Friday, August 31, 2007

The Mechanics of Perfection: Philosophy, Theology and the Perfection of American Law

The following is a preliminary draft of an essay that will appear in final form in On Philosophy in American Law (F.J. Mootz, ed., Cambridge: Cambridge University Press, forthcoming 2009):

American philosophy of law is better understood as theology than as that traditional American academic or pragmatic discourse that styles itself “philosophy.” The mechanics of an American philosophy of law provides a basis in reason for an American theology of faith in the perfectibility of law. The relationship between reason, faith and truth (perfection) better defines an American philosophy of law than traditional, merely rational, conceptions. This essay first examines the contours of the exercise of American legal rationality by courts and legislators, and central to this analysis are the famous cases of Swift v. Tyson (1842) and Erie Railroad Co. v. Tomkins (1938). It then looks to Benedict XVI’s suggestion that there is a foundational relationship between faith (theology) and reason (philosophy) as a better basis for understanding the American theology of law, the function of philosophy within that theology, and the role of the magisterium of judges in its elaboration.

Since the settlement of Plymouth Bay and the Virginia colonies, Americans have been in obsessed about the mechanics of perfectibility. Perfectibility is built into the constitutive documents of the American Republic. The Preamble to the American Constitution declares the establishment of the American union: “in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.” Thus, the founding constitutive act of that Republic is expressed as higher law. And that higher law sets as the object of the political community so created the attainment of perfection. The objective is at once transcendental (reflecting universal eternal values) and immanent (immersed in a historical project to that end).

The expression of that perfection is Law, and Government provides the means. The mechanics of perfectibility lies in a philosophy, the elaboration of which has been marked by great and hotly contested battles. The theology of perfection is grounded in a faith that the attainment of perfection can be expressed by means of governmental action through a rational mechanics. Through these mechanics Americans can discern the spirit of perfection—as God or as the genius of the American community made manifest – to be embraced as the American nation relentlessly builds that civitas dei americorum. Logos – understood in its modern sense as the union of faith and reason, as the inherent rationality of the divine in a historically immanent form—serves as well as the ancient philosophy of American law. Law is the expression of the present state of the American search for perfection. The quest for perfection is accomplished through government and proceeds on the basis of the simultaneous application of philosophies or theologies of perfectibility embraced by the great stakeholders in the American system—lawyers, politicians, industrialists, religious leaders, and the media – on which “the people” are dependent.

Perfectibility in the American context is a messy business – it is the product of uncontrolled and uncoordinated efforts undertaken independently and in communion with like-minded allies and institutions by every stakeholder in American civic life. Disaggregated – into court cases, statutes, the efforts of particular courts and legislatures – the sense is of something chaotic and directionless. American law appears directionless and reactive. But appearances veil a different picture, one better appreciated in the aggregate and over the long term. From a distance, the patterns become clearer; and that pattern suggests a lurching toward perfection. American law at any moment is a snapshot of that aggregate lurching toward perfection that is always a case and a statute away. The expression, means, and mechanics of perfectibility – this forms the essence of a philosophy of American law in the service of a paramount faith in that perfection.

The expression (and meaning) of perfection through law.

The decisions in Swift and Erie are twin poles of reason joined by a shared faith in a rational basis for legal perfectability. “Swift and Erie address the question of the nature of law and of the common, or unwritten, law in particular.” (Braithwaite 1992:774). The cases offer substantially irreconcilable conceptions of the state, law, the role of legislatures and judges and the relationship between the “higher law” of the federal constitution as an ultimate positive constitutive act and “the law” of the nation. Yet, there is commonality. Both are founded on the same fundamental understanding of purpose of the function of law as an expression of perfectibility. The differences between them, differences that keep American jurisprudence lively, center on the specifics of the relationship of law, the state and its government.

Swift assumes a common national judicial project to approach the perfection of the common law by repeated communal application by the community of judges. Matters of a general nature, affecting the peoples of the states of the union in equal measure, general questions of law, were organic and required a common effort from all judges – where state or federal – to the same task, “that is, to ascertain upon general reasoning and legal analogies, what is the true exposition of the contract or instrument, or what is the just rule furnished by the principles of commercial law to govern the case.” (Swift, 1842, 18). In this context, positive law was a derogation from the common law, the organic and communal law of the people, expressed by them and through their courts, and to which they, like their government was subject. That subjection was both conditional, with respect to those local matters on which government might direct a different result that is, “to rights and titles to things having a permanent locality, such as the rights and titles to real estate, and other matters immovable and intraterritorial in their nature and character.” Id. And immutable with respect to the higher law represented by the common law. The judge served the law, and law was an articulation of the lived customs and principles of communal organization of the people who came together in a political union. The obligations of all judges were general and the same – to work together to attain the highest, best, and most just expression of the organic law of the people to apply in any dispute brought before them. Judges thus exist beyond the mechanics of the various governments, and their role is not limited by the political and territorial restraints put on the various elected and administrative officials constituted through the “higher law” of the federal and state constitutions. Their relationship to law, and to the people, is direct and extends, like the common law, to the borders of the union. To abrogate or limit this common law is to abrogate or limit the substantive portion of the “higher law” of the federal (and state) constitutions, which both preceded and served as a foundation for the constitution of government represented by those instruments.

Erie assumed the necessary subordination of the judiciary and the common law of the nation to that of subordinate political units, the content and power over which were to be distributed in accordance with whatever formula their legislatures may declare. Its foundation is the princely state, in which the popular will is reduced to the positive and instrumental expression of a popular construct//the apparatus of state. Law loses its organic character and the judge her role as the vehicle through which the customary will is articulated and applied. Erie assumes a legislative supremacy to define the confines of law and its character. It rejects “the assumption that there is ‘a transcendental body of law outside of any particular state but obligatory within it unless and until changed by statute,’ that federal courts have the power to use their judgment as to what the rules of common law are; and that in the federal courts ‘the parties are entitled to an independent judgment on matters of general law.’” (Erie Railroad, 1938 (quoting in part, Justice Holmes)). Erie rejects the possibility of the judge as an instrument of the search for the ultimate truth or justice as expressed in law. Quoting Justice Field, Justice Brandeis turns the conceptions of Swift on its head. What passes for a general law of the United States “is often little less than what the judge advancing the doctrine thinks at the time should be the general law on a particular subject.” (Baltimore & Ohio R. Co. v. Baugh 1893, 401 (Field, J., dissenting)). The law of the judge is thus both personal and uncontrolled. He is transformed into the unelected legislator usurping legislative authority.

It is to the apparatus of government, rather than to the whim of the judge, that the appropriate measure of law lies, and accountability can be had. This point, perhaps one of the most potent in Erie, has been taken up by legal realists, post modern critiques and conservatives, each seeking to reduce further the authority of the judge and mold the positive acts of the legislature to its own program of legislation. But, Erie does not reject the possibility of perfectibility in general and perfectibility through law in particular. It just moves the source from judge to the “higher law” of the federal constitution, now understood as the source and template of governance in which law is expressed by the legislative organs of the state. Perfectibility becomes a political rather than a judicial act.

Government as the means to perfectibility.

The philosophy of perfection, thus, can be subsumed under a greater objective – the search for perfect order. The amalgamation of rechtsstaat with the substantive basis of a Sozialstaat, the perfect order merges expression (law), means (government) and mechanics (philosophy) into a dynamic whole that ultimately achieves rest (the end of striving) and thus, peace. American jurisprudence embraces, perhaps in an ironic way, the Augustinian insight about the messianic character of peace:

Peace between man and God is the well ordered obedience of faith to eternal law. Peace between man and man is well ordered concord. Domestic peace is the well-ordered concord between those of the family who rule and those who obey. Civil peace is a similar concord among the citizens. The peace of the celestial city is the perfectly ordered and harmonious enjoyment of God, and of one another in God. The peace of all things is the tranquility of order. Order is the distribution which allots things equal and unequal, each to its own place. (Augustine 1950: Bk XIX, Sec. 13, p. 690)

Perfection is an ideal state which is to be served through a philosophy, or better put the rational pragmatics, of law. This ideal state can realized by embracing truth as it exists outside of an individual – either in divine command (or grace, or law) or in the inspired will of the community at its most potent. It is (or apes) messianism, with or without religion, “What I call messianicity without messianism is a call, a promise of an independent future for what is to come, and which comes like every messiah in the shape of peace and justice, a promise independent of religion, that is to say universal.” (Derrida and De Cauter 2006: 268-269). That is, perfection arrives from the top (the divine or the apparatus of government) down (the people and their customs) or from the bottom up, that is organically constructed as an articulation of the community's aggregate beliefs and behaviors. How that occurs, through judge or legislature, is the substance of the philosophy of law.

