354 Freedom of Information Act (FOIA), 216 FSB Task Force See Financial Stability Board Task Force FSC certificate See Forest Stewardship Council certificate funding gaps, 47 Gagliardi v Trifood International, 177, 178 GATT See General Agreement on Tariffs and Trade GDP See gross domestic product Geitner, Timothy, 214 gender equality, 287–288, 291–292 Gender Goods and Services Directive, 284 General Agreement on Tariffs and Trade (GATT), 323 The General Theory of Employment, Interest and Money (Keynes), 16–17, 18 George, Henry, 20 Germany anti-discrimination law in, 285 bonds in, 111 close-out netting in, 140 Hartz reforms in, 124–126 hyperinflation in, 137 invisible poverty in, 124–126 labour market reform in, 127 risk management failures in, 162 working poor in, 126 GFC See Global Financial Crisis GFFA See Government Pension Fund Act Index Ginnie Mae, 47–48 Ginsburg, Douglas, 217 Glass-Steagall Act, 216–217, 336 Glenn, Patrick, 328 global constitutionalism, 266–267 Global Financial Crisis (GFC), See also 2007–2008 financial crash austerity ideology as result of, 122–123 democratic capitalism and, 348 Dodd-Frank Act as result of, 49 economic policy influenced by, 347 fracturing of embedded liberalism and, 47 free markets after, 328–332 laissez faire contract law and, 49–50, 52, 56 MBS before, 50–51 origins of, private indebtment and, 122 securitization market before, 50–52 as sustainability issue, 257–260 Global Sustainability Terms (GSTs), 260–267 constitutionalization of, 276–277 CSR and, 261, 265–266 cultural standards for, 270–271 deliberative passages as part of, 265 ecological economics and, 264 ecological standards for, 269–270 economic incentives and, 276 economic mechanism design with, 262–264 economic standards for, 271–272 Equator Principles and, 262 FSC certificates, 261 global constitutionalism and, 266–267 graded interest rates and, 276 green economics and, 264 IFC performance standards, 262 myth production for, 274 mythology of sustainability and, 265–266 political standards for, 272–273 procedural standards for, 272–273 property rights and, 263–264 self-governance and, 277–278 social standards for, 270–271 sociological systems theory and, 264–265 stakeholders and, 275–276 systemic structural coupling and, 264–265 transaction costs and, 263–264 UN Responsible Contracts and, 261 globalization See also open markets of corporations, 64–65 of free markets, 332–335 political economy influenced by, 137–138 supercapitalism and, 324 Gordon, Jeffrey, 214 governance contract, 70–72, 338–340 363 agency in, 73–75 corporations and, 60–81 embeddedness of, 71 social norms and, 71–72 cooperative, 231 in Norway, 244 NSWF and, 243–247 SWFs and, 231, 243–247 corporate governance theory, 61 agency in, 73–75 scholarly research in, 65 shareholders and, 164, 193 economic, 99–102, 201 within Eurozone, 107–110 Foucault on, 321–322 global markets and, 335–340 within Greece, 107–110 inter-systemic, 243–247 in Norway, 243, 248–249 self-governance, 277–278 Government Pension Fund Act (GFFA), 232 Government Pension Fund-Global (NWSF), 230–236 active ownership and, 234–235, 237–238 cooperative governance and, 243–247 corruption issues, 242–243 Ethical Guidelines for, 236–243 Ethics Council, 241–243, 244–247 exclusion rules for, 242 inter-systemic governance and, 243–247 juridification for, 236–243 Norges Bank and, 231–236, 240–241, 245–247 organization of, 232–233 public policy on private investment with, 248 purpose of, 231–232 responsible investment strategy of, 233–234 shareholder strategies, 235–236 spheres of governance and, 248–249 governmentality, 321, 340 Graeber, David, 134, 135 Gramm-Leach-Bliley Act, 336 Great Transformation globalization as influence on, 137–138 of political economy, 137–142 of society, 136 trading of risk as part of, 137–142 Greece adjustment