Sunday, May 09, 2010

Gunther Teubner: On the ‘Constitutional Moments’ of Non-State Systems—Managing Systemic Compulsion to Self-Destruction in the Global Financial System

In a recently published article well worth reading, Gunther Teubner explores the possibility of systems, like individuals, can be organized as inherently addictive or at least prone to addictive behavior under certain conditions of stress. See, Gunther Teubner, A Constitutional Moment? The Logistics of ‘Hit the Bottom’, in After the Catastrophe: Economy, Law and Politics in Times of Crisis (Poul F. Kjaer and Gunther Teubner (eds.), forthcoming 2010). This short essay describes and engages Teubner’s elaboration of this thesis.

“Is there such a thing as collective addiction?” (Teubner, supra at 1) What drives institutionalized systems, rationally organized, to act against their own interests? (I., 2) . With these question, Teubner sets off on a journey from individual addiction to the possibility of both collective and systemic addiction. Teubner distinguishes his project from the usual efforts to understand what Western society likes to characterize as the addictive behavior of individuals, or the “social amplifiers of addictive behavior . . . peer pressure, imitation, social norms or mob mentality.” (Id., at 1). Applying the lens of systems theory, Teubner suggests the possibility of collective addiction, “addictive behavior quite independent[] of the dependence syndromes of individual human beings.” (Id.) He wonders, “If there is such a thing as a non-individual, and thus collective or communicative, compulsions to growth, then the greed of individual bankers is not the main problem. Instead we must look for the specific social addiction mechanisms that cause such impersonal addiction phenomena.” (Id., at 2).

Teubner’s reference to the “herd instinct of bankers” (Id.) and the like is both telling and interesting in this respect. Teubner draws on the language of the therapeutic to construct a view of systemic dialectic that is dynamic in the sense that it is incapable of end. But the of the herd is infused with other meaning. It is embedded within a “psychology” of morality, and especially of the contradictions of herd morality explored a century ago by Friedrich Nietzsche. “Whoever examines the conscience of the European today will have to pull the same imperative out of a thousand moral folds and hideouts—the imperative of herd timidity: ‘we want that some day there should be nothing any more to be afraid of!’ Some day—throughout Europe, the will and way to this day is now called “progress.’” Friedrich Nietzsche, Beyond Good and Evil: Prelude to a Philosophy of the Future ¶ 201 (Walter Kaufmann, ed. & trans., New York: Vintage Books, 1966). The herd is tied to the morality that gives it systemic form, and that itself is formed of essence and contradiction. Here is a notion of systemic addiction in its moral and inherently self contradictory (and thus dynamic) sense:
To blunder to such an extent, not as individuals, not as a people, but as humanity!—That one taught me t o despise the very first instincts of life; that one mendaciously invented a ‘soul’ a ‘spirit’ to ruin the body; . . . that, conversely, one regards the typical signs of decline and contradiction of the instincts, the ‘selfless,’ the loss of a center of gravity, ‘depersonalization’ and ‘neighbor love’ (addiction to the neighbor) as the higher value—what am I saying?—the absolute value.

Friedrich Nietzsche, Ecce Homo, IV (Why I am Destiny) ¶ 7 (Walter Kaufmann, ed. & trans., New York: Vintage Books, 1967). And thus a bridge between the therapeutic and the moral. “Definition of morality: Morality—the idiosyncrasy of decadents, with the ulterior motive of revenging oneself against life—successfully. I attach value to this definition.” (Id. ).

One could use these hypotheses as the foundation for an exploration of the character of compulsion. But Teubner has something else, something more interesting, in mind. He means to use the insights of systemic addiction to posit the way social systems approach catastrophe and transform themselves at the moment of disaster, not through the intervention of political actors but autonomously and within the bounds of its own systemic logic. Here, perhaps, is an ironic application of the parable found in Luke 4:23 (Physician, heal thyself (Ἰατρέ, θεράπευσον σεαυτόν)), recast as--System, heal thyself. Teubner means to penetrate the interior hysteria of social systems, “that is, a folie circulaire between penitential convulsions and hysteria about redemption” (Friedrich Nietzsche, Ecce Homo, supra, IV (Why I am Destiny) ¶ 8), in system terms. The context is the financial crisis of 2007 in its systemic aspects. But the associations with morality lurks not far beneath.