Perfectibility and the judge. Law in Swift was an organic construct presided over by judges into which the legislature sometimes intruded. The aggregation of that construct, the work of all judges wrestling with the same question, produced perfection, sometimes even against the will of the legislature expressed as statute. This reflects old knowledge. In Dr. Bonham’s Case, Coke reminded us that “when an Act of Parliament is against Common right and reason, or repugnant or impossible to be performed, the Common Law will controll it, and adjudge such Act to be void” (Bonham’s Case 1610: 275). The judge stands between perfection and the political community. American constitutionalism, like American religion, functions on the basis of sin, of error. The source of salvation from error, that is from the sin of unlawfulness, is then focused on the judge, as guidance from sin is vested in the priest. “The priest rules through the invention of sin;” (Nietzsche 1888: Ch. 49 at 631) the constitutional judge rules through the elaboration of doctrine. As Nietzsche reminds us, “Disobedience of God, that is, of the priest, of ‘the Law,’ is now called ‘sin’ [and] the means for ‘reconciliation with God’ are, [of course, the] means that merely guarantee still more thorough submission to the priest: the priest alone ‘redeems.’’ (ibid: Ch. 26 at 598). The judge becomes voice to perfection and the instrument of her own privilege. This serves as the measure of perfection within the philosophical foundation of Swift. But also in Erie. Law in Erie law was an instrumental and conscious expression government. The people were best served by their government, which most legitimately could express the perfection of their law through statute to be guarded and interpreted by the courts. While Swift would rely on the judges for the task of rationalizing perfection, Erie looked to the legislature and statute. In either case, faith in law and in government becomes basic to the rational exercises that serve as its philosophy. And in both cases it is the magisterium of judges that controls.

Perfectibility and the political branches. Still Erie points to the role of the political branches between perfection and its expression in law. The intermediation is represented as a necessary consequence of the construction of a system of divided power in which the community is deemed to have divested itself of direct regulatory power (that is, of its relationship to the construction of a customary law) in favor of a government constituted to exercise all political authority. As Justice Scalia is now fond of noting: “Modern governments . . . are thought to derive their authority from the consent of the governed, and the laws they prescribe are enacted by the people’s representatives. Such a system is quite incompatible with the making (or the “finding”) of law by judges—and most especially by unelected judges.” (Scalia 1995: 40). The apparatus of state thus serves as the means of a perfection the measure of which is its constitution and the guardian of which remains the judge.

This sort of institutional intermediation is also tellingly confirmed by the substitution of the great law codes for what remains of the common law in the United States. It is evidenced by the rise of great private bodies of public personages charged with the consideration and development of a harmonized expression of the ideal in law. This project is represented by the great projects of informal legal codification of the American Law Institute (“ALI”) and the National Conference of Commissioners on Uniform State Laws (“NCCUSL”).

The ALI has sought uniformity in common law through systematization of decisions, synthesizing and pointing to the “correct” result in a manner reminiscent of the Swift. The American Law Institute, building on the “Bractonian and Blackstonian treatises, declaring the common law on the empirical foundations of judicial decisions” (American Law Institute 2005: vii), fearing the “chaos in a legal world of 48 states” (ibid) but afraid to undertake legislative codification, invented the form of the Restatement. Restatements constituted a synthesis of sorts, “analytical, critical and constructive” (ibid: 5) seeking to reduce to a single systematic form the underlying principles that gave a legal field coherence “and thus restore the coherence of the common law as properly apprehended” (ibid: 5). They serve as once to synthesize and to innovate (ibid:). Though not binding, ALI Restatements have proven to be authoritative in many American courts.

The NCCUSL has worked since 1892 on unification of law through statutory projects more in conformity with the jurisprudential focus of Erie. A non-governmental organization whose members, representing all of the states and other territorial units, are for the most part regulated by statute, NCCUSL commissioners “promote the principle of uniformity by drafting and proposing specific statutes in areas of the law where uniformity between the states is desirable.” Their uniform laws have become a pillar of state legislation and have moved the project of legislative uniformity—of the search for a pan “American” legal ideal closer toward realization. It, too, then, serves a potent illustration of the application of this development of a means to apply the mechanics of perfectibility expressed as law within the American political community. The mechanics of perfection are strikingly similar to that of the Judge. But here the legislator becomes voice to perfection and the instrument of her own privilege.

Whether by means of judicial or legislative command, or through the efforts of quasi-legislative endeavors of political elites, then, the expression of perfection remains law, realized through a institutional techniques the value of which is determined by application of a mechanics of the knowledge of the attributes perfection. And that mechanics of knowledge joins law to philosophy or theology. It is to this last point that this essay now considers.

Logos and law, the mechanics of perfection.

The philosophy of law centers on a rationality of perfection. This faith defines and delimits the scope of those mechanics within the broad parameters of faith and reason. Its foundation is a faith in perfection and the end of striving or peace. Its mechanics is entwined with order, and order fold back into rationality—whether subjective or objective. Faith in perfection, rationally expressed through and as law, expresses a theology of law without religion.

The institutional Catholic dialog about the relationship between faith and reason provides useful insights for contextualizing the philosophy of American law within its theological (or faith) foundations. Within that context, faith becomes the “truth” of perfectibility, and reason the substance of and mechanics for its attainment. As articulated in the encyclical Fides et Ratio (1998) one starts with the knowledge of revealed truth, (Ibid: ¶ 7), a transcendental truth that is also immanent, that is, “immersed in time and history.” (Ibid: ¶ 11). Faith is a fidelity to this revealed truth as both transcendental (eternal and ultimate—perfect) and immanent (leading to perfection). (Ibid: ¶ 13) “Between these two poles, reason has its own specific field in which it can enquire and understand, restricted only by its finiteness before the infinite mystery of God.” (Ibid: ¶ 14) Thus the foundation of the unity of faith and reason: “In God there lies the origin of all things, in him is found the fullness of the mystery, and in this his glory consists; to men and women there falls the task of exploring truth with their reason, and in this their nobility consists.” (Ibid: ¶ 17). God—perfection, peace—is thus encapsulated in the notion of Logos: “Logos means both reason and word - a reason which is creative and capable of self-communication, precisely as reason. John thus spoke the final word on the biblical concept of God, and in this word all the often toilsome and tortuous threads of biblical faith find their culmination and synthesis.” (Benedict XVI 2006).

Where the community of the faithful includes the world (the founding postulate of universalist religions and philosophies), the internal workings of faith on reason become the paramount relationship. The body of the Divine defines the extent of reality; it serves without limit. Reason without faith, then, becomes method without purpose, and reduces its object to individual satisfaction. Within religion, “any attempt to maintain theology's claim to be "scientific" would end up reducing Christianity to a mere fragment of its former self. But we must say more: if science as a whole is this and this alone, then it is man himself who ends up being reduced.” (Benedict XVI 2006). Reason in the absence of faith and the faith community is reduced to the subjective, and the partial. “The subject then decides, on the basis of his experiences, what he considers tenable in matters of religion, and the subjective "conscience" becomes the sole arbiter of what is ethical. In this way, though, ethics and religion lose their power to create a community and become a completely personal matter. This is a dangerous state of affairs for humanity.” (Ibid).

But in a world in which multiple communities of the faithful exist, and where the scope of faith communities are functionally differentiated (political, economic, etc.), then faith and reason acquire a different direction—communication, collaboration, and evangelization (diálesis) rather than Logos. This is a world with many bodies of the Divine, internally infinite, yet externally limited by the body of faith. In this world, and within that diálesis, an overcoming of parochial faith (one that is inwardly infinite and outwardly limited) might be possible, or power relationships played out.