programmes in, 98 Athens Stock Exchange, 103–104 bonds in, 111 consumption levels in, 107 corporate income tax in, 103 drachma exchange rates, with Euro, 105–106 364 Index Greece (cont.) economic history in, 98–99 entry into Eurozone, 105–107 Euro as currency in, 107–110 external debt in, 111 financial bailout of, 122–123 GDP in, 107, 109–110, 111 governance issues within, 107–110 interest rates in, 106 migrant population in, 103 from 1990–2005, economic history in, 102–104 pension system reforms in, 108–109 ratings agencies’ assessment of, 110–112 savings as percent of GDP in, 107 wages and salaries in, 104 Greek crisis Athens Stock Exchange during, 103–104 bankruptcy restructuring and, 97 as biggest sovereign insolvency, 97–99 cheap labour as factor in, 102–104 collapse of Soviet Union as factor in, 102 critical narrative for, 102–107, 112–113 data on, 101–102 European Commission response to, 98 external debt as percentage of GDP and, 111 financial and economic imbalances in, 98 government debt as cause of, 97 inefficient markets as factor in, 110–112 in monetary union, 98 profit margins and, 102–104 quest for single cause of, 101 ratings agencies’ assessment of Greece and, 110–112 trade balance deficits as cause of, 97, 98–99 green economics, 264 Greenspan, Alan, 326–327 greenwashing, 274 gross domestic product (GDP) in Eurozone, 108 external debt as percentage of, 111 in Greece, 107, 109–110, 111 Grundisse (Marx), 24 Hall, Peter, 54–55 Halvorson, Kristen, 243 Hardie, Iain, 46–47 Hart, Danielle, 49–50 Hartz reforms biopolitical functions of, 125 criticisms of, 126 development of, 124–125 in Germany, 124–126 Hayek, Friedrich, 40 hedge funds, non-credit, 189–190 hedonism See also consumption ascetism morality in conflict with, 117–118 communitarianism and, 128–129 consumer protection law and, 118 debt-economy and, 115–117 hindsight bias, 176 Historical Materialism (Bukharin), 29 Holdcroft, James, 214 Holmes, Oliver Wendell, Jr., 50, 66–68 Hungary, financial bailout of, 122–123 hybrid investing, 229–230 Hyndman, H M., 20 hyperinflation, 137 IASB See International Accounting Standards Board IBA See International Bar Association IBRD See International Bank for Reconstruction and Development Iceland, financial bailout of, 122–123 ICSID See International Centre for the Settlement of Investment Disputes ICT See information and communications technology IFC See International Finance Corporation IFRS See International Financial Reporting Standard incentive distortions, 164–166 incidental expenses See faux frais of production indebtedness, 100 indirect discrimination, 286–289 infinite economic growth, myth of, 257–260 information and communications technology (ICT), 45–46 interest rates in Greece, 106 GSTs and, 276 International Accounting Standards Board (IASB), 196 International Bank for Reconstruction and Development (IBRD), 262 International Bar Association (IBA), 262 International Centre for the Settlement of Investment Disputes (ICSID), 277 International Finance Corporation (IFC), 221 GSTs and, 262 sustainability development and, 268 International Financial Reporting Standard (IFRS), 196 international law BITs and, 260 soft law in, 337 structural couplings to, 274–276 sustainability regulation in, 259–260 Index UN Responsible Contracts, 261 International Swaps and Derivatives Association (ISDA), 142, 354 auction methodology for, 145 close-out netting and, 139–140, 145–147 cognitivation of financial markets and, 143–144 in derivatives market, 144–147 development of, 142–143 functioning of, 142–143 Master Agreements and, 143–145 Model Netting Act, 146 OTC markets and, 142–143 reembedding debt and, 142–154 agonistic pluralism standards and, 151 deliberative democracy standards and, 150–151 identification of occurrence, 147–148 legitimation of standards, 