Not that this cyclical set of dialectical “moments” occur in isolation. Rather, systemic addiction—as it reaches to and through the moment of confrontation with its own contradiction and reconstitutes itself to avoid obliteration—engages in these activities in constant communication with the economic and legal spheres. That inevitable systemic lurching toward catastrophe and its revaluing effects on the system itself, then are communicated with and through the law and economic systems through which it interacts with business and the law-state. Yet, here again, Nietzsche looms in the shadows. He reminds us that such communication can be inherently subordinating—another contradiction that itself is such to the cyclicity of dialectical system built on contradiction. In his exploration of the parameters of punishment in the original connection of moral concept of guilt (Schuld) in the material concept of debt (Schulden), Nietszche points to a variation of the notions of communication and hierarchy, as well as the contradiction and reconstitution of ideal and action.
Throughout the greater part of human history punishment was not imposed because one held the wrongdoer responsible for his deed, thus not on the presumption that only the guilty one should be punished: rather as parents still punish their children, from anger at some harm or injury, vented on the one who caused it—but this anger is held in check and modified by the idea that every injury has its equivalent and can actually be paid back, even if only through the pain of the culprit. And whence did this primeval, deeply rooted and perhaps by now ineradicable idea draw its power—this idea of an equivalence between injury and pain? I have already divulged it: in the contractual relationship between creditor and debtor, which is as old as the idea of ‘legal subjects’ and in turn points back to the fundamental forms of buying, selling, barter, trade, and traffic.
Friedrich Nietzsche, On the Genealogy of Morals Essay 2 Section 4(Walter Kaufmann, ed. & Trans., New York: Vintage Books, 1967)

This notion of ‘moments’, then, infuses the analysis. The addictive behavior of social systems embodies the contradiction built into the system itself. Catastrophe represents that ‘moment’ when the self-organizing constitution of the social system is confronted in an unavoidable way with its destruction through the application of the logic of its own constitution. That moment serves as a space within which, confronted by its own contradictions (in this case the irrationality of a social system built on rationality as a model of manageable social ordering), the systems values can be reconstituted (revalued), not from the application of external forces—law or economic regulation—but through the . And thus Teubner’s hypotheses:

(1) In order to understand the recent global financial crisis, we should not rely on factor analysis alone. Instead, we should look for the underlying self-destructive growth compulsions of information flows – in other words, for phenomena of collective addiction.

(2) ‘Hit the bottom’ refers to the constitutional moment when either a catastrophe begins, or societal forces for change are mobilised of such intensity that the ‘inner constitution’ of the economy transforms under their pressure.

(3) Plain money reform is one of several examples that illustrate a capillary constitutionalisation of the global economy, the effects of which could not be achieved through either national or transnational interventions of the world of states.

(4) The dichotomy constitutional/unconstitutional develops into a binary meta-code within the structural coupling between the economy and law, and is ordered above both the legal code and the economic code. 
 (Id., at 2).  But this is neither Hegelian dialectics nor Marxist dialectical materialism, though both also reflect the cyclidity of systemic transformations lubricated by the contradictions built into social systems.

Teubner starts with a search for the character of self destructiveness in social systems—the root of its internal contradiction and the lubricant for its revaluation in the face of catastrophe. (Teubner, supra, at 3-7). He criticizes the compartmentalized—and bureaucratic—approaches to “solution” to the financial crisis of 2007 as solutions grounded in false causes. “Typically, these proposals are based on factor analysis, in which individual causes are isolated, through the attribution of causality, and held responsible for the crisis. The aim of regulation, then, is to introduce counter-factors to the causal chain in order to prevent a repetition of the crisis.” (Id., at 3). He notes the principal problem of these institutional instincts: “fatta la legge trovato l’inganno. No sooner has a law been passed than the loophole appears” (Id.). I have suggested the same in the context of European efforts to assert regulatory power over irregular securities markets. See Larry Catá Backer, Monitor and Manage: MiFID and Power in the Regulation of EU Financial Markets. Yearbook of European Law, Vol. 26, 2007. One is reminded here of Nietszche’s insight of the error of imaginary causes. “First principle: any explanation is better than none. . . . the first representation that explains the unknown as famniliar feels so good that one ‘considers it true.’” Friedrich Nietzsche, Twilight of the Idols, The Four Great Errors, ¶5 (Walter Kaufmann ed. & trans., Princeton University Press, 1954).