From this the great organizing principle of American legal philosophy. Self-constituted communities are bounded by the ‘truth” of their constitution, a truth that necessarily embodies faith and reason in the sense that is described in John Paul II’s exposition in Fides et Ratio. Political communities, like religious and social communities, are bounded by the “truth” of their constitution—rationally bounded by rules and understandings within which the infinite is possible. Faith provides the ongoing principles of that community—its morals, ethics and theology. Reason serves as the means for incorporation and application of those principles. Together they provide the framework within which the search for “truth”—as perfection—is undertaken by means of government and expressed, ultimately, in law.


There is thus an active and a passive element to the relationship between American law and jurisprudence, its philosophy and theology. On one hand, jurisprudence explains a mechanics of law eschewing any suggestion that it may affect the product. On the other, jurisprudence styles itself the source of a mechanics of law construction. But not just an explanation, or a mechanics. American juristic philosophy, like the cultural-political framework in which it operates, is both fractured and itself seeking that singular perfection of expression that would bring it in line with the sole, exclusive and ultimate reality.

American jurisprudence reduces itself to the conceptual battles represented by Swift and Erie. “The major issue, thus, is to find the ultimate criterion of law, whether in the heaven of juristic ideals or in the earth of social reality. . . . In other words, we are advancing, let us hope, in the direction of agreement that the objective of jurisprudence is the same as of all science—to develop the truth.” (Yntema 1947: 1106). And in this reduction overcomes itself as well: “justice exceeds the law (le droit) but also motivates its movement, the history and becoming of juridical rationality . . . . no justice without appeal to judicial determinations and to the force of law, no becoming, no transformation, history or perfectibility of law without the appeal to a justice that will always exceed it.” (Derrida 1993: 266, translated and quoted in De Cauter).

The philosophy of American law is rational and pragmatic: it seeks to serve its faith. Faith is grounded in perfection through law among the community of the faithful, who together constitute the citizens of the American nation. Together this community lives its faith through a commitment to the attainment of the “more perfect union” on which the American self-creation is based. That more perfect union is expressed in law by means of the apparatus of state—through which the collective genius of the community of the faithful is assembled and through which faith can be authoritatively manifested.

Yet it is the mechanics of this perfection, rather than its content, that continues to dominate the more dynamic aspects of the philosophy of the American theology of law. For Americans, the basic question of philosophy is more often reduced to who, rather than to what, and how rather than why. From common law theory, to liberal positivism, legal realism, natural law and critical theory, all seek to serve as the mechanics of a singular perfectibility. These diverse mechanics provide the structure and context through which the ascendancy of different visions of reason seek primacy in the service of perfection, each constituting pieces in the striving for perfection, an American religion without religion. (Caputo 1997: 116). The contests over the control of its mechanics was the object of the great battle played out between Swift and Erie, and consciously so. The foundations of reason were never in doubt, nor was a necessary conflation of reason with law. Thus Justice Frankfurter could mock Swift even as he affirmed its object. “Law was conceived as a ‘brooding omnipresence’ of Reason, of which decisions were merely evidence and not themselves the controlling formulations. Accordingly, federal courts deemed themselves free to ascertain what Reason, and therefore Law, required wholly independent of authoritatively declared State law.” (Guaranty Trust Co. 1945: 116). But Reason, itself, is bound up in the form of the constitutional order, which itself is an expression of the form perfection—the body of the divine. “The operation of a double system of conflicting laws in the same state is plainly hostile to the reign of law.” (Ibid: 125). Or as Benedict XVI might suggest, “Not to act "with logos" is contrary to God's nature.” (Benedict XVI 2006).


American Law Institute. Capturing the Voice of the American Law Institute: A Handbook for ALI Reporters and Those Who Review Their Work. Philadelphia: American Law Institute, 2005).

Augustine of Hippo. The City of God. Trans. Thomas Merton. New York: The Modern Library, 1950.

Benedict XVI, “Faith Reason and the University: Memories and Reflections,” Address Delivered at the University of Regensburg, Germany, Sept. 12, 2006 available at

Braithwaite, William T. “The Common Law And The Judicial Power: An Introduction To Swift-Erie and the Problem Of Transcendental Versus Positive Law.” In Law and Philosophy: The Practice of Theory Essays in Honor of George Anastaplo. Eds. William T. Braithwaite, John A. Murley, and Robert L. Stone. Athens, OH: Ohio U. Press, 1992: 774-818.

Caputo, John D. The Prayers and Tears of Jacques Derrida: Religion Without Religion. Bloomngton, IN: Indiana University Press, 1997.

De Cauter, Lieven. “The Tyrant as Messiah: Messianism and Antinomianism in the Neoconservative Ideology.” The Brussels Tribunal (Sept. 3, 2006) available at

Derrida, Jacques. Spectre de Marx L’état de la dette, le travail du deuil et la nouvelle Internationale. Paris: Galilée, 1993.

---------- & Lieven De Cauter. ‘For a justice to come. An Interview with Jacques Derrida’ (Lasse Thomassen (ed.), The Derrida-Habermas Reader, Edingurgh: Edinburgh U. Press, Edinburgh, 2006:259-69.

John Paul II, Fides et Ratio. Vatican City: Vatican Publication, 1998.

Nietzsche, Friedrich. The Antichrist. In The Portable Nietzsche. Ed. and trans. Walter Kaufmann. New York: Penguin Books 1968 (originally published 1888): 565-656.

Scalia, Antonin. “Book Review.” Reviewing Steven D. Smith. Law’s Quandary. Harvard University Press, 2005. First Things 157:37-46 (2005).

Uniform Law Commission, “Organization,” available

Yntema, Hessel E. “Book Review.” Yale Law Journal 56:1101-1106 (1947). Reviewing Interpretations of Modern Legal Philosophies: Essays in Honor of Roscoe Pound. Ed. Paul Sayre. New York: Oxford U Press, 1947.

Baltimore & Ohio R. Co. v. Baugh, 149 U.S. 368 (1893).

Dr. Bonham’s Case. 1610. Hilary Term, 7 James I. In the Court of Common Pleas. Reports, vol. 8, 113 b (8 Co. 107a (1610)), reprinted in Coke 2003, vol. I, 264.

Erie Railroad Co. v. Tomkins, 304 U.S. 64 (1938).

Guaranty Trust Co. v. York, 326 U.S. 99 (1945).

Swift v. Tyson, 41 U.S. (16 Peters) 1 (1842).

Thursday, August 30, 2007

Empresas en Perfeccionamiento and the Sinification of the Cuban Economy

Over the course of the last decade, and under the very nose of the American foreign policy elite Cuban economic organization has been undergoing a slow but fundamentally important change. While Americans continue to believe that time has stood still in Cuba, Raul Castro and his circle in the Fuerzas Armadas Revolucionarias (FAR) have been slowly, patiently and methodically reorganizing the deployment of Cuban productive capabilities form the old and inefficient Stalinist state overseen morass to the more efficciency based Chinese model of state owned corporations more (though still not substantially enough) responsible for their own economic performance.

FAR has been at the forefront of the creation of a corporate restructuring of economic organization in Cuba. From a mass of undifferentiated but centrally controlled production units, FAR has begun to reorganize state economic productivity on corporate lines. The state retains control of these enterprises, but they are run as separable entities on a more competitive basis. A recent report. The Cuban Military in the Economy, Focus on Cuba, Cuba Transition Project, Issue 46, Aug. 11, 2007, nicely describes both the extent of FAR's corporate holdings, and the Sinification of its corporate techniques. The report tends to view what it describes as the "militarization" of the Cuban economy unenthusiastically. Yet it was this step that made China's engage with globalization possible, and the step most likely to permit the reorganization of the Cuban economy with the least amount of disruption. It is, for that reason, perhaps, that American critics of Cuba might view the transformation negatively. Certainly, from a global engagement perspective, the adoption of a rule fo law regime based on the creation and respect for independent economic entities capable of bearing responsibility for their actons (and interactions with global economic actors) would tend to strengthen efforts to bring Cuban economic activity into the global stream.