148–153 societal regulatory authority and, 153–154 Tahawwut Agreement and, 150 voting democracy standards and, 149–150 inter-systemic governance, 243–247 investment banking CDS and, 138–139 hybrid investing, 229–230 invisible poverty, 124–126 Ireland, financial bailout of, 122–123 ISDA See International Swaps and Derivatives Association Jensen, Nina, 245 Johnson, Lyndon, 47–48 judge-made law, 337–338 Kalman, Laura, 308 Keynes, John Maynard, 16–21 Konzelmann, Suzanne, 211–212 Krugman, Paul, 107 Kugelmann, Ludwig, 33 labour markets ascetism and, 126–127 in Germany, 127 labour power under communism, 34, 35 socialism and, 34 value of, Marxism and, 26 labour theory, of value British left-wing criticism of, 16–22 Marx on, 16–17, 21–22 Ricardo on, 16–21 supply and demand in, 22 Wicksteed’s critique of, 37–38 laissez faire economies, 13 365 contract law and, 49–50, 52, 56 institutional structure in, necessity of, 350–351 law See also anti-discrimination law; contract law; international law behavioural, 303–307 political science and, in U.S., 306 private, 291 as social system, 74 Law, Liberty and Legislation (Hayek), 40 law theory See also corporate law theory agency in, 73–75 behavioral economic dimensions of, 68 economic policy influenced by, 66–70 evolutionary theory and, 68 psychological dimensions of, 68 left-wing ideology See also Marx, Karl conceptualisation of economic regulation, 13–16 criticism of free markets, 13–16 labour theory of value and, 16–22 Legal Realism, 136 Lehman Brothers, shutdown of, Levitin, Adam, 50–51 Leyshon, Andrew, 48 liability See also fault-based liability; manager liability for managers as fault-based, 162–166 through government intervention, 180 objections to, 179–180 overview of, 161–162 restrictions of, 177–180 strict, 163–166 incentive distortions from, 164–166 shareholders and, 166 liberal contract law, 47–52 liberal market economies (LMEs), 54–56 as debt-economy, 117–118 Libor See London Inter-Bank Offered Rate liquidity price of goods and, 191 shadow banking regulations and, 191–193, 194 Lisbon Treaty, 289–290 LMEs See liberal market economies loan agreements, 137 lobbies, lobbyism and, 322 Lochner v New York, 50 London Inter-Bank Offered Rate (Libor), 219 Luhmann, Niklas, 138, 142 Maastricht Treaty, 286–287 Macaulay, S., 337 366 Index Macey, Jonathan, 214 manager liability as fault-based, 162–166 through government intervention, 180 objections to, 179–180 overview of, 161–162 restrictions of, 177–180 strict liability and, 163–166 Marbury v Madison, 338 market freedom theory, 72–73 market sovereignty, development of, market-based banking, 46–47 CMEs and, 54–56 rise of, 53–54 securitization markets and, 52–56 in U.S., 53 market-to-market accounting rules, 47 Marx, Karl, 24, 25, 31–32, 37, 38 capitalists for, 24–25 critique of capitalism, 23–36 on capitalists, 24–25 on consumption, 25–26 on debt relations, 118, 119–121 on economic competition, 31–32 on economic history, 17 economic policy for, 10 economic regulation through social interventions, 15–16 Keynes on, 16–21 on labour theory of value, 16–17, 21–22 on morality, 120 Orwell and, 21 on poverty, 27–28 on reproduction, 12 Shaw on, 19–21 social theory for, 14 on supply and demand, 23–30 on universal mediocrity, 27 on value of commodities, 23 Wicksteed on, 21–22 Marxism faux frais of production, 25–26, 28 labour power, value of, 26 Master Agreements, ISDA and, 143–145 mathematical economics, 326–328 Mayr, Otto, 321 MBS See mortgage-backed securities McLellan, David, 27 Merger Movement, 324 MERS See Mortgage Electronic Registration System Minc, Alain, 326–327 MMMF See mutual money market fund Model Netting Act, 146 modern finance See finance, modern Mortgage Electronic Registration System (MERS), 46 mortgage-backed securities (MBS) under contract law, 45–46 creation of, 