Teubner suggests a deeper analysis, one “which regards the factors of factor analysis simply as interchangeable activating conditions, and which attempt to discover the underlying dynamic.” (Teubner, supras, at 3). He uses the example of the money mechanism to suggest the dynamic of rule and avoidance producing catastrophe that transforms the internal constitution of the global financial economy. Money creation has been liberated from control by states and their central banks. The result has been a massive creation of money by private banks and a massive growth of the financial sector. That growth, in turn can be sustained only by growth to the real economy. Butt eh growth is led by the imperatives of money supply rather than by the needs of the social sector increasing the exaggeration of both growth and contraction. (Id., at 4-5). “That said, it is not the compulsion to growth as such which occupies centre-stage, but rather the difference between necessary growth and self-destructive growth-excesses with undesirable consequences.” (Id., at 5).

Yet, this suggests the possibility of a managerialism that is at variance with the foundational dynamic of the dialectic that Teubner identifies. That mangerialism is considered in the consideration of self-destructive growth versus growth dynamics in communication. (Teubner, supra, at 5-7). The mangerialism, of course, is inherent in the terminology. Addictive behavior has a negative connotation, like the addictive imperatives of globalized capital considered earlier. These behaviors are destabilizing to individual and to system. They are also inherent in the body of the individual or system. The nature of addiction, after all, is its compulsiveness.
The definition of individual addiction – compulsive engagement in an activity despite lasting negative consequences – must be rethought for social systems in general, and for collective actors in particular. Which ‘addiction mechanisms’ are responsible for the fact that the autopoietic self-reproduction of a social system through the recursivity of system-specific operations reverts into a communicative compulsion to repetition and growth, bringing self-destructive consequences in its wake?
(Id., at 5). Yet this addiction, if Teubner is right, is also natural to the individual and system—without it, as Nietzsche reminds us, the dynamic element dissipates—no growth, no progress, no catastrophe bringing revaluation and transformation of the inner constitutions of systems.

Systemic addiction is understood within the context of social processes—as a phenomenology of communication. Teubner suggests communicative addiction as a compulsion to growth communicated through the mechanics of social interactikon grounded in the dynamics of the production of money. (Teubner, supra, at 6). This raises the fundamental question for autopoietics, “how are we to conceive of the relationship between social self-reproduction and the compulsion to growth?” (Id.)—what I call the instinct toward managerialism. I amless worried about the dependence of autopoiesis on the logic of growth. (Id.). A dynamic environment of self reproduction of social systems must include both the equilibrium and destabilizing elements. Systems that do not embrace the logic of their own inversion, as compulsion, become irrelevant. Teubner recognizes that there is “an inherent compulsion to ever higher production in function systems other than the economy – an inherent compulsion which, on the one hand, is a necessary condition of self-reproduction but, on the other, can be propelled by assignable growth-inducing mechanisms to the point of transition into destructive tendencies.” (Id., at 7). He notes that law systems are capable of creating conflict through its own regulation—that is that the law itself contains its own contradictions. Politics systems exhibit the same fundamental contradictory state, the movement toward the attainment of the fundamental objectives of such systems creates the conflicts that also distort the objectives and makes their attainment more difficult. But rather than embracing the dynamic, Teubner suggests the “need to differentiate between a compulsion to growth that is necessary for continuation, and increase-excesses, which threaten the normal state of things.” (Id.). It is to the effort to theorize that distinction and to manage threats to the normal state of things that he then turns.

To understand the distinction between normal growth, growth that does not threaten the stability of systems and their networks, from metastasizing growth that threatens stability, Teubner turns to catastrophe--destabilization powerful enough to threaten systems. For that purpose, the analogy to cancer provides a powerful metaphor. Here Teubner invokes the idea of constitutional moments. (Id., at 7-16).
The experience of near-catastrophe, as opposed to the experience of its contingency as such, may be regarded as the ‘constitutional moment’. . . . The constitutional moment is the direct experience of crisis; the experience of a liberated social energy, yielding destructive, even self-destructive, consequences that can only be overpowered by their reflection and by the decision to self-limitation. The passage of social systems through the ‘dark side’ of their promise of progress is ultimately no departure from the healthy normal course of things, no error to be avoided. Quite the opposite: the experience of the dark side is almost a necessary condition of the transformation of the inner constitution. It is ultimately, then, the pathologies that herald the constitutional moment: the moment in the catastrophe in which a decision is made between total destruction of the energy and its self-limitation.
(Id., at 8). Teubner thus appreciates both the creative possibility in the moment of transformation in the face of catastrophe, as well as the danger that the system will not be strong enough to meet catastrophe and survive in recognizable form.