The FAR has been in the vanguard of introducing modern industrial and management techniques to Cuban industry. Among the techniques being tested in the recasting economic organization in Cuba, without sacrificing the Marxist Leninist basis of state organization, is the Sistema de Perfeccionamiento Empresarial (SPE). The purpose of this program is to permit facilitate companies to use modern management techniques in their operations.
The SPE has been penetrating into countryside companies more quickly since Fidel Castro's incapacitation. Thus, for example, a report from a state news organ for Ciernfuegos recently reported on the successes of entities in that province adopting SPE organization. "En las entidades que aplican el SPE los niveles de calidad crecieron en sentido general, e incluso en once de ellas lograron avalar los procesos con la norma de calidad ISO 9 000, un estándar internacional que mide la excelencia de las producciones." (Thos eentities applying SPE quality levels generally grew and 11 of them attained ISO 9000 quality standards, an international standard that measures production quality). Empresas en perfeccionamiento runden utilidades,, Aug. 3, 2007. The story laments, though that only 38 of the 114 state enterprises in Cienfuegos has yet to adopt and qualify for status as an SPE. Id.

But the pace of change may be accelerating. FAR leaders appear to be ready to pressure the non-military part of the economy to begin to more aggressively change their organization to mimic the changes in the FAR sector. A recent speech, Carlos Lage Dávila, a member of the Political Bureau and and Secretary of the Executive Committee of the Council of Ministers, analyzed the difficulties of expanding application of the SPE program more broadly, suggested a number of reasons for the failure (including most significantly a failure of leadership, inattention, and poor planning) urged the greater use of the SPE model as the basis for economic development in Cuba. See
Discurso de Carlos Lage Dávila, miembro del Buró Político y secretario del Comité Ejecutivo del Consejo de Ministros, en la clausura del Seminario Nacional con los directores de empresas que aplican el perfeccionamiento empresarial, efectuada en la Sala Universal de las FAR, el 29 de agosto deL 2007 (" Necesitamos que las empresas en perfeccionamiento sean un ejemplo, una vanguardia en la batalla por el de-sarrollo económico del país. " Id.). But in a mark of the lossening of the opposition of Fidel Castro to Sinification, Lage Dávila made the surprizing statement: " El socialismo es en la historia del hombre un sistema social joven. La experiencia más avanzada, la de la URSS y el llamado campo socialista El socialismo es en la historia del hombre un sistema social joven. La experiencia más avanzada, la de la URSS y el llamado campo socialista fracasó. Los países que hoy se plantean la construcción del socialismo en distintas partes del mundo, lo hacen desde condiciones económicas y políticas muy diferentes a las nuestras. Sus aciertos y tropiezos deben enriquecer nuestro camino, pero la construcción del socialismo en Cuba solo es posible como fruto de nuestra propia experiencia.." Id. ("Socialism is the histroy of a young social system. The most advanced experience of the Soviet Union andf the so-called socialist camp, failed. Today states in different parts of the world in which the construction of socialism is fostered do it under economic and political conditions very different from our own. Their successes and failures should enrich our own way, but the construction of socialism in Cuba is only possible as the fruit of our own experience."). As important, corporate directors of state enterprises will owe a strong fiduciary duty to its principal shareholder--the state. In that sense, Lage Dávila tells us, corporate directors serve both a pblic and private purpose: "El director de una empresa al frente de un eslabón esencial de la economía del país es también y ante todo un representante del Partido y del Gobierno ante sus trabajadores. Es un dirigente económico, pero también político cuya primera tarea es defender, difundir y hacer prevalecer las ideas de la Revolución." Id. ("The director of a vanguard company that is an essential link of the nation's economy is also and first of all a representative of the Party and the Government to his workers. He is an economic leader, but also politician whose principal task is to defend, to spread and cause the success of the ideas of the Revolution.") These are statements worthy of Deng Xiaoping and point to an intensification of the campaigns to change the face of economic organization in Cuba. Expect more , and soon.

Friday, August 24, 2007

The Regulatory Dimensions of States as Corporate Actors

The last quarter century or so has witnessed a growing obsession with the regulatory dimensions of corporations as state actors at least among global political elites (the transnational political, media and intellectual classes). Much ink has been spilled on identifying the essence of the problem, spotting the weaknesses of the current structure of political governance with respect to the problem, and advocating any one of a growing number of changes to solve it. At its vanguard, this movement in the culture of political characterization (and thus of the crafting of a certain reality) has substantially outlined its conclusions with respect to each. Vanguard elements of the global political elites tend to hold that the essence of the problem centers on the failure to recognize the great social and political dimensions of economic activity. Corporations act like or on states in a manner with respect to which the political and social dimension cannot be ignored. The separation between public and private, state and corporation is unrealistic and unsustainable. It works to the detriment of the underrepresented elements of both sorts of entities—the people. The weaknesses of the current system of governance thus are identified as centering on this failure of recognition. Specifically, there is a capacity problem—states are too small or too weak or too constrained in the exercise of their regulatory power vis-à-vis entities which are themselves unconstrained by any territorial principle. And the solutions? There are many competing even among vanguard groups. These involve crafting a regulatory system through institutions or mechanisms as broadly constructed as the entities to be regulated. Thus, calls for international regulation though autonomous global institutions, or the development of a set of binding global regulatory norms enforceable in the courts of any states, or by other mechanisms.

Clearly the vanguard elements of elite society has not yet won the day. And this global vanguard faces challenges both from the left and the right. Old style Marxist Leninist states tend to be wary of programs that suggest a further deterioration of the power and autonomy of the state. This is especially the case in developing states like China, that have recently come into their own. States that have emerged from colonial domination are sometimes wary and sometimes embrace internationalization. They are wary to the extent internationalization is perceived as a cloak for re-colonization (by other means—the usual charge levied against modern economic globalization). They are more likely to embrace international institutionalization to the extent that it is organized along state representation lines (since there is power in numbers and their political voice will be more loudly, and authoritatively, heard). Ironically, old style free market states are also wary of internationalization, and especial international institutionalization. These states tend to be wary of a further deterioration of the power and autonomy of the state for slightly different reasons. Many in this group remain unconvinced of the democratic legitimacy of supra national and international institutions. And others fear that international democratization will have the opposite effect—permitting those states with little history of respect for rule of law concepts as they have been developed in the West to disproportionately control the levers of global institutional authorities. The political elites in the United States tend to take this position more often than not, and so find themselves at times. And international institutionalization tends to run counter to the philosophy of modern economic globalization, founded on the separation of politics form economics, of public from private institutions, and on a free movement of private capital, some services, but not labor, based on contract principles.

And so, while the vanguard builds a case for global institutionalism, the bulk of public and private elites, and especially those with power and money, have opted for less dramatic approaches. They are willing to acknowledge a problem, but suggest that its essence is bad behavior by the characterless, rather than on a flaw in the theories of governance that posit distinctions between the economic and the political organisms. They are willing to acknowledge weaknesses in the current structure of political governance, but tend to place emphasis on a failure to enforce existing rules rather than on the systemic flaws or incapacities of current governance models. And they are willing to produce models for correct behavior and proper conduct based on an encouragement to states to enforce their laws and an exhortation to economic actors to behave appropriately. The great models for this model are the U.N.’s Global Compact and the Organization for Economic Development and Cooperation’s model rules.

While substantial attention has been lavished on the regulatory dimensions of corporations as state actors, comparatively little has been paid to the regulatory dimensions of states as corporate actors. But this is an issue every bit as important to the problem of the regulation of economic activity, and indeed, may become the most important determinant of the way in which the character of the state ultimately evolves in the legal ordering of this century. The issue was given a bit of a boost recently in a story carried by the New York Times and meant to scare the American population in the usual nativist manner (a pattern well worn outside the United States). Steven R. Weisman, A Fear of Foreign Investments, New York Times, Business Day, Aug. 21, 2007 at C1. It seems that foreign states are becoming great economic actors. They are becoming great economic actors in the ordinary manner—by buying interests in corporations and other private economic actors, and using those investments to maximize their own welfare. The story reports on the way in which governments are funneling their dollar holdings into investment funds that then acquire “companies, real estate, banks, and other assets in the United States and elsewhere.” Id.

