(Pix (c) Larry Catá Backer)
This is another in what I hope to be a month long series of aphoristic (ἀφορισμός) essays, meant to provoke thought rather than explain it. The hope is that, built up on each other, the series will provide a matrix of thoughts that together might lead the reader in new directions. Though each can be read independently of the others, they are intended to be read together and against each other.
A century ago the guardians of public power in the United States
articulated a widely held fear of private aggregations of power. A generation ago the guardians of public power on a global stage
continue to articulate the same widely held fear--but now threatening
all states. Still, the subversion of the classical notion of the public order, when that subversion can be effected to the advantage of the primi inter pares of the global state community, might still be a tempting alternative. And so a century's worth of worry has brought the community of nations closer to a solution they can both understand and control. The consequence: notions of public and private power are now necessarily re-conceptualized. Accordingly, just as the central problem of the last century was to
conceptualize distinctions between public and private law based on the
fundamental division of law grounded in the status of the actor, so the
central problem of law in this century will be to conceptualize
distinctions between regulatory and participatory law regimes.
A century ago the guardians of public power in the United States articulated a widely held fear of private aggregations of power. That fear was pointed outward, to the community of individual actors, as well as inward to the authority and effectiveness of the public power itself. It suggested the nature of the threat as not merely economic, but also conceptual--large corporate aggregations threatened the hierarchy of legal authority in which the state and its apparatus stood at the very top as the only legitimate source of public regulation, and everything else occupied the space reserved for the objects of that regulation. It was a simple world-order conception in which regulation was memorialized in law derived from public bodies legitimately vested with authority to command every member of the community it controlled. Everything else might be coercive, but it was not public (a matter affecting the governance of the community)--from the compulsion of religious behavior codes to the limited agreements memorialized in contracts between finite parties covering very limited set of behaviors. But large corporate organizations threatened that order--and the authority of the state--asserted through it military and articulated through it officials. "Through size, corporations , once merely an efficient tool employed by individuals in the conduct of private business have become an institution--an institution which has brought such concentration of economic power that so-called private corporations are sometimes able to dominate the state." Louis K. Liggett Co. v. Comptroller of the State of Florida, 288 U.S. 517 (1933) (Brandeis, J. dissenting in part).
A generation ago the guardians of public power on a global stage continue to articulate the same widely held fear--but now threatening all states. In the form of multi-national corporations, the belief has grown that large aggregations of private power can overwhelm the the more limited and territorially based public power, especially (but not exclusively) of small states. Larry Catá Backer, Economic Globalization Ascendant: Four Perspectives on the Emerging Ideology of the State in the New Global Order, University of California, Berkeley La Raza Law Journal, Vol. 17, No. 1, 2006. These entities might subvert not only the traditional order hierarchy represented by the state, but might well subvert the global monopoly of power represented in the public power through the erection of supra-national systems of public actors. One response has been to attempt to domesticate these sources of private transnational power to an aggregate morality of public power expressed at the international level and transposed into the law of all public actors. The U.N.'s Global Compact project represents one attempt to operationalize such a system. The Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises system represents another. The alternative, and less well accepted response, at least within the community of public actors, has been based on a willingness to acknowledge the public power of these private institutions and to bring them within the regulatory framework that binds other public actors. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law. Columbia Human Rights Law Review, Vol. 37(3):287-389 (2006).
Still, the subversion of the classical notion of the public order, when that subversion can be effected to the advantage of the primi inter pares of the global state community, might still be a tempting alternative. And so today, the guardians of public power have succumbed to the lessons of a century. If the old field boundaries are ineffective in preserving local or global monopolies of public power, then those monopolies must adjust to fit themselves to the newer realities. So states have now sought to extend their market share in all markets for power. No longer content to wield the traditional (and traditionally limited) forms of public power, the state now serves as a major player in markets for economic power. This participation is not merely in the old and now fairly tame form of ownership of state enterprises--mercantilist/Marxist-Leninist undertakings with a long and well understood history and purpose. Larry Catá Backer, The Private Law of Public Law: Public Authorities as Shareholders, Golden Shares, Sovereign Wealth Funds, and the Public Law Element in Private Choice of Law, Tulane Law Review, Vol. 82, No. 1, 2008. Instead, in the form of sovereign wealth funds, the state has now the very thing which, a century ago it feared most as an internal threat to its authority--pools of national wealth, potentially as great as the financial strength of a state, used for the purpose of investing in private markets. The facilitating cause is the creation of the very system that frees economic actors from the constraints of territory and more closely binds public actors thereto. For an exposition of the cheery picture reflecting elite consensus views, see, e.g., Paul Rose, Sovereigns as Shareholders, 87 North Carolina Law Review 83-149 (2008).