The complication today, however, is the inability of the state—of law or political systems—to effectively intervene in the context of social systems and societal constitutions. Teubner suggests a hybrid constitutionalization, in which a balance is reached between internal processes and external interventions in the process of reconstitution in the face of catastrophe. That is, a wall of external communication may be necessary to produce the boundaries within which self reflectivity may serve to reconstitute systems in the midst of dynamic revaluation. Teubner suggests “not only state instruments of power, but also legal rules, and ‘civil society’ countervailing powers from other contexts, media, public discussion, spontaneous protest, intellectuals, social movements, NGOs or trade union power should apply such massive pressure on the function systems that internal self-limitations are configured and become truly effective.” (Id., at 10). Thus the task is to enlist the web of systems in their communicative interactions to foster interactions that provide a space within which any particular sub-system can construct its own stabilizing set of limits. The object is managerial and can be significant. “Political-legal regulation and external social influence are only likely to succeed if they are transformed into a self-domestication of the systemic growth dynamic. This requires massive external interventions from politics, law and civil society: specifically, interventions of the type suited to translation into self-steering.” Id., at 11.

The difficulty, though, when dealing with social systems—for example the global economy, is that the character of the normative structure is complex. With a nod to both Derrida (Jacques Derrida (1992) The other handing: Reflections on today's Europe, Bloomington: Indiana University Press) and Foucault (Michel Foucault (1976) "Räderwerke des Überwachens und Strafens: Ein Gespräch mit J.-J. Brochier", in: Michel Foucault (ed) Mikrophysik der Macht, Berlin: Merve, 31-47, 45) Teubner focuses on the capillary constitution—the microstructures of rules that constitute behavior values. This capillary constitution may not be managed directly—the tools of intervention are too crude for that purpose. But intervention may serve the same purpose as a grain a sand in an oyster—as an irritant that energizes the self-constituting mechanics of the sub system in accordance with its own logic. “The desired course for social sub-constitutions is, as has been said, limitations of the endogenous tendencies towards self-destruction and environmental damage. This is the core of the constitutional problematic, this difficult handling of the focal subsystem’s self-transformation and that of their environmental systems.” (Teubner, supra, at 11).

But this raises issues of method. For Teubner, this is the case of the Beelzebub casting out the devil. (Id., at 12). The pattern of political constitutionalism might provide a loose template for managing societal capillary constitutionalism, that is for stabilizing systems grounded in the constitution of micro power. And what better notion than Rechtsstaat notion for that purpose—process as the bones of system constitution!
What does this mean for the constitutions of other social sub-spheres, in particular, for the economic constitution? In order to inhibit pathological compulsions to grow, stimuli for change, which follow the historical model of the self-limitation of politics, need to generate permanent counter-structures that will take effect in the payment cycle down to its finest capillaries. Just as in political constitutions power is used to limit power, so the system-specific medium must turn against itself. Fight fire by fire; fight power by power; fight law by law; fight money by money. Such a medial self-limitation would be the real criterion differentiating the transformation of the ‘inner constitution’ of the economy from external political regulation.
(Id., at 12-13). We move from the judge to the ethical standard as the focal point of system stability and we move system stability to center stage. But social system stability is not sourced within the state, but in three “’reflection centers’ within society, and in particular within economic institutions, into the criterion of a democratic society. Candidates for a capillary constitutionalisation exist not only in the organised sector of the global economy, in corporations and banks, but also in its spontaneous spheres.” (Id., at 13).
As for authorities to judge whether the systems are in a healthy state, the theory of societal constitutionalism has identified “collegial institutions” in the various social sectors, which cultivate the relevant logic of actions, and has required them to be constitutionally institutionalised. Collegial institutions are reflection-centres for social self-identification, in the sense both of the rationality and normativity of the relevant social sector, and, simultaneously, of rendering it compatible with society. The collegial institutions function as a type of think-tank for the relevant constitution, which is to be understood, for its part, as the benchmark for system/environment relations.
Id., at 19. This notion of collegial institutions as collective stakeholders in societal constitutionalism, even in the economic sphere, has found expression within the governance efforts of public institutions in the wake of the 2007 financial crisis. The Financial Stability Board system represents a public sector version of this naturalization of institutionalized communication within the economic sphere. See, Larry Catá Backer, Polycentric Governance in the Transnational Sphere: Private Governance, Soft Law, and the Construction of Public-Private Regulatory Networks for States and Transnational Corporations (April, 03 2010). Indiana Journal of Global Legal Studies, Vol. 17, No. 2, 2011.