45–46 under Dodd-Frank Act, 51–52 before GFC, 50–51 promissory notes in, transfer of, 48–49 role in GFC, 45–46 in U.S., 53 Muller, Christopher, 214 mutual money market fund (MMMF), 194–195, 198–199 natural markets, as myth, 348–349 natural prices, 322–323 necessary peacefulness, 12–13 neoliberalism, 120–121 new mercantilism, 334 NFCs See non-financial companies Nietzsche, Friedrich on debt relations, 118, 119–121 on morality, 119–121 non-financial companies (NFCs), 45–46 non-recourse lending, 222 Norges Bank, 231–236, 245–247 active ownership and, 240–241 Ethical Guidelines for NWSF and, 240–241 Norton, Gary, 52 Norway See also Government Pension FundGlobal cooperative governance in, 244 GFFA in, 232 spheres of governance in, 243, 248–249 SWFs in, 229, 230–236 NWSF See Government Pension Fund-Global off-balance sheet conduits, 197–198 On Protection to Agriculture (Ricardo), 38 open door policy, in China, 333 open markets, 323–324 Casino Capitalism and, 323 GATT and, 323 World Trade Organization and, 323 ordo-liberalism, 113 originate-and-hold banking model, 214–215 originate-to-distribute banking model, 214–215 Orwell, George, 20–21 over-the-counter (OTC) derivatives, 142–143 pacta sunt servanda principle, 140 The Path of Law (Holmes), 66–68 Pease, E R., 30 Pecqueur, Constantin, 27 Index pension systems, in Greece, 108–109 Petroleum Fund, 232 See also Government Pension Fund-Global Pigou, Arthur Cecil, 12, 17 planning, economic as alternative to competition, 33–36 Engels on, 33–36 for production, 33 Polanyi, Karl, 135, 310 policy See economic policy political economy globalization as influence on, 137–138 Great Transformation of, 137–142 pooling and service agreement, 48 Posner, Richard, 307, 308, 328 poverty, 27–28 invisible, 124–126 power See transfer of power power relations, debt relations as, 118, 119–121 Preobrazhensky, Evgeny, 29 price of goods, 191 natural prices, 322–323 price theory, 304–305 prison reform, 100–101 private indebtment, 122 private law, 136, 291 credit contacts and, 137 redistributive justice through, 309–311 social justice through, in EU, 299 private ownership, 25 production capitalism as mode of, 36–37, 39 consumption compared to, 128 economic planning for, 33 faux frais of, 25–26, 28 social class division as influence on, 116 project financing Equator Principles for, 221–222, 223–224 IFC role in, 221 non-recourse lending and, 222 for TBTF banks, 221–222 World Bank role in, 221 promissory notes, transfer of, 48–49 property rights, 263–264 free markets and, 350–351 prosumers, 128 prosumption, 128 protection laws See consumer protection laws quantitative economics, 327 Race Directive, 283–284 rating agencies See also credit ratings assessment of Eurozone countries, 113 assessment of Greece, 110–112 367 rational-choice theory, for modern finance, 210 recontractualization, of corporations, 77 redistributive justice through anti-discrimination law, 293 CESL as, 309–311 through private law, 309–311 reembedding debt, 144 ISDA and, 142–154 agonistic pluralism standards and, 151 deliberative democracy standards and, 150–151 identification of occurrence, 147–148 legitimation of standards, 148–153 societal regulatory authority and, 153–154 Tahawwut Agreement and, 150 voting democracy standards and, 149–150 reference systems of meaning, 77 reform See economic reform regulation, economic See also banking regulations; finance, modern corporate law theory and, 61 defined, 10–13 ex ante, 12, 13, 14 ex post, 12, 14 first theorem of welfare and, 11 left-wing criticism of, 13–16 neoliberalisation of, 61 Smith on, 39–40 through social intervention, 10–12, 14, 15–16 regulatory arbitrage, 187, 199–201 normative approach to, 200–201 without permanent law reform, 199–200 relational contract theory, 75–78 repo transactions, 198–199 representation