Harvard Law School Graduate Program S.J.D. 1st Year Reading List Title: Material Democracy: Legal and Institutional Innovation in Latin America Carlos Portugal Gouvêa cgouvea@law.harvard.edu Contents 1. PROPOSAL ABSTRACT 1 2. FIELDS OF STUDY 2 2.1. LAW AND DEVELOPMENT 2 2.2. DEMOCRATIC ANALYSIS OF LAW: 4 2.3. INTERNATIONAL ECONOMIC LAW 6 2.4. THEORY OF INSTITUTIONAL DEVELOPMENT 9 1 1. Proposal Abstract The objective of my S.J.D. thesis is to demonstrate that legal analysis of institutional reforms must include a concern about its distributive impacts on society, considering that the greatest challenges faced by democracy in Latin America nowadays are its extreme inequality and concentration of wealth. My assumption is that this concern could have a positive effect, not only because it could avoid the implementation of reforms that would increase inequality, but also because this information could have a transformative effect, creating possibilities for legal and institutional innovations that could strengthen democracy and economic development in the region. To achieve this objective, I proposed the hypothesis that the weakness of the democratic process causes the negative distributive effects of laws. In societies with high inequalities, this weakness of democracy is not only caused by limited participation on political process, but also by the use of concentrated economic power to influence political decisions, creating a cycle that perpetuates inequality. I will test this hypothesis studying the relationship between the three waves of reforms that impacted the region in the last decades -the transition to democracy, the process of economic liberalization, and the contemporary projects of legal and institutional reforms -evaluating if the proposed analysis of distributive effects of laws could suggest strategic reforms capable of breaking this cycle. The expected outcome of this study is threefold. First, I would like to contribute to the scholarship in the field of “Law and Development” by exploring a possible correlation between democracy and the distributive character of laws. Second, I will argue that this new wave of legal reforms in Latin America should incorporate distributive analysis, in terms of real distribution of political and economic power, or, otherwise they will only crystallize inequality. Third, I will advocate that this new process of reforms could be a unique opportunity for innovative legal and institutional reforms that could initiate a virtuous relation between democracy and development in the region. 2 2. Fields of Study 2.1. Law and Development Professor David Kennedy (main supervisor) Description: The “Law and Development” scholarship is a field of study and also the object of my thesis, considering that many scholars not only described, but, in fact, engaged in the operation of the reforms in Latin America. My objective with this field is to articulate the new scholarship on the field, focused on the distributive effects of legal reforms, not only demonstrating the relevance of this approach as a method of legal analysis, but also advocating the necessity of incorporating such methodology to the legislative process in Latin America, as means of increasing the legitimacy of democratic systems in societies with high levels of economic inequality. Reading List: Amsden, Alice, THE RISE OF “THE REST” – CHALENGES TO THE WEST FROM LATE INDUSTRIALIZING ECONOMIES (2001) Arndt, H. W., ECONOMIC DEVELOPMENT: THE HISTORY OF AN IDEA (1987) Cypher, James and Dietz, James, THE PROCESS OF ECONOMIC DEVELOPMENT (Routledge, 1997) De Soto, Hernando, THE MYSTERY OF CAPITAL: WHY CAPITALISM TRIUMPHS IN THE WEST AND FAILS EVERYWHERE ELSE (Basic Books, 2000). Garth, Bryant and Dezalay, Yves, eds., GLOBAL PRESCRIPTIONS: THE PRODUCTION, EXPORTATION AND IMPORTATION OF A NEW LEGAL ORTHODOXY (University of Michigan Press, 2002) Kennedy, David, Background Noise? The Politics Beneath Global Governance, 21 Harvard International Review 3, 52 (Summer 1999) _____. Laws and Developments, in CONTEMPLATING COMPLEXITY: LAW AND DEVELOPMENT IN THE 21ST CENTURY, (Amanda Perry and John Hatchard eds., forthcoming 2003). _____. The International Anti-Corruption Campaign, 14 CONNECTICUT JOURNAL OF INTERNATIONAL LAW 455 (1999). Kennedy, Duncan, Mainstream Law-and-Economics from the Perspective of Critical Legal Studies, in 2 THE NEW PALGRAVE DICTIONARY OF ECONOMICS AND THE LAW (P. Newman ed. 1998). _____. The Stakes of the Law, or Hale and Foucault, in SEXY DRESSING ETC.: ESSAYS ON THE POWER AND POLITICS OF CULTURAL IDENTITY 83 (HARVARD UNIVERSITY PRESS, 1993). _____. The Role of Law in Economic Thought: Essays on the Fetishism of Commodities, in THE AMERICAN UNIVERSITY LAW REVIEW 34, 939-1001 (1985). 