Key for Teubner are the politization of consumers (id., at 13-14), the ecologization of corporate governance (id., at 145), and plain money (id., at 14-16). The first evolves sub-system process to the construction and exercise of social preferences, the second broadens the impact of corporate constituencies within the governance structures and decision making of economic entities, and the third would add stability and order to the global financial constitution. The latter would require the reassertion of national power over the power to create money and money equivalents—the medium of economic exchange in its most liquid form.

And thus the heart of the argument for the defence of the stability of the capillary global societal economic constitution:
Plain money reform aims at the centre of the economic constitution because it configures – “constitutes” – the self-limitation mechanisms of the economy, the economic medium, money, and the transnational cash-flows themselves: it does not attempt indirectly to regulate the economy externally by means of political power, legal rules, moral imperative, discursive persuasion, or public opinion. . . . In what follows, it will be shown, whether and to what extent plain money reform involve constitutional functions, constitutional processes and constitutional structures, in a strict rather than metaphorical sense.
Id., at 16. The focus is on the societal economic constitution and the catastrophe that is represented by the financial crisis of 2007.

So, how does the control of the creation of money work the levers of this complex machinery of societal global economic constitutionalism in ways that distinguishes between stable (societal positive) and excessive (addictive and societal negative) activity and provides a foundation for dynamic movement that avoids system catastrophe? Teubner first suggests that the move to “plain money” would reconfigure “actors, organisational rules, competences, procedures and modes of functioning of the communication media of the economy. The decision in favour of plain money corrects the ‘invisible’ historical transformation of the global economic constitution, which has been caused by the development of non-cash money.” (Id., at 17). Power shifts back from private actors—the banks—to public actors—the state as the “real constitutional centre of money creation.” (Id.). Public control of money would then serve as an external break on the tendency to excess of commercial activity in the face of money.
Following the recent financial crisis, limitations of the excesses of economic commerce are high on the agenda. We could even talk of a secular displacement of constitutive constitutional functions in the direction of limitative constitutional functions. This is a necessary consequence of the global autonomous positioning of the function systems: “We cannot pre-suppose that society will be able to exist with the environment that it creates.”
(Teubner, supra, at 18, quoting in part, Niklas Luhmann (1995) Social Systems, Stanford: Stanford University Press, 169). Teubner notes that plain money rules also shifts power in other ways, principally by adding to the socio-constitutional legitimacy of central banks. “This may be regarded as a significant self-limitation of the growth compulsions of the economic payment cycle. Proponents of plain money reform proclaim it to be an effective withdrawal therapy against the excessive addictive behaviour of the credit sector.” (Id., at 19).

Teubner then suggests that plain money rules provide the sort of governance form that is natural to the social system it seeks to affect. But to achieve legitimacy as constitutional process, it must serve both to self constitute the social system and to serve as the basis for elaborating the system applied to itself—constitutions define the organization and order of the government of the state and serve as the framework within which the rules elaborating that organization are tested. Traditionally, one tests the constitutional sufficiency of statute by reference to a higher law of the constitution itself.
Politics becomes an autonomous power-sphere of society when it directs power processes via power processes, and produces a double closure of politics through the provision of electoral procedures, modes of organisation, competences, separation of powers and fundamental rights. And what about the economy? It becomes autonomous when, in the money cycle, payment operations are employed in order to control the money supply itself.
(Teubner, supra at 20). Thus, for the constitution of a social system (constituted as a state, as an economic system or other social system), “Constitutions do not emerge until phenomena of double reflexivity appear: reflexivity of the self-constituting social system and reflexivity of the supportive legal system. ” (Id., at 21). In this effort, law plays a secondary but critical role. Teubner suggests that “to identify constitutions as against other instances of structural coupling, we might wish to use the term ‘binding institution’ of law and social subsystem to refer to the former.” (Id.).

Rule order is critical for Teubner’s conception of the constitutional functions of plain money. Such rule order is framed by legal norms. “The critical point is not reached until secondary norms regulate how the identification, setting, amendment, and the distribution of competence to issue and to delegate primary norms should proceed.” (Id., at 22). Legal norms serve as both bridge and glue, joining autonomous systems. “A constitution is always the connection of two real ongoing processes. From the point of view of law, it is the production of legal norms, which is typically merged with the basic structures of the social systems. From the point of view of the social system, it is the generation of basic structures of the social order, which simultaneously inform the law and are regulated by it.” (Id.). But law serves a more important purpose—it become the source for closure, for the provision of a mechanics of stability that asocial system—for example the global economic system, is incapable of providing under the logic of its own normative ordering. Law in this sense is both an ordering mechanics and an intervention to avoid the catastrophe of the self-destructive addictive tendencies of any system. (Id., at 23).

