an unanticipated consequence of
Jack M. Balkin
Jack Balkin: jackbalkin at yahoo.com
Bruce Ackerman bruce.ackerman at yale.edu
Ian Ayres ian.ayres at yale.edu
Mary Dudziak mary.l.dudziak at emory.edu
Joey Fishkin joey.fishkin at gmail.com
Heather Gerken heather.gerken at yale.edu
Abbe Gluck abbe.gluck at yale.edu
Mark Graber mgraber at law.umaryland.edu
Stephen Griffin sgriffin at tulane.edu
Bernard Harcourt harcourt at uchicago.edu
Scott Horton shorto at law.columbia.edu
Andrew Koppelman akoppelman at law.northwestern.edu
Marty Lederman msl46 at law.georgetown.edu
Sanford Levinson slevinson at law.utexas.edu
David Luban david.luban at gmail.com
Gerard Magliocca gmaglioc at iupui.edu
Jason Mazzone mazzonej at illinois.edu
Linda McClain lmcclain at bu.edu
John Mikhail mikhail at law.georgetown.edu
Frank Pasquale pasquale.frank at gmail.com
Nate Persily npersily at gmail.com
Michael Stokes Paulsen michaelstokespaulsen at gmail.com
Deborah Pearlstein dpearlst at princeton.edu
Rick Pildes rick.pildes at nyu.edu
Richard Primus raprimus at umich.edu
K. Sabeel Rahmansabeel.rahman at brooklaw.edu
Alice Ristroph alice.ristroph at shu.edu
Neil Siegel siegel at law.duke.edu
Brian Tamanaha btamanaha at wulaw.wustl.edu
Mark Tushnet mtushnet at law.harvard.edu
Adam Winkler winkler at ucla.edu
Thomas Piketty's Capital in the 21st Century continues to spur debate among economists. It has many lessons for attorneys, as well. But does law have something to offer in return? I make that case in my review of Capital, focusing on Piketty's call for a renewal of the social science of political economy. My review underscores the complexity of the relationship between law and social science. Legal academics import ideas from other fields, but also return the favor by informing those fields. Ideally, the process is dialectic, with lawyers and social scientists in dialogue.
I also saw a renewed synergy between law and social sciences at the Rethinking Economics conference last month. Economists inquired about bankruptcy law to better understand the roots of the financial crisis, and identified the limits that pension law places on certain types of investment strategies.
Some of the organizers of the conference recently took the argument in a new direction, focusing on the interaction between Modern Monetary Theory (MMT) and campaign finance reform. "Leveling up" modes of campaign finance reform have often stalled because taxpayers balk at funding political campaigns. Given that private campaign funders' return on investment has been estimated at 22,000%, that seems an unwise concession to crony capitalism. So how do we get movement on the issue?
For MMT backers, the answer is relatively clear:
[M]oney is not a feature of our natural environment, but a social construct, mediated by law. . . . One profound implication of this view is that the common belief that the U.S. federal budget is constrained like a household budget is a myth. . . . The U.S. federal government does not need to tax or borrow in order to fund itself. Taxes accomplish many functions, but they do not “fund” federal government spending. . . .[For] the campaign finance reform community to increase its chances of victory in implementing its policies (especially those aimed at changing the initial distribution of economic power), it must provide a more truthful and accurate account of the relationship between governance and modern money. In order to win over skeptics, campaign finance reform advocates need to explain that neither the national fiscal position nor people’s checkbooks need suffer in order for a scheme like democracy vouchers to work. People need to hear that it is right and reasonable for them to ask that public money be put to work for public purpose.
We do see the unrestrained money-creating capacity of the government on display in endless rounds of "quantitative easing." The AIG trial reminds us that intervention can become extraordinarily fine-grained and manipulative. Modern monetary theorists seek to harness that power in favor of public purposes, such as infrastructure building, campaign finance, or other investments. And we should be under no illusion that they are trying to shift economics from a stable science to politicized ideology. Dominant paradigms of economics in general (and public finance and accounting in particular) are the site of constant struggle over values. Advocates of austerity push for "fair value accounting" and "dynamic scoring," for little discernible purpose other than upward wealth redistribution. If those committed to some baseline of infrastructure, health, and education fail to press back with our own theory of public finance, we will fail, both intellectually and strategically.
To return to my original, methodological concern: a renewed emphasis on a key legal insight (the government cannot default on debt it issues in its own currency) can lead to an adjustment to economic theory (MMT), which in turn informs a new legal proposal to get past the current, futile campaign finance reform debate. It's a movement from legal insight to economic insight back to legal insight, or L - E - L. Of course, any implementation of MMT-driven campaign finance reform will need to sidestep SCOTUS's AZ FECFCPAC v. Bennett strictures. But that will be a much easier task than, say, trying to impose limits on spending by wealthy candidates or corporations. Just as MMT gets us past the zero-sum logic of taxation and CBO scoring in fiscal policy generally, it transcends the usual "level playing field" or "equal influence" paradigm of campaign finance. The legal foundations of MMT make it both scientifically, and normatively, a better theory of our economic system than the dominant paradigms of monetary policy. Posted
by Frank Pasquale [link]