The article reports that the resulting concern is multilayered. “One of the American concerns is philosophical. The United States has for years preached the gospel of privatization, calling on other countries to sell their government-owned industries.” Id. Yet this is an odd concern. Governments are not nationalizing economic actors. They are merely seeking to act like other shareholders. This behavior is unremarkable when private entities acquire interests in each other for the purpose of maximizing their interests. But it appears to have a different effect if public entities begin to act like private investors. The usual explanation is simple: states are different. They seek to maximize the political and social interests of their people rather than confine themselves to wealth maximization like private investors. The difficulty, of course, is that this explanation is no longer entirely accurate. Private investors maximize their interests (roughly translated into wealth concepts). And they serve their own masters, including ultimate shareholders and the investment community in ways that may require action that does not suggest immediate monetary maximization. Indeed, the entire corporate social responsibility movement is grounded in the notion that investors are demanding conduct that is not wealth maximizing in the traditional (and now increasingly obsolete) sense of short term profit maximization. States also, to a great extent, are captive to their own “investor base”—their voters. In this respect the political dimension of state activity in the market is similar to that of private holding companies in the market.

Ah, it is said. But that points to the second concern—state corporate investment will affect the markets adversely. Thus, related to the “states are different argument” is one that is raises “the prospect of government interference in free markets, only this time, in other countries’ markets.” Id. Control of the markets, it is said, derives from the size of the investment funds controlled by state actors.

Another concern is the sheer size and potential growth of these funds. Their estimated $2.5 trillion in assets exceeds the sum invested by the world’s hedge funds. . . . Though sovereign wealth funds do not appear to have played a role in the recent turmoil in global markets, experts say they could in the future, in favorable or unfavorable ways — by selling assets abruptly and precipitating a crisis, or by bailing out funds or companies that are in trouble.

But this argument is difficult to square with the nature of the investment. States power to control the markets are based on the same power as that in private hands—the ability to deploy vast amounts of wealth in the market, in strategic ways for the benefit of their ultimate shareholders. To the extent that private holders of vast wealth are currently regulated—and we are told by our political elites, regulated well enough—those regulations apply to state investors as well. And surely to the extent that the world’s great hedge funds, already enormous by the all accounts, can be acceptably regulated, so too sovereign funds. Indeed, even those who worry most suggest that the conflation of state and corporation that appears to be so vociferously denied when the issue is the public responsibilities of private concerns grudging admit that this is a worry in search of a problem. “‘They could become either the source of the problem or part of the solution,’ said Edwin M. Truman, senior fellow of the Peterson Institute for International Economics.” Id.

Thus the problem points to the fundamental issue mirrors that of multinational corporate regulation—how does one square the realities of private conduct by public actors in the market under a theoretical and regulatory construct that posits the separation and unbridgeable separate character of public and private entities. It is no surprise, then that “The worry is that beyond the possibility of foreign funds pushing up prices on bonds, stocks and real estate, they might exercise inappropriate control politically or in the private sphere.” Id. And the answer, for some, is one heard increasingly in national legal orders—when states act in the market, they will be treated as any other corporation. ““A government is a different type of animal in the investing world,” he said. “We call them sovereign wealth funds, but once you’re operating outside your own borders, you’re not sovereign in the same sense.’” Id., (quoting Edwin Truman). Yet, the implications of that position, for the construction of a regulatory framework, is still lost on its proponents. For if it is so self evident that states lose their political character to an extent at least when they act outside their borders, then it seems equally plausible for other entities to do the same in similar circumstances. And it is not necessarily that the sovereign character of the state is lost when it projects its power outside its borders, but that te nature of that power, and its relation to the regulatory power of others, changes in the context in which it is asserted. This, of course, is precisely the point raised by those who argue that corporations actions can acquire a political and social dimension.

So, for the moment, those who identify the problem appear to propose a regulatory framework substantially similar to that imposed on private entities exercising social responsibilities. Thus “many experts [are] urging the United States, the International Monetary Fund and the World Bank to draw up codes of conduct that would keep politics out of investment decisions and require the funds to share information about the composition of their portfolios and their investment strategies.” Id. Other suggest requiring sovereign funds to have “non political managers.” Id. And quite rightly, the United States has sought a measure of reciprocity in these forms of investment—inbound as well as outbound. Id.

All of this, ironically enough, seems to add a measure of strength to the arguments of the vanguard that the distinctions between public and private entities are falling away. That insight should produce a necessary reevaluation of the nature of regulatory deficiencies and ought to reinvigorate the debate about the character of appropriate responses. All of that has been difficult to do when the focus has been on the regulatory dimensions of corporations as state actors. Perhaps it will be more likely coming when the focus is on the same problem in reverse—the regulatory dimensions of states as corporate actors.

Wednesday, August 22, 2007

Religion in the Service of the State: Schools of "Soft Islam" in Britain

I have suggested that one of the more interesting aspects of one of the current series of wars, first in Europe (Bosnia Herzegovina and then Kosovo), Afghanistan and then in the Middle East (Lebanon but principally Iraq after 2003) has been the contest between religion and the state for supremacy in the crafting of political culture. Indeed, the early twentieth century has seen the renewal of a conversation about the order of hierarchy of religious and political orders in the West in a style to which the West had been unaccustomed since the seventeenth century. That this conversation is now aided by force of arms--as well as the deployment of virtually all of the mechanics of cultural production--should come as no surprise. The stakes are quite high. In a sense, these wars are waged for the "soul" of religion (in these cases of "Islam") or of the "state."

The combatants on the Islamist side are well known through a certain sort of reportage in the American press. The religio-political discourses of Osama bin Laden and his allies are widely available in the West. For a popularizing version, consider for example, Ruel Marc Gerecht, The Gospel According to Osama Bin Laden, The Atlantic Monthly, Jan. 2002 and Janet Levy, Al-Qaeda Reader: The Writings of Osama bin Laden and Aiman al-Zahawari Show the True Face of Islam, Free Republic, July 17, 2007. More respectable alternatives, for example in the form of Saudi style Islam have been widely disseminated through a generation long project of establishing schools and sending teachers throughout the globe where Muslims are available for instruction. These movements, of course, are the tip of the iceberg of a long and rich conversation within Islam, one that is far from over. For an interesting Turkish secularist perspective, see Orhan Tarhan, The Root of Terrrorism, Voice of Ataturk.

But the West has also been trying to shape the character of Islam, even as Islam attempts to shape the character of the political-cultural state. And it has done so, not for the sake of Islam, necessarily, but for the sake of its own constitution as political sates at the top of a hierarchy of legitimate authority. It is for that purpose that the West has become, clumsily enough to be sure, to attempt the construction of a "soft" Islam which can be exported, Saudi religious foundation style, among Muslim communities globally. Larry Catá Backer, Of Political States and "Soft" Religion As the Basis for State Organization, Law at the End of the Day, July 17, 2007. It comes as no surprise to read, then, of the latest efforts to bend Islam to the needs of Western states in the United Kingdom. Jane Perlez, New Civics Class Asks, What Would Mohammad Do?, The New York Times International, Aug. 21, 2007 at A3. Special classes, aimed at mosque centered education, have been created as part of
a government-financed effort to teach basic citizenship issues in a special curriculum intended to reach students who might be vulnerable to Islamic extremism. In the long haul, the British government hopes that such civics classes, which use the Koran to answer questions about daily life, will replace the often tedious and sometimes hard-core religious lessons taught in many mosques across the land.

Jane Perlez, New Civics Class, supra. The approach is meant to insinuate itself into religion from the "inside":
Written by a Bradford teacher, Sajid Hussain, 34, who holds a degree from Oxford, the new curriculum is being taught in some religious classes here in a city that is increasingly segregated between South Asians and whites. The pilot effort in Bradford has the backing and the financing from the Labor government as part of a hearts-and-minds campaign that it hopes will eventually spread to other cities and help better integrate the country’s mainstream Muslims into British culture.
Jane Perlez, New Civics Class, supra. The government, quite consciously, has found a group within the Muslim community of Britain whose understanding of that religion the state will choose to subsidize. "One of the virtues of the curriculum in Bradford in applying Mr. Brown’s vision, according to his aides, is that it is taught by forward-leaning imams and is based on matching messages from the Koran to everyday life in Britain." Jane Perlez, New Civics Class, supra.