That is the key to societal constitutionalism’s addiction problem. Law as methodone—“ The economy. . . requires massive interventions from law in order to achieve self-constitutionalisation; though not to the comprehensive extent characteristic of politics.” (Id., at 23). He uses the banking sector as example:
In the banking sector, the ability to pay and the inability to pay are generated simultaneously. The banking system relies on the paradox of self-reference, on the unity of the ability and inability to pay. “The banks have the core privilege of being able to sell their own debts for profit.” This paradox is disarmed where payment operations become reflexive; that is, where operations of money supply are used on operations of money supply. But this reflexivity of economic operations is unstable. It has been stabilised through an internal hierarchisation of the banking sector, supported by a ‘hard’ regulation by means of binding law. In this way, the law, with its procedural and organisational norms that regulate central banks in their relation to the commercial banks, contribute to the process of coping with the paradoxes of the economic cycle.
(Id., at 24, quoting, in part, Niklas Luhmann (1990) Die Wissenschaft der Gesellschaft, Frankfurt: Suhrkamp, 145).

There is a formalist cast to this constitution of societal systems undergirded by law. “Through the restriction of money creating competences, law apprehends the limitative function of an economic constitution and at the same time stabilises the self-reflexive relations of the payment operations, which, without being legally anchored in this way, would again disperse.” (Id., at 24). And not just governance, but connected by a more formal rule structure typical of the Rechtsstaat. I wonder, though, whether law, as Teubner understands it, is broad enough to include those techniques of behaviour controlling power that serve Foucault’s notions of governmentality. (See, Michel Foucault, Governmentality, in The Foucault Effect: Studies in Governmentality 87 (Graham Burchell, Colin Gordon & Peter Miller eds., 1991). For a valuable analysis, see Michael Reed, From the ‘Cage’ to the ‘Gaze’? The Dynamics of Organizational Control in Late Modernity, in Regulation and Organizations: International Perspectives 17 (Glenn Morgan & Lars Engwall eds., 1999); Wendy Larner & William Walters, Introduction Global Governmentality: Governing International Spaces in Global Governmentality: Governing International Spaces 1, 1 (Wendy Larner & William Walters eds., 2004)).
Consider the complex of power issues involved in the construction of transnational transparency regimes of financial markets. Entities like the International Monetary Fund and World Bank “have found themselves drawn into battles with a range of transnational, multinational, domestic, and international authorities over the production of financial information and the diffusion of financial information.”In this aspect, surveillance is felt as gouvernmentalité, a linking of governance with the techniques of its power.
Larry Catá Backer, Global Panopticism: States, Corporations and the Governance Effects of Monitoring Regimes. Indiana Journal of Global Legal Studies, Vol. 15, 2007 (quoting in part, Margaret Hansen, The Global Promotion of Transparency in Emerging Markets, 9 Global Governance 63, 64 (2003) (“These political battles cast a critical light on seemingly apolitical assumptions that motivate much of the theoretical rationale for international governance strategies inspired by the goal of a transparent global financial system.”)).