hypothesis, 193–194 Ricardo, David, 16–21, 38 risk See also credit risk correlated tail risks, 168–169 for shareholders, incentives for, 164 for TBTF banks, 212 trading, during Great Transformation, 137–142 VAR models, 45 risk management by banks, 167–169 under German law, 162 risk-insensitive funding, 193–194 The Road to Wigan Pier (Orwell), 20–21 Robinson, Joan, 19, 334 Roosevelt, Franklin D., 336 Ruskin, John, 20 Sanio, Jochen, 189 Santiago Principles, 229 368 Index Sassen, S., 333, 336 Say’s Law, 19 Schmitt, Carl, 340 Schröder, Gerhard, 124–125 See also Hartz reforms labour market reforms under, 126–127 securitization, in banking regulations, 197–198 securitization market See also mortgagebacked securities ABS in, 48 banking systems influenced by, 45–47 contract law and, 47–52 under Dodd-Frank Act, 49 Ginnie Mae, 47–48 historical development of, 47–49 ICT as influence on, 45–46 laissez faire contract law and, 49–50, 52, 56 market-based banking and, 52–56 pooling and service agreement in, 48 during post-World War II era, 52–53 speed-up of, before GFC, 50–52 self-entrepreneurship, 121 self-regulation, in corporate law theory, 80 shadow banking ABCP, 194–195 backstop requirements in, 194 credit intermediation and, 194–196 defined, 188–191 free markets and, 328–329 FSB Task Force for, 188–191 MMMF shares, 194–195 non-credit hedge funds, 189–190 regulated banking influenced by, 196 regulations for, 188–196 definition of, 188–191 goals of, 191–194 liquidity supply and, 191–193, 194 risk-insensitive funding and, 193–194 regulatory arbitrage and, 187 short term commercial paper, 194–195 spillover from, 196 shareholders corporate governance and, 164, 193 in NWSF, 235–236 risk incentives for, 164 strict liability and, 166 Shaw, George Bernard, 19, 20 Fabian Society and, 19, 30 on Marx, 19–21 Sherman Act, 324 Shleifer, Andrei, 298–299 short term commercial paper, 194–195 short-term funding, 47 single supervisory mechanism (SSM), 329 Smith, Adam, 35, 39–40, 322, 334 social choice, 14, 15 social class, mass production influenced by, 116 social justice in EU, through private law, 299 in U.S., 299 social norms, contract governance and, 71–72 social security, 121–122 Social Statics (Spencer), 50 social sustainability standards, 270–271 socialism labour power and, 34 as transition between capitalism and communism, 34 sociological systems theory, 264–265 soft law, 337 Soskice, David, 54–55 sovereign debt austerity ideology as response to, 121–124 European Stability Mechanism and, 122 Fiscal Compacts and, 121–124 restructuring of, 121–124 sovereign wealth funds (SWFs) See also Government Pension Fund-Global in China, 230 cooperative governance and, 231 ethics councils for, 236–243 historical development of, 229–231 for hybrid investing, 229–230 juridification of, 236–243 in Norway, 229, 230–236 Santiago Principles and, 229 for state investments, 229–230 Soviet Union, collapse of, 102 special purpose entities (SPEs), 198–199 Spencer, Herbert, 50 SPEs See special purpose entities SSM See single supervisory mechanism stakeholders in corporations, 77 GSTs and, 275–276 standard of care, in fault-based liability bank insolvency limitations under, 167–169 defined, 166–176 ex ante, 169–173 ex post, 174–176 hindsight bias in, 176 regulatory rules for, 170 state capitalism, 332–335 in China, 332–333 Strange, Susan, 322, 330 strategic constitution, 321 strict liability incentive distortions from, 164–166 managers and, 163–166 Index shareholders and, 166 subprime lending crisis, 174–175 supercapitalism, 324 supply and demand capitalism and, 23–30 competition and, 32 in labour theory of value, 22 Marx on, 23–30 sustainability development, 267–273 defined, 267–269 environmental aspect of, 267 IFC performance standards for, 268 mythology of, 265–266 sustainability regulation economic