And from the state's perspective, rightly so. Religion, it has been understood in the West since the end of the endemic wars among Christians, is permitted a certain autonomy, as long as its values roughly coincide with that of the political community and as long as its methods do not overtly threaten the assertion of state power by individuals holding positions within the political apparatus of the state. This understanding, in its most crass form, is still alive and well in places like the People's Republic of China, which, like certain political leaders of the late medieval period in Europe, retains the power to appoint (or approve) the religious leaders assigned within its territory. Vatican Objects to Chinese Bishop, BBC News Online, April 29, 2006. But institutionalized religion has again sought to invert the modern European formulation of hierarchy. And the West has tended to defer. But having deferred, it has sought to capture. Thus the government's facilitation of an "appropriate" British Islam, to combat both alternative religious visions (also seeking legitimacy and adherence within the communities of the faithful) and those subsidized by other states.

For those who view the spheres of political and religious community as substantially separated, and autonomous within their own spheres, this development might be disturbing. In an inverted sort of way, it represented a return to the old conflation between state and "church" that caused so much discomfort in pre democratic ages. But religion has sought to involve itself more and more in political dialog--in both the East and the West. And so it makes perfect sense for the state to seek to intervene in religion. And religion will find it hard to have it both ways--protected from state interference and protected in its intrusion in political life. For some, in both the West and the East, this state of affairs represents a return to the "normal." But the West ought to remember, in its cultural "bones" the consequences of imperial involvement in religious affairs on individual conscience, a value still widely regarded within many political communities.

Friday, August 17, 2007

The Forms of Terrorism in International Relations From a Chinese Perspective

Americans tend to view terrorism, and its containment, in two dimensional terms. Terrorism tends to exist exogenously. It is either invasive or revolutionary. Foreigners are terrorists; natives who have become foreigners, in beliefs and culture, are also terrorists. And terrorism is itself a metaphor for lawlessness.

But in other important states, terrorism has been acquiring additional dimensions. Evidence of this expansion of meaning has been on display this week, as the leaders of the Russian Federation and the People's Republic of China meet to review the progress of what may become the first post-Soviet counter to NATO--the Shanghai Cooperation Organization. This review is being held in conjunction with a widely publicized set of military exercises meant to highlight the strength of both the Chinese and Russian military establishments, and their leading role in the Turkish regions of central Asia--an area of substantial sensitivity to China and to Russia. See Larry Catá Backer, China's People's Liberation Army at 80: Projecting Power and the Shanghai Cooperation Organization, Law at the End of the Day, Aug. 1, 2007.

The focus of these military and political activities is "terrorism" and its eradication. That objective underlies much of the work of the SCO. Terrorism will serve as the foundation of the wide ranging set of international agreements to be developed and implemented as a consequence of the current round of meetings in Bishkek, the capital of the Republic of Kyrgyzstan, a member of the SCO. These are identified in the Bishkek Declaration. Among the objectives of the new cooperation, the Bishkek Declaration states that

The SCO member states stand ready to develop cooperation and step up joint efforts on strengthening international information security in all aspects.
The heads of state believe that stability and security in Central Asia can be provided first and foremost by the forces of the region’s states on the basis of international organisations already established in the region.
The member states stress the need for collective efforts on counteracting new challenges and threats. They highly rate the activity of the SCO Regional Antiterrorist Structure and believe that it possesses a significant potential for further enhancement of interaction in the fight against terrorism, separatism and extremism.
Bishkek Declaration.

It is important, then, to get a sense of what SCO leaders may understand by "terrorism." For that purpose, recent statements by President of Hu Jinatao may prove helpful--and ominous for American policy. In a set of public statements, Hu declared that " "China and Russia are both unswervingly against terrorism in any form," Hu said while meeting with his Russian counterpart Vladimir Putin at a military base near the Ural Mountain city. "At present, the non-traditional elements threatening security are still notable. Terrorism is posing severe threat to world peace and development," Hu said." Fighting Terrorism an Important Mission of SCO, China, Russia: Hu , People's Daily Online, Aug. 18, 2007.

Terrorism, however, Hu stated, must be understood in its three guises. "The Chinese president said the two sides have sound cooperation in cracking down on the "three evil forces" of terrorism, separatism and extremism and expect such ties to be further enhanced." Fighting Terrorism an Important Mission of SCO, China, Russia: Hu , People's Daily Online, Aug. 18, 2007. Conflating separatism and extremism with terrorism works well within current Chinese policies in its Western regions. It may work well for the Russian Federation as it contemplates increasing the acceptability or irridentist sentiments. Yet it also seems well adapted toward providing a rule of law basis for the suppression of any expression that might be deemed to threaten the integrity of the state (at least theoretically acceptable under most understanding of the legitimate power of states) or its apparatus. In its latter guise, the conflation appears problematical, at least in the West. But even in its former guise, it appears to significantly shrink any legitimate ambit for self determination movements.

Hu's conflation thus raises a set of issues that the West has managed to sidestep on the way to its construction of a set of internally contradictory rights norms at the international level. Hu reminds us that if rights of self determination can support Kosovar independence, it might also support that in Xinjiang. If it supports the suppression of National Socialism in Germany, then it might also support the suppression of Falun Gong in China. And if it supports the Chinese positions in these areas, might it also support the American positions in Iraq? Or the actions of multinational corporations in suppressing conduct through contract and courses of conduct? These questions, especially as they relate to consistency in the application of legal norms, will increasingly bedevil international norm setting. Hu correctly reminds us that the problem of terrorism is, in effect, the problem of the state in the 21st century.

Wednesday, August 08, 2007

Hierarchies of Subordination: The Curious Case of Sudanese Muslims Fleeing Egypt for Israel

It is well known that difference tends to produce subordination. That is, difference can be given effect politically only by producing differences in treatment based on judgments as to the relative value of the traits on which difference is based. Much of the 20th century literature on the "color line" and race issues in the United States has been based on a tacit or implicit embrace of these understandings. See Larry Catá Backer, Altheimer Symposium on Racial Equity in the 21st Century: Culturally Significant Speech: Law, Courts, Society and Racial Equity, 21 UNIVERSITY OF ARKANSAS LITTLE ROCK LAW JOURNAL 845 (1999). What most people understood, though they quibbled about the details and the deepness of the effects, were that hierarchies of subordination existed based on race, that law had and might continue to institutionalize these hierarchies, and that in any case social and cultural practices might make it difficult even for law, by its "rule" to change them.

In the 21st century, a number of these insights were translated to the field of hierarchies and subordination based on religious affiliation. The last quarter of the 20
th century had seen the rise of religion as a new basis for political and social subordination. Religion, especially after September 11, 2001, became fuel for political conflict as well. In this century, the question, then, might arise: where there are multiple bases of culturally significant differences, that is differences producing the possibilities of social and political subordination, would hierarchies of subordination be created? In other words, if there are multiple bases for subordination, which tend to take precedence over others?

One thing seems clear--where racial and ethnic subordination are both possible, political communities still appear to ignore the positive values of religious solidarity to effect racial subordination. Race, it seems, may continue to top the list of difference producing enforced subordination.
Three recent news reports nicely illustrate these complexities of subordination in 21st century global politics. All three deal with different aspects of a curiosity: the specter of Muslims fleeing the dar al Islam (in these cases Egypt) for sanctuary in. . . . Israel.

Monday, August 06, 2007

Soft Rule of Law and Corporate Regulation: The Institutionalization of Corporate Social Responsibility

I have suggested that corporate regulation, and especially the regulation of multinational corporations, is no longer substantially dependent on the state. More precisely, corporate regulation especially with respect to the larger entities, is no longer subject to--or a function of the operation of--traditional public rule of law systems, of which public (political) institutions (national or supra national governments) represent the highest sources of authority.