But the notion of governmentality might require avoidance for another reason—it detracts from the larger project of securing recognition of the possibility of constitutionalism beyond the state. Teubner recognizes the skepticism within the academic herd (I use the term here in its Nietzschean sense, though note an irony in applying Teubner’s notion of self destructive compulsion to the herd habit). But he seeks to assuage them through mimicry—and thus the transposition of law and social system as basis of autonomous constitution (and emergence of autonomous constitutional code). (Teubner, supra at 25). But it is not clear to me that the dynamics of the law-state ought to transpose to the social state. Here, Teubner’s own resort to Foucault might provide a useful insight—the construction of a constitutional code, understood in a systems way, grounded in structural coupling of social system and governance code—not law (understood in its traditional form, but governance understood in the way in which it has been applied in fact by governance units—from states to economic entities. Understood in that way, the constitution of a global economy, founded on the communication among law-governance-politics systems and the establishment of governance rule hierarchy ((constitutional code above governance code form which it is derived and through which its elaboration is limited) becomes clearer and more powerful. The communicative (structural coupling) aspect then comes to the foreground, tying Teubner’s notion of communication between systems as irritant (and thus as a spur to internal change) and as an external limit on internal operation. (Teubner, supra, at 26-27).
These two types of programmes irritate one another to the point where they cause a specific co-evolutionary path of legal and economic structures within the economic constitution. . . . Fundamental principles of the economic system are reconstructed as legal constitutional principles (according to the particular historical situation: property, contract, competition, social market economy or ecological sustainability). Law “translates” the fundamental principles of the economy into legal principles, and concretises them as legal rules of constitutional law. . . . In the opposite direction, something comparable occurs: the meta-code allows the re-entry of law into the economic system (again historically variable: mandatory rules of contract law, social obligations of property, the limits of competition, rule of law principles in economic decisions or fundamental rights within corporations). Thereby, constitutional law binds economic operations.
(Id., 26, 27). And thus back to plain money: the legal irritant of the plain money rule would induce a revaluation of the constitution of economic system. “Under a plain money regime, money creation by the private banks would be economically unconstitutional and not simply illegal.” (Id., at 27). And thus, addictive behavior—the excess at the heart of the contradiction inherent in the operation of any social or economic system, can be managed, and thus managed, contained.

We now understand the role of law sub-systems within the process of constitutional management within Teubner’s construct. But what political sub-systems; what of the role of the state? The last part of the essay suggests a double conception of the political as a basis for understanding the role of politics, and the distinct role of the state, in the reconstruction and management of the economic constitution.
First, by ‘the political’ is meant institutionalised politics: the political system of the world of states. In relation to this notion, the social sub-constitutions ‘go the distance’; they require extensive autonomy against the political constitution. . . . Second, the concept can also indicate the political in society outside institutionalised politics. . . . In this respect, the particular social constitutions are highly political, but beyond the state.
(Id., at 28). That is, the issue of control ought to return to the people, but not to the people constituted by and exercising power through the state. Teubner suggests the nature of this limitation, one that upends the contemporary ideology of the law-state as the totalizing repository of power over all other sub systems—social, economic, cultural, ethnic, religious and political. “In the functionally differentiated society, the political constitution cannot fulfil the role of defining the fundamental principles of other sub-systems without causing a problematic de-differentiation – as occurred in practice in the totalitarian regimes of the twentieth century.” (Id., at 29). In place of hierarchy, Teubner offers communication as action-inducing irritant, and autonomy. “We must give up the notion that, in the state, politics represents society and that other social spheres – people or sub-spheres – participate therein. No social sub-system, not even politics, can represent the whole society.” (Id.).

Political legitimacy is neither sufficient nor appropriate to the constitution of systems that exist beyond the control of the political state but that are tied within closely bound networks with them. Teubner suggests a troika of law-politics-economics as the basis for three way division of the social constitution. (Id., at 30-31). The political law-state serves now as irritant and boubndary framer (a function that the economic order serves with respect to the political law-state in turn).
The phrase, ‘in the shadow of politics’ has an additional meaning. Societal constitutionalism always depends on law; Law, for its part, depends on the physical monopoly that politics has over power. Economic and social sanctions alone are not sufficient to stabilise the constitutional norms. Plain money reform, too, requires politically backed legal sanctions. . . . Such political support, however, does not transform the economic constitution into a state constitution. It is only the instruments of state power which law mediates, depoliticises, and places at the disposal of the economic constitution.
(Id., at 32). I might add religion to the mix. (See, Larry Catá Backer, Values Economics and Theology: The Contribution of Catholic Social Thought and its Implications for Legal Regulatory Systems (December 4, 2008). Coalition for Peace & Ethics Working Paper No. 2008-1/1.

But the economic system cannot play its role properly unless it too acquires it own autonomous politics. Here again mimicry—A social system, like a law or political system requires its demos. And the actions of that demos constitutes legitimating acts and the preservation of autonomy within a system that preserves accountability. Again, structural mechanics meant to manage the contradictions of systems that are inherently self destructive, as system, by the provision of webs and networks of restraints. (Id., at 32). But like political systems, that requires an outside force—the psychologist with the power to restrain, and a set of therapeutic devices that the patient may use to self correct the contradictions of self-destructive compulsion. For the financial system that role would be served by an instrument of the law-state—the central banks. ““Guardians of the constitution” – that is the appropriate metaphor. And just as constitutional assemblies and constitutional courts are the guardians of the political constitution, so the central banks and the constitutional courts are the guardians of the economic constitution. And their constitutional politics requires a high degree of autonomy.” (Id., at 33). But effectiveness is possible only to the extent that these central banks attain a degree of autonomy from any one sector of the law-politics-economics troika. “Here, the meaning of an autonomous financial constitution is revealed, which must control its own logic and cannot, despite its highly political character, be delivered by institutionalised politics. The analogy with constitutional courts is again appropriate. This is a principle not of the political, but of the societal separation of powers.” (Id.).

