Why focus on what we call law and political economy, and why now?
In the last decade, inequality has become impossible to ignore. The 2008 financial crisis and the foreclosures and dislocation that followed it shook public and (to a limited extent) elite confidence that financial markets would “police” themselves and work for everyone. The Occupy micro-movement, although it was small and short-lived, led many people who had thought distributive conflict disreputable to begin naming it again. The Bernie Sanders campaign and Black Lives Matter have both drawn fresh attention to the deep and pervasive role of “structural” inequality – long term class divides, often acutely racialized – in shaping American life.
Two basic facts lie at the place where these crises and mobilizations intersect. One is that economic inequality has been growing markedly for decades, in most of the developed world but especially in the United States. The other is that elites, especially economic elites, dominate policy-making, marginalizing the views and interests of most citizens in rich democracies. These two trends reinforce each other, and both are pervasively intertwined with the law. In fact, neither is intelligible without a careful study of both “private” and “public” law.
While the major political prompt to our call for law and political economy has been the varied and continuing economic crisis, the crisis might have come and gone intellectually (as it seems to have mostly done institutionally) except for the additional critical prompt provided by the extraordinary success of Thomas Piketty’s Capital in the Twenty-First Century, first published in English in 2014.
Piketty’s book sparked an unusually rich set of debates about the consequences of capitalist development and the production and reproduction of inequality across the past few centuries. With one exception, he found that inequalities in both incomes and wealth have increased consistently. The exceptional period he charted was the roughly three decades of post-war economic recovery, known by a variety of superlatives across different countries: the “post-war economic miracle” or the “Golden Age of Capitalism,”—and translations or more particular names in France (“les trente glorieuses”), Germany (“wirtschaftwunder”), Italy (“miracolo economico”), Japan (“economic miracle”), Sweden (“rekordåren”) and pretty much any other industrial country that saw exceptionally high growth rates and widely shared growth from roughly 1945-1975.
But the post-war boom was not to last. Starting in the 1970s and 1980s—and continuing through to today—inequality reasserted itself, with increasing vigor, and across a range of the world, even in countries with much more progressive welfare states and government redistribution than the United States.
Much follows from this inequality including: an increasing accumulation of capital and concentration of its ownership; a higher share of capital’s take of overall national income; an increase not only in inequalities of wealth but also in incomes, given the portions of income coming from capital; and the possibility of “super salaries” for the managers of capital assets. Fundamentally, it signals a preponderance of capital over labor in the generation and distribution of income and wealth: as Piketty puts it, “[C]apital reproduces itself faster than output increases” (Capital, p. 571).
But what is behind this inequality? Piketty’s argument was popularly associated with a “law” expressed in the unexpectedly charismatic inequality r > g, meaning the rate of return on capital exceeds the rate of economic growth generally (producing disproportionate accumulation to the wealthy, who hold capital). But this expression simply summarizes empirical findings across a great variety of settings, from the antebellum plantation South to the England of Jane Austen’s marriageable “incomes” to Silicon Valley, and is disconnected from any account of what produces the inequality. The effort to understand the causes of this inequality has prompted legal scholars to consider the way that the law has interacted with it (and with its adjunct, plutocratic government): sometimes resisting or transforming it, but more often conceding to it, consolidating it, and brokering its conversion into more basic and worrying inequalities of other kinds, including in access to justice and to political power.
What Piketty’s detailed empirical analysis has helped to consolidate is a new narrative, which we might call the “post-war as exception.” This narrative is now in contest with an older one, which we might call the “post-war as destiny.” Piketty showed that the post-war years were exceptional in their brief reversal of the inequality between r and g; and this empirical confirmation that they were exceptional has helped many of us ratify our intuitions that things haven’t been going well in advanced democracies for many decades.
Recognizing the post-war as exception matters because many of our elite discourses in law and related fields were formed or shaped under what, in retrospect, were unusual and ultimately unsustainable conditions. Notably, the idea of post-war as destiny consolidated a particular picture of the possible and desirable relation between markets and democracy, between economics and politics. It also allowed—for a time—those scholars and activists concerned with inequality to focus on non-economic exclusions, even while they also recognized at some level what we now call “intersectionality,” which is to say, the way that different kinds of exclusions or subordinations (based on class, race, ethnicity, gender) overlap and ramify. But in the post-war years, the problem could come to appear not as inequality but deprivation. We could thus declare a war on poverty without needing also to declare a war on plutocracy. The idea that a tenth of a percent of the population would own a quarter of all national assets, as is now the case, was not our future, but our past—something from the Gilded Age that we thought we had left behind.
As we have elsewhere argued along with many of the participants on this blog, lawyers and legal scholars are in an advantaged position to uncover the legal foundations generating r>g and to think, accordingly, about what is to be done. Digging into that inequality requires unpacking the institutional details that Piketty’s analysis elides. This means understanding the trends he has highlighted in light of legal construction of the economy, and more precisely, the changing juridical landscape in America, and elsewhere, across the last half century. Many of the seemingly disparate trends that we hope to canvass on this blog—from the consolidation of class through procedural restrictions on access to justice, through the intersections of racial discrimination and economic inequality, to the increasing power of mega-firms and the super-rich—have in common that they consolidate and accelerate the inequality that Piketty’s enormous effort in data-collection and analysis has brought to public attention.
In other work, we have argued that there is a deeper context that unites these many trends: a turn toward market-based and market-mimicking forms of governance. The shift from post-war legal liberalism to what we diagnose as “neoliberalism” is part of this story—and the occasion for a separate blog post. And the shift—however regrettable—becomes more comprehensible against the empirical backdrop that Piketty’s analysis has revealed: the post-war boom as an historical exception and the turn in recent decades to a new Gilded Age in the United States and beyond.