3 _____. Neither the Market nor the State, Housing Privatization Issues, in., A FOURTH WAY? PRIVATIZATION, PROPERTY, AND THE EMERGENCE OF NEW MARKET ECONOMIES 253 (G. Alexander & G. Skapska, eds.). Krueger, Anne, POLITICAL ECONOMY OF POLICY REFORM IN DEVELOPING COUNTRIES (1993) Meier, Gerald, LEADING ISSUES IN ECONOMIC DEVELOPMENT (Oxford University Press, 2000) Rist, Gilbert, THE HISTORY OF DEVELOPMENT FROM WESTERN ORIGINS TO GLOBAL FAITH (Zed Book, 1997). Rodrik, Dani, DEMOCRACY AND ECONOMIC PERFORMANCE (Dec. 14, 1997) (unpublished manuscript, available at Kennedy School of Government Library). _____. THE NEW GLOBAL ECONOMY AND DEVELOPING COUNTRIES: MAKING OPENNESS WORK (Johns Hopkins University Press, 1999). Stiglitz, Joseph, GLOBALIZATION AND ITS DISCONTENTS (Norton, 2002). Trubek, David, Law and Development, in Int’l Encyc. of Soc. & Beh. Sciences 8443 (N.J. Smelser and Paul B. Baltes eds. 2001) ______. Max Weber on Law and the Rise of Capitalism, WISC L. REV. 720 (1972). ______. and Marc Galanter, Scholars in Self-Estrangement: Some Reflections on the Crisis in Law and Development Studies in the United States, 4 WISC. L. REV. 1062 (1972). ______. The Rule of Law in Development Assistance: Past, Present and Future (June, 2002) (available at http://www.wisc.edu/wage/trubek/publications/) 4 2.2. Democratic Analysis of Law: Professor Roberto Mangabeira Unger Description: This field is focused on the transformations of the concepts of “Democracy” and “Rule of Law” from early constitutional developments in the 17th century to the present time, on the contemporary perspective of social theory. It will try to understand how these concepts acted as mediators between public and private spheres on liberal societies. One of the aspects that will be discussed is how the concept of “Rule of Law”, from an idea that arose with the first modern constitutional democracies meaning the supremacy of public in relation to private interests, was transformed into the protection of some private legal institutions considered fundamental for the operation of market economies. The main question to be addressed will be: is democratic deliberation still the main source of law in modern democratic societies? Considering contemporary mainstream post-formalist theories of legal analysis, the answer seems to be negative. The use of principles from social sciences to limit the range of options for legislative and judicial decisions is playing the same role as natural principles of reason or rights did for early liberal theories and it fails to respond to the challenges that liberal societies faced throughout the twentieth century. The objective of this field is to identify how the contemporary use of the concepts of “Democracy” and “Rule of Law” to advocate institutional reforms in developing countries could limit the institutional alternatives for these societies to achieving new and more advanced forms of social organization. Reading List: Comte, Auguste, Plan of Scientific Work Necessary for the Reorganization of Society, EARLY POLITICAL WRITINGS (Cambridge University Press, 1998). Dahl, Robert A., DEMOCRACY AND ITS CRITICS (Yale University Press, 1989) Dewey, John, THE ESSENTIAL DEWEY: PRAGMATISM, EDUCATION AND DEMOCRACY (Indiana University Press, 1998) Durkheim, Emile, THE DIVISION OF LABOR IN SOCIETY (Free Press and Collier Macmillan, 1964) (1933). Foucault, Michel, DISCIPLINE AND PUNISH (Vintage, 1995) (1977) ___________. POWER (Penguin, 2002) Habermas, Jurgen. THE STRUCTURAL TRANSFORMATION OF THE PUBLIC SPHERE: AN INQUIRY INTO A CATEGORY OF BOURGEOIS SOCIETY (MIT Press, 1989) (1962). ___________. LEGITIMATION CRISIS (Polity Press, 1988) (1973) ___________. THE THEORY OF COMMUNICATIVE ACTION (Beacon Press, 1981). Harrington, James, THE COMMONWEALTH OF OCEANA (Cambridge University Press, 1992) (1656) Hobbes, Thomas, LEVIATHAN (Cambridge University Press, 1996) (1651) 5 John Locke, TWO TREATISES OF GOVERNMENT (Yale University Press, 2003) (1689) Marx, Karl, The Civil War in France, in LATER POLITICAL WRITINGS (Cambridge University Press, 1996) (1871). ___________. THE EIGHTEENTH BRUMAIRE OF LOUIS BONAPARTE (International Publishers, 1964). ___________. & ENGELS, Friedrich. THE GERMAN IDEOLOGY. (Prometheus Books, 1998) (1845-1846). Mill, John Stuart, On Liberty, in ON LIBERTY AND OTHER ESSAYS 5-128 (Oxford University Press, 1998) (1859) __________. Utilitarianism, in ON LIBERTY AND OTHER ESSAYS 131-204 (Oxford University Press, 1998) (1861) __________. Considerations on Representative Government, in ON LIBERTY AND OTHER ESSAYS 131-204 (Oxford University Press, 1998) (1861) Rawls, John, A THEORY OF JUSTICE (Harvard University Press, 1999) Schmitt, Carl, THE CONCEPT OF THE POLITICAL (University of Chicago Press, 1996). __________. Political Theology: Four Chapters on the Concept of Sovereignty (MIT Press, 1985). Tocqueville, Alexis de, DEMOCRACY IN AMERICA (A. A. Knopf, 1987) Unger, Roberto Mangabeira, KNOWLEDGE & POLITICS (Free Press, 1984) (1975). __________. LAW IN MODERN SOCIETY: TOWARD A CRITICISM OF SOCIAL THEORY (Free Press, 1976). __________. FALSE NECESSITY: ANTI-NECESSITARIAN SOCIAL THEORY IN THE SERVICE OF RADICAL DEMOCRACY (Cambridge University Press, 1987). __________. SOCIAL THEORY, ITS SITUATION AND ITS TASK. (Cambridge University Press, 1987). __________. PLASTICITY INTO POWER: COMPARATIVE-HISTORICAL STUDIES OF THE INSTITUTIONAL CONDITIONS OF ECONOMIC AND MILITARY SUCCES. (Cambridge University Press, 1987). Weber, Max, ECONOMY AND SOCIETY (University of California, 1978). __________. POLITICS AS A VOCATION (Fortress Press, 1965). 