In some cases, the traditional hierarchical relationship between private economic entity and public political institutions becomes inverted. See
Backer, Larry Cata, "The Autonomous Global Enterprise: On the Role of Organizational Law Beyond Asset Partitioning and Legal Personality," Tulsa Law Journal, Vol 41, 2006. In those cases, free movement of capital combined with an increasingly open global system of capital and production, permit corporations to shift resources and operations to maximize its wealth creation potential. In that environment, regulation is reduced to a thing--another factor of production--for which a global market exists. Just as corporations shift operations to lower costs of production by taking advantage of differences in local labor markets, corporations also can shift operations in response to regulatory environments. As a consequence, these corporations effectively regulate themselves.

Increasingly, however, the regimes of "hard" rule of law systems--statutes and other forms of regulation--are becoming less relevant. Instead, "soft" rule of law systems have begun to arise within global frameworks of economic activity. These private and contractually based systems, have helped create structurally autonomous subsystems of regulatory activity beyond the regulatory framework of "hard" rule of law systems. See
Backer, Larry Cata, "Economic Globalization and the Rise of Efficient Systems of Global Private Lawmaking: Wal-Mart as Global Legislator" . University of Connecticut Law Review, Vol. 39, No. 4, 2007. Within these private and self referencing systems, contract serves as the memorialization of law and investors and consumers are the "citizens," whose consumption and investment decisions serve as a constant system of voting preferences.

It is no surprise, then, that large corporations have finally come to understand that "public perceptions affect a company's stock price," Pete Engardio and Michael Arndt, What Price Reputation?, Business Week, July 9 & 16, 2007 at 70. "
More and more are finding that the way in which the outside world expects a company to behave and perform can be its most important asset. Indeed, a company's reputation for being able to deliver growth, attract top talent, and avoid ethical mishaps can account for much of the 30%-to-70% gap between the book value of most companies and their market capitalizations." Id. at 72. This perception has given rise to an emerging market for the services of professionals able to communicate perceptions to the investor community. Id. Two sorts of businesses have stepped into this market. The first include data mining and analysis companies.

To get a fix on how companies are seen publicly, they are hiring firms like Factiva and Delahaye that use powerful search engines to track databases of all print, broadcast, and Internet coverage and to search for trends. For around $100,000, for example, Factiva can plow through a database that includes 10,000 mainstream media sources from 150 countries and 14 million blogs and tell clients whether their press is positive or negative on key issues. . . .

Id., at 74. The second include consulting and modeling firms, which can interact with data on a more proactive basis. "A host of small consulting firms including CCW, a subsidiary of Omnicom Group's (OMC ) Fleishman-Hillard PR agency (OMC ), and KDPaine & Partners, a Durham (N.C.) boutique, mine this data with remarkable precision to steer client corporations to the most effective messages and away from those that should be ignored. " Id. As in politics, then, the intangibles of taste and values, can be modeled by econometric tools. "Call it the new science of reputation management. . . . But a company's reputation among investors, consumers, and the general public traditionally has been regarded as too squishy to measure with hard numbers or manage with any precision, let alone to prove cause and effect." Id., at 70, 72.

In modeling corporate behavior for United Technologies Corp., for example, the consultants from CCW
spent months processing a bewildering amount of assorted data UTC had amassed over the years. It included studies tracking consumer perceptions of its brands, employee satisfaction, views of stock analysts and investors, corporate press releases, thousands of newspaper and magazine articles, and two years' worth of UTC financial information and daily stock movements. After feeding the data into an elaborate computer model, Cohen and Low concluded that 27% of UTC's stock market value was attributable to intangibles like its reputation.
Id. at 70. The power of this focus is particularly strong on issues of corporate behavior--or at least on the appearance of corporate behavior. "Companies also realized their shares were increasingly vulnerable to negative publicity over employee and social practices." Id., at 76. This drives corporate attention, and action. Thus, for example, in its modeling, CCW considers whether corporate social responsibility factors play a role in stock price. "Do messages about the company's employee relations, governance, or environmental effects have impact, for example? If so, how many cents per share can be explained that way?" Id. at 76.

Investor expectation rather than government regulation, then, appears to be a more efficient engine driving corporate behavior. And this is not the simple sort of investor expectation analyzes of the past. It is clear, now, that such expectations now have a critical social dimension. To that extent, investor expectations can begin to substitute for legislation. Of course, that is the rub. For those who believe that private choice in consumption markets serve as the most democratic expression of public choice, this system conforms both the efficiency and democratic reinforcing effects of markets. And it makes the case for governmental restraint in intervention. On the other hand, those who value the legitimacy of political institutions--assuming that state apparatus better represents a political community (that is the entire community affected by corporate activity) than a portion of that political community (the investors)--might suggest that the only form of legitimate control of corporate behavior must originate in hard law. To some extent, then, the issue of markets and corporate social responsibility is an issue of law, and the space for law in the regulation of human activity. And this issue is in a sense a restatement of the more fundamental question--to what extent must/should/may the political community serve as the major/only/another source for the genesis and control of such behavior. The old ideological battle between the appropriate definition of private space--a conflict that gave rise to the human rights structure of the last century--is likely to be replayed over the extent of private space reserved for economic activity.

Saturday, August 04, 2007

Castro, the State and the Market: Refining the New Political Anti-Globalization

Fidel Castro has spent the greater part of the last year meditating on a life's efforts as one of the principal opponants of American global ambitions. First as a factor in Soviet alignment and now playinga similar, though more reduced role within a Chinese sphere of influence, Cuba has exerted an influence on letters and intellectual development far greater that its population size and geo-political position might have suggested. But proximity to a giant often does that. Over the last several months Castro has been refining and restating the fundamental character of his opposition of the current hegemonic system of global harmonization. It is by now well known that this harmonization Castro opposes is based on the ascendancy of the private transaction over public relations, of contract over private law, of the enterprise over the state, of international law beyond international organization (effectively the rise of transnational law regimes) over municipal law and intergovernmental regulation of global affairs.

In a recent address posted on line, Fidel Castro Ruz, A Reflection on Hard and Obvious Realities, Aug. 3, 2007, Castro lays out his fundamental difference with the current form of globalization:
The concern which the Cuban Revolution has always had about the education of the people is obvious. Judging by my own experience, I soon came across the idea that only conscience could prevail over the instincts that govern us. Technological advances today speak of the possibility of manipulating the functions of the cells in the human brain. What good would all this do in a world ruled by the commercial value of goods and services? Who will have the final say in this regard? By this means and through the shameless brain drain, a phenomenon we should adamantly continue to discuss, the most valuable part of the human being could be destroyed: a human being's education via its conscience. Fidel Castro Ruz, A Reflection on Hard and Obvious Realities, supra.
Thus the evil underlying modern global realities--the commercial values of goods and services. What is unacceptable to Castro is a world whose foundational values are grounded in the private consumption choices of individuals which are served by private entities which, in their relation with the consumers of goods and services, appear to have little need for the state.

And Castro should be opposed to this form of globalization, for it is inimical to his own universalist political philosophy. Marxist Leninist thought tend to posit a hierarchy of power based on the requisites of a dictatorship of a national proletariat whose purpose is to pave the way for the eventual succession of a mature communist community (the state withering away). But for this to happen, there must be a state to wither, and that state must be powerful enough for its national proletariat to effect the sort of education necessary for the withering. Thus, for example, Castro's focus on education in the material quoted above, a concern that has marked the Cuban Revolution from its inception. For Castro, then, globalization, to be legitimate, must proceed from and by states. People must act on the basis of a singular allegiance to a singular supreme community--the political state--through which all aspects of organized life, including economics, social welfare, morals, culture, etc., may be ordered.

But the American system of globalization threatened that very order by positing a different rule of law basis--one grounded in a privileging of individuals and private law, and tolerating a more horizontal relationship between private and public power. But this is incomprehensible to the master of a system that necessarily posits a hierarchy of power in which the people (collectively) can owe undivided allegiance to but one juridical personality, and that juridical entity must be the political state. And thus the threat of market globalization is not merely a threat of American "imperialism", the usual way n which Castro's writings on this point tend to be brushed aside in the West. Instead, Castro is at pains to suggest a deeper theoretical difference, one based on a wholly incompatible understanding of politics and law systems.