And thus Teubner draws this complex web together. All systems are subject to catastrophe as a function of the inherent contradictions of its own internal logic. Those contradictions are manifested (using the language of the therapeutic) in compulsive and self-destructive behavior which, given the internal logic of any system can lead to catastrophe—the imperiling of system order itself. The self-destructive contradictions of all sub-systems (but in this case the economic social system) derived from the compulsions of its own internal logic can be managed. That management is inherent in the operation of the complex web of the troika law-politics-economics sub-systems within which collective organs operate. Yet, no networked system can successfully project its power completely or thoroughly to reconstitute another. It may provide boundaries against the external effects of internal compulsion and it may, acting within the constraints of its own logic, irritate internal reaction in other systems. But these irritants can be consciously applied, and targeted. And thus, the suggestion of a simple irritant—the severe limitation on the power over money is suggested as a means of working the machinery of networked sub-systems communicating (irritating) each other and thus forcing internal confrontations with the illogic of internal constitutions before catastrophe manifests to threaten all sub-systems within the greater global social organ. Teubner ends with a reminder of the possibilities of consequences to flirting with catastrophe—the lessons of the Great Depression of 1929 and its reinvigoration of the state and its ultimately failed attempts to usurp the autonomy of the economic sphere by a variety of means. (Id., at 34).

Still, I am reminded of the great contests between the Mensheviks and Bolsheviks in pre-Revolutionary Russia. Teubner has elaborated the possibility of order in the systems cosmos. He identifies the levers through which the system itself can face its self-destructive contradictions, its compulsive addictions, and avoid excess—while at the same time producing conditions that permit foundational revaluation in the face of the possibility of catastrophe. I wonder, though, whether fundamental systems order necessarily includes a large dose of chaos. It is not clear to me that the fundamental contradictions of systems—their relentless drive toward the limits of their logic—their compulsion to drive toward their limit, and by such compulsion to destroy their essence as they strive to attain it—is not both basic and inescapable. That, is I wonder whether catastrophe is avoidable in the face of the inherent contradictions of systems, and the fundamental drive of systems to follow their internal logic (purity) to its limit (compulsion, addiction, crisis).
People, groups, all conscious organisms simultaneously seek the protection of oblivion, an acceptance of repose in some perfect and eternal state, equilibrium, on the one hand, and also struggle to overcome the desire for oblivion, that is struggle against faith. Such struggle leads to emancipation for those who can successfully struggle. That success is valid for those who struggle, but cannot be gifted to others. Each in turn must struggle – individual, group, organism – against the reality bequeathed to it. And thus the process of self-overcoming and recurrence are linked through death and transformation. “Existence seeks an organizing principle.” Yet organizing principles are personal to the organism that struggles or accepts. Only the struggle remains the same – over and over. Friedrich Nietzsche, The Will to Power at § 1066. Only the eternal can overcome eternally; in all other cases, overcoming recurs eternally. J (1886) at § 200. These open systems of multiple cycles constitute the matrix within which the hermeneutical projects of Gadamer and his followers, can occur, foundations can be established, maintained, problematized, destroyed, and replaced.
Larry Catá Backer, Cycles of Legal Foundations: Law After Deconstruction, Law at the End of the Day, Aug. 14, 2006. This suggests an ancient insight into the cyclicity inherent in systems. (ibn Khaldun, 'Abd-ar Rachman. 1377. The Muqaddimah: An Introduction to History, trans. Franz Rosenthal, ed., N.J. Dawood. Princeton: Princeton University Press, 1967.) It is not the nearness of catastrophe but catastrophe itself that provides the space within which a system either reengages in self revaluation or is overtaken and reconstituted from outside. That is another possible lesson from the Great Depression of 1929. Teubner draws near that precipice and pulls back. But in that turn, he has illuminated an elegant and plausible basis for management, far more coherently drawn than the limited scope approaches that have been the bread and butter of financial sector analysis since the recognition of the slide toward financial sector catastrophe in 2007.

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