growth limits and, 257–260 in international law, 259–260 in national public law, 258–259 time delay issues in, 259 sustainable contracting, 273–277 See also Global Sustainability Terms BITs for, 260 certification and, 274 classifications in, 274 economic growth limits and, 257–260 through judicial control, 276–277 labeling in, 274 as public myth, 274 structural couplings in, 274–276 SWFs See sovereign wealth funds Tahawwut Agreement, 150 taxation corrective, for negative externalities, 30 in Greece, for corporations, 103 TBTF banks See too-big-to-fail banks The Theory of Moral Sentiments (Smith), 35 theory of the firm, 326 Theory of Unemployment (Pigou), 17 3-6-3 banking model, 46 Thrift, Nigel, 48 too-big-to-fail (TBTF) banks, 210–214 co-regulation models for, 223–224 corporate culture in, 210, 219–223 credit ratings for, 212 under Dodd-Frank Act, 211, 217 excessive political influence of, 212, 217–218 excessive risk-taking by, 212 Libor benchmark for, 219 moral hazards from bailout of, 212 organizational psychology for, 219–223 penalty-driven regulations for, 210 project finance regulation for, 221–222 restructuring of, 217 size of, 211–212 369 social cohesion issues from, 212 transaction costs, 263–264 transconstitutionalism, 266 transfer of power, transfer of wealth, transnational private law, 266–267 Treaty of Rome, 286 Treaty on the Functioning of the European Union, 324 Turillo, Daniel, 219 Turner, Adair, 188–189, 224–225 2007–2008 financial crash, 2010 Seoul Summit, FSB Task Force, 185 UCC See Uniform Commercial Code U.K See United Kingdom UN Responsible Contracts, 261 unemployment insurance See Hartz reforms Uniform Commercial Code (UCC), 46 United Kingdom (U.K.) Big Bang in, executive compensation regulation strategies in, 223–224 new public management methods in, 321 United States (U.S.) See also Dodd-Frank Wall Street Reform and Consumer Protection Act Clayton Act in, 324 consumer credit regulation in, 298–299 executive compensation regulation strategies in, 223–224 FDI in, 333–334 FOIA in, 216 Glass-Steagall Act in, 216–217, 336 Legal Realism in, 136 market-based banking in, 53 MBS in, 53 Merger Movement in, 324 response to CESL, 301–307 Sherman Act in, 324 social justice in, 299 synergy of law and political science in, 306 universal mediocrity, 27 value of commodities See commodities value theory, 36–40 value-at-risk (VAR) models, 45 Varieties of Capitalism (VoC) literature, 45–46, 54–56 Venables, Tony, 107 VoC literature See Varieties of Capitalism literature Volcker, Paul, 216, 218 Volstead Act, 30 von Böhm-Bawerk, Eugen, 28–29 370 Index wages and salaries, in Eurozone countries, 104 War Communism, 28–29 Washington Consensus, 336 wealth See transfer of wealth Wealth of Nations (Smith), 334 The Wealth of Nations (Smith), 35 wealth of networks, 340 welfare reform See Hartz reforms welfare state, corporate law theory and, 61 West Coast Hotel v Parrish, 50 Wicksteed, P H., 19–20 on centralisation of capital, 36–37 critique of labour theory, 37–38 on Marx, 21–22 Woolley, John, 49 working poor, 126 world free markets, 319–320 world free markets, 319–320 World Bank, 221 World Trade Organization, 323 Zeigler, Nicholas, 49 Zeronauts, 258 Zumbansen, Peer, 50 ... Reshaping Markets Economic Governance, the Global Financial Crisis and Liberal Utopia Edited by Bertram Lomfeld Professor of Private Law and Legal Philosophy Free University of Berlin Alessandro... markets tell the truth? Between competition and efficiency Finance and mathematical economics Which “free market” after the crisis? Truths and untruths Free markets and state capitalism Global. .. Alessandro, editor | Zumbansen, Peer, 1966– Reshaping markets : economic governance, the global financial crisis and liberal utopia / edited by Bertram Lomfeld, Alessandro Somma, Peer Zumbansen Cambridge,