And so a century's worth of worry has brought the community of nations closer to a solution they can both understand and control. If you can't beat them, join them. For states on the verge of being overwhelmed by aggregations of private power, the logical alternative is to acquire as large a portion of that power as one can. And that approach has the benefit of not upsetting the form of economic organization currently in place. But it does have a most salutary consequence form the perspective of the state--it reduces complication in international relations. It can reduce the power of intruders on the traditional stage of power conflicts, leaving (again) the state in substantial control of that stage. In a global system in which military campaigns are no longer morally and legally justifiable to any significant extent (except perhaps when engaged under the protection of the most powerful states), the public penchant for aggression and competition must be satisfied by other means. Today those means of friendly competition, or aggressive combat, take place indirectly.
Today, the political class can look out at the economic terrain, like their ancestors nearly a century ago, and worries. They worry about large economic aggregations that threaten the viability of the traditional state system and the preservation of distinctions between public and private power. But now the worry does not arise from the usurpation of public power by private enterprises. No; it arises instead from the usurpation of private power by public actors.
The consequence: notions of public and private power are now necessarily re-conceptualized. In the form of sovereign wealth funds, one can abandon the old distinction between public and private power to build a new legal matrix founded on the distinction between regulatory and participatory power. Within that matrix, the character of the actor is less dispositive than the quality of power asserted. Just as, in the West, law has moved from status to contract distinctions, so it is evolving from public/private to a regulatory/participatory distinction. Within that binary the status of the actor, as a state or as a corporation, will count for less than an understanding of the nature of its particular intervention--regulatory or participatory.
Accordingly, just as the central problem of the last century was to conceptualize distinctions between public and private law based on the fundamental division of law grounded in the status of the actor, so the central problem of law in this century will be to conceptualize distinctions between regulatory and participatory law regimes. For this framework, the status of the actor will make less difference than the nature of the exercise of power by that actor. The actions of states , corporations and other actors (for example non-governmental organizations like Amnesty International and the like) that assert regulatory power ought to be regulated under the same sets of norms with respect to those actions. Likewise, corporations and states that act within regulatory systems ought to be subject to the rules of those systems in equal measure. The character of the action rather than the status of the actor ought to be the basis of law systems. that mean to regulate actors who intervene in areas once deemed to be the sole preserve of states. To the extent that public bodies continue to cling to the antiquated distinctions, preserving systems grounded in forced legal distinctions grounded in status, they will continue to fail in efforts to both properly conceptualize and effectively intervene, in the new power realities on the ground.
A century ago the guardians of public power in the United States articulated a widely held fear of private aggregations of power. That fear was pointed outward, to the community of individual actors, as well as inward to the authority and effectiveness of the public power itself. It suggested the nature of the threat as not merely economic, but also conceptual--large corporate aggregations threatened the hierarchy of legal authority in which the state and its apparatus stood at the very top as the only legitimate source of public regulation, and everything else occupied the space reserved for the objects of that regulation. It was a simple world-order conception in which regulation was memorialized in law derived from public bodies legitimately vested with authority to command every member of the community it controlled. Everything else might be coercive, but it was not public (a matter affecting the governance of the community)--from the compulsion of religious behavior codes to the limited agreements memorialized in contracts between finite parties covering very limited set of behaviors. But large corporate organizations threatened that order--and the authority of the state--asserted through it military and articulated through it officials. "Through size, corporations , once merely an efficient tool employed by individuals in the conduct of private business have become an institution--an institution which has brought such concentration of economic power that so-called private corporations are sometimes able to dominate the state." Louis K. Liggett Co. v. Comptroller of the State of Florida, 288 U.S. 517 (1933) (Brandeis, J. dissenting in part).