Castro thus suggests that "Commercial advertising and consumerism are incompatible with the survival of the species. After all possible calculations, you will realize that natural resources, space, climate, weather, and the system cannot yield any other outcome, given their pace and the direction in which they are moving." Fidel Castro Ruz, A Reflection on Hard and Obvious Realities, supra. But what he is really suggesting is that his euphemism for private, contractually oriented transnational law systems are incompatible with the traditional state system for ordering all aspects of an individual's life--economic, social, cultural and political. T this extent, Castro is right. And it suggests a difficulty that Cuba will have to face as it slowly moves from traditionally isolationist and strictly state dependent Stalinism, to a more ambiguous Chinese style system.

Wednesday, August 01, 2007

China’s People’s Liberation Army at 80: Projecting Power and the Shanghai Cooperation Organization

This year the People’s Republic of china celebrates the 80th anniversary of the founding of the People’s Liberation Army. “On August 1, 1927, CPC-led armed forces held an uprising in Nanchang, capital of east China's Jiangxi Province, which is regarded as the founding day for the PLA. This year, a series of official programs are to be held nationwide to celebrate the 80th anniversary of the army's Day.” Hu Jinatao Hails Army’s Role, Contribution to Nation, People’s Daily Online, July 27, 2007. Indeed, the Chinese State has taken great pains to use the celebrations to remind the world of its new willingness to project power—and its ability to do it through the PLA. See, e.g., PLA Budget to Rise With the Economy: President Ho, People’s Daly Online, Aug. 2, 2007; Beijing military exhibition draws 1 million visitors in 15 days, People’s Daily Online, Aug. 1, 2007 (“The exhibition showcases the development of the PLA, by displaying a total of 20 pieces of advanced military weaponry and logistic outfits of the army, navy and air force, 970 pictures and 1,750 other military exhibits in a total area of 6,540 square meters. Advanced military weaponry, including new types of ground-to-ground missiles, medium-range surface-to-air missiles, fighter aircraft and new logistic outfits are on display.”). As Ho Jintao was quoted as saying in a widely circulated address: “The PLA is "no longer a small, single-service force, but a strong and multiple-service force," which has made progress in modernization and is stepping toward an information technology-based army, Hu said.” China's armed forces more modernized, professional: President Hu, People’s Daily Online, Aug. 1, 2007. And critical to any improvement in the power of the PLA is its unquestioned loyalty to the Chinese Communist Party. The union of CCP and PLA has been the basis of stability in China for a long time; and it is a connection that Chinese leaders are always cultivating. See, e.g., Chinese president stresses PLA's loyalty to CPC, People’s Daily Online, Aug. 1, 2007 (quoting Hu Jintao as saying: “"In these 80 years, the PLA has fostered its fine revolutionary traditions," he said, stressing "the traditions, in essence, mean that the PLA is forever at the CPC's command and the service of the people and should be courageous and skillful at war fighting." "The noble spirit that the PLA has nurtured over the years is to adhere to the absolute leadership of the Party," he said.”).

Among the many activities to which the People’s Liberation Army has begun to devote itself, one in particular may deserve a bit of sustained attention, the Shanghai Cooperation Organization (SCO). According to the official website history, “The Shanghai Cooperation Organisation (SCO) is an international organisation composed of the Republic of Kazakhstan, the People of Republic of China, the Kyrgyz Republic, the Russian Federation, the Republic of Tajikistan and the Republic of Uzbekistan.” History of Development of Shanghai Cooperation Organization. India, Pakistan, Iran and Mongolia have been granted observer status within SCO. Id. Formed in 2001, its primary mission was “combating terrorism, separatism and extremism.” Id. An Organizational Charter was adopted in July 2002. The Charter broadened the scope of the SCO’s mission to include: “strengthening mutual trust, friendship and good-neighbourly relations among the member countries; promoting their effective cooperation in politics, trade and economy, science and technology, culture, education, energy, transportation, ecology and other fields; making joint efforts to maintain and ensure peace, security and stability in the region, to establish a new, democratic, just and rational political and economic international order” Id. The SCO Charter elaborates an institutional structure that is essentially intergovernmental in character, though it has developed a limited institutional structure.

Article 10 of the SCO Charter (entitled Regional Antiterrorist Structure) provides:
The Regional Antiterrorist Structure established by the member States of the Shanghai Convention to combat terrorism, separatism and extremism of 15 June, 2001, located in Bishkek, the Kyrgyz Republic, shall be a standing SCO body. Its main objectives and functions, principles of its constitution and financing, as well as its rules of procedure shall be governed by a separate international treaty concluded by the member States, and other necessary instruments adopted by them.
SCO Charter, art. 10. Pursuant to this provision, the PLA has slowly been gaining substantial experience in multilateral military cooperation, especially the sort of cooperation in which the PLA takes the lead. The focus since 2002 has been on trouble in China’s troubled Western autonomous regions. Thus, it was no surprise to learn that a “joint anti-terrorism drill held by China and Kyrgyzstan from Oct 10 to 11, 2002 in the border region of the two countries. This is the Chinese army's first real ammunition military drill with foreign army, and is also the first bilateral joint military drill within the framework of the SCO.” China & Kyrgyzstan joint anti-terrorism drill in 2002, People’s Daily Online, July 27, 2007.

This year, the SCO again expands Chinese military capabilities. Currently, SCO states are engaged in an exercise
“operation, codenamed "Peace Mission 2007", involves 1,600 members of the PLA traveling by train and various military vehicles from Xinjiang in Northwest China to Chelyabinsk in the mountainous Ural region of Russia. The distance by train is 10,300 km, while aircraft will cover just 2,700 km, Xinhua quoted Senior Colonel Lu Chuangang as saying yesterday. This is the first time such a large military force has crossed a national border and traveled so far, Lu, who is the officer in charge of the drill, said.”
PLA ready for Peace Mission challenge, People’s Daily Online, July 31, 2007. The operation is more than a simple military drill. It suggests the sort of training one can expect of a state ready to project power where it will:
“‘It's not that simple for us to carry out exercise in a foreign country," said, Yin Xunbo, a 26-year-old soldier, "We have to learn other things besides military skills.’ For 1,600 members of the Chinese People's Liberation Army (PLA), to be in Russia next month, some understanding about relevant laws and Russian culture is as much important as their military skills. In this case, all of them had attended classes on these matters.”
Chinese soldiers study law before going to Russia for joint exercise, People's Daily Online, July 28, 2007. And the “exercise will involve practically all SCO members for the first time in its history.” Peace Mission 2007, People’s Daily Online, July 27, 2007.

It is possible to read all sorts of things into these joint exercises. Ironically, perhaps one of the most astute observers of the SCO is Fidel Castro, the ailing President of Cuba who, for the last year has the leisure to think about the SCO. He picked up on an assessment by a Russian military official of the potential for SCO—not for the defeat of terrorist activities in Chechnya or Western China, but for a challenge to the United States:

On July 24th , the Russian news agency Ria Novosti published the following information:

Colonel General Leonid Ivashov, a defense expert, stated that the main instrument of the US policy is the economic, financial, technological and military dictate. . . . The United States would do anything in its power to prevent Russia from being an autonomous player. The debates on anti-missile defence, Iran and Kosovo, have not generated any formulas for compromise. It is important for Russia to consolidate its positions and recover its geopolitical potential. . . . In order to neutralize the plans for world hegemony it is necessary to build an alternative pole, and we already have the foundations to do so: the Shanghai Cooperation Organization (SCO). . . . The SCO ought to recruit new allies and combine the potential of those countries which want to and are capable of implementing an autonomous policy. . . . Within the SCO framework, a novel philosophy could be formulated, based on the harmony among civilizations and on the rational use of natural resources. The majority of States will surely support such measures, of that I am convinced. Thus, a new political pole will come into being, the pole of peace. The SCO mission is to create a new model of development for human civilization.

Fidel Castro Ruz, Reflexión del Comandante en Jefe. Reflexión sobre duras y evidentes realidades. 3 de agosto del 2007 . While the United State sis busy building its own version of a new world order, based on privatizing globalization, free markets, democratic state governance and its understanding of rule of law, a number of other states are increasingly busy building an institutional architecture for a challenge to that system. Whether that alternative architecture will ever pose a substantial challenge to the current developing global system remains to be seen. But the eagerness of other nations to indulge these pursuits ought to worry the Americans.