A generation ago the guardians of public power on a global stage continue to articulate the same widely held fear--but now threatening all states. In the form of multi-national corporations, the belief has grown that large aggregations of private power can overwhelm the the more limited and territorially based public power, especially (but not exclusively) of small states. Larry Catá Backer, Economic Globalization Ascendant: Four Perspectives on the Emerging Ideology of the State in the New Global Order, University of California, Berkeley La Raza Law Journal, Vol. 17, No. 1, 2006. These entities might subvert not only the traditional order hierarchy represented by the state, but might well subvert the global monopoly of power represented in the public power through the erection of supra-national systems of public actors. One response has been to attempt to domesticate these sources of private transnational power to an aggregate morality of public power expressed at the international level and transposed into the law of all public actors. The U.N.'s Global Compact project represents one attempt to operationalize such a system. The Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises system represents another. The alternative, and less well accepted response, at least within the community of public actors, has been based on a willingness to acknowledge the public power of these private institutions and to bring them within the regulatory framework that binds other public actors. See Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law. Columbia Human Rights Law Review, Vol. 37(3):287-389 (2006).
Still, the subversion of the classical notion of the public order, when that subversion can be effected to the advantage of the primi inter pares of the global state community, might still be a tempting alternative. And so today, the guardians of public power have succumbed to the lessons of a century. If the old field boundaries are ineffective in preserving local or global monopolies of public power, then those monopolies must adjust to fit themselves to the newer realities. So states have now sought to extend their market share in all markets for power. No longer content to wield the traditional (and traditionally limited) forms of public power, the state now serves as a major player in markets for economic power. This participation is not merely in the old and now fairly tame form of ownership of state enterprises--mercantilist/Marxist-Leninist undertakings with a long and well understood history and purpose. Larry Catá Backer, The Private Law of Public Law: Public Authorities as Shareholders, Golden Shares, Sovereign Wealth Funds, and the Public Law Element in Private Choice of Law, Tulane Law Review, Vol. 82, No. 1, 2008. Instead, in the form of sovereign wealth funds, the state has now the very thing which, a century ago it feared most as an internal threat to its authority--pools of national wealth, potentially as great as the financial strength of a state, used for the purpose of investing in private markets. The facilitating cause is the creation of the very system that frees economic actors from the constraints of territory and more closely binds public actors thereto. For an exposition of the cheery picture reflecting elite consensus views, see, e.g., Paul Rose, Sovereigns as Shareholders, 87 North Carolina Law Review 83-149 (2008).
And so a century's worth of worry has brought the community of nations closer to a solution they can both understand and control. If you can't beat them, join them. For states on the verge of being overwhelmed by aggregations of private power, the logical alternative is to acquire as large a portion of that power as one can. And that approach has the benefit of not upsetting the form of economic organization currently in place. But it does have a most salutary consequence form the perspective of the state--it reduces complication in international relations. It can reduce the power of intruders on the traditional stage of power conflicts, leaving (again) the state in substantial control of that stage. In a global system in which military campaigns are no longer morally and legally justifiable to any significant extent (except perhaps when engaged under the protection of the most powerful states), the public penchant for aggression and competition must be satisfied by other means. Today those means of friendly competition, or aggressive combat, take place indirectly.
Today, the political class can look out at the economic terrain, like their ancestors nearly a century ago, and worries. They worry about large economic aggregations that threaten the viability of the traditional state system and the preservation of distinctions between public and private power. But now the worry does not arise from the usurpation of public power by private enterprises. No; it arises instead from the usurpation of private power by public actors.
The consequence: notions of public and private power are now necessarily re-conceptualized. In the form of sovereign wealth funds, one can abandon the old distinction between public and private power to build a new legal matrix founded on the distinction between regulatory and participatory power. Within that matrix, the character of the actor is less dispositive than the quality of power asserted. Just as, in the West, law has moved from status to contract distinctions, so it is evolving from public/private to a regulatory/participatory distinction. Within that binary the status of the actor, as a state or as a corporation, will count for less than an understanding of the nature of its particular intervention--regulatory or participatory.
Accordingly, just as the central problem of the last century was to conceptualize distinctions between public and private law based on the fundamental division of law grounded in the status of the actor, so the central problem of law in this century will be to conceptualize distinctions between regulatory and participatory law regimes. For this framework, the status of the actor will make less difference than the nature of the exercise of power by that actor. The actions of states , corporations and other actors (for example non-governmental organizations like Amnesty International and the like) that assert regulatory power ought to be regulated under the same sets of norms with respect to those actions. Likewise, corporations and states that act within regulatory systems ought to be subject to the rules of those systems in equal measure. The character of the action rather than the status of the actor ought to be the basis of law systems. that mean to regulate actors who intervene in areas once deemed to be the sole preserve of states. To the extent that public bodies continue to cling to the antiquated distinctions, preserving systems grounded in forced legal distinctions grounded in status, they will continue to fail in efforts to both properly conceptualize and effectively intervene, in the new power realities on the ground.
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