6 2.3. International Economic Law – Governance of International Economic Institutions Professor William Alford Description: During the 1990’s, institutional reforms in developing countries have been directly related to “International Economic Law”, not only because the main areas of these institutional reforms -namely; financial and trade liberalizations, privatizations, and monetary deregulations -were congenial with this legal field, but also because the main international players of these reforms were global economic governance institutions. In recent years, the focus on macro-economic reforms was transformed into a new wave of micro-economic reforms, also called “Rule of Law” reforms, focused on reforming private property regulations, contract enforcement mechanisms, and building governmental transparency. This effort was practically translated into reforms on corporate law, bankruptcy law, judicial structures, and administrative law. These new subjects are not directly related to the mandates of institutions such as the International Monetary Fund, World Bank, or the World Trade Organization. However, they gained increasing importance in public debates and in the budgets of those organizations. The objective of this field is to understand the general transformations in the role of these institutions in the economic governance, from mere management of international conflicts and crises to management of legal reforms in developing countries. First, the historical and political context for the creation of these institutions will be debated, considering the two main fields of International Economic Law and their respective institutions: International Finance and International Trade Law. This contextualization will be followed by an analysis of the governance mechanisms of the different institutions in these fields, regarding the general division of power and the decision making process, in their political, bureaucratic and judicial spheres. This formal institutional map of international economic governance will be followed by the analysis of individual reforms under a perspective of comparative law, understanding how the processes of financial, monetary, and trade deregulations developed in Asia in comparison to Latin America, and how the privatization and corporate law reforms are evolving. The expected result of this effort is to reveal the interests of the different players involved in this process -lawyers, international investors, national and international bureaucrats, political elites in developed and developing countries -overcoming the barriers of technical legal discourse. Readings List: Alford, William P. "On the Limits of 'Grand Theory' in Comparative Law," 61 Washington Law Review 975 (1986). _____. "The More Law, The More...? Measuring Legal Reform in the People's Republic of China" in How Far Across the River? Chinese Policy Reform at the Millennium (Nicholas C. Hope, Dennis Tao Yang & Mu Yang Li eds., Stanford University Press, 2003). _____. Intellectual Property, Trade and Taiwan: A GATT-Fly's View, 97 COLUMBIA BUSINESS LAW REVIEW (1992). _____. International Commercial Arbitration: An Idiosyncratic Overview, THE KOREAN FORUM ON INTERNATIONAL TRADE AND BUSINESS LAW, 1992. 7 _____. Of lawyers lost and found: Searching for Legal Professionalism in the People’s Republic of China, in EAST ASIAN LAW AND DEVELOPMENT: UNIVERSAL NORMS AND LOCAL CULTURE, (eds. A. Rosett, L. Cheng, and M. Woo, 2002). _____. Raising the Bar: The Emerging Legal Profession in East Asia (William P. Alford ed., forthcoming 2004). Braithwaite, John, GLOBAL BUSINESS REGULATION (Cambridge University Press, 2000). Campbell. David, What is Meant by ‘the Rule of Law’ in Asian Company Law Reform? in COMPANY LAW IN EAST ASIA 11 (Roman Tomasic, ed., 1999). Cao, Lan, Chinese Privatization: Between Plan and Market, 63 LAW AND CONTEMPORARY PROBLEMS 13 (2000). Chen, Sheying, Economic Reform and Social Change in China: Past Present and Future of Economic State, 15 INTERNATIONAL JOURNAL OF POLITICS, CULTURE AND SOCIETY 569 (2002). Council on Foreign Relations (1999). Safeguarding Prosperity in a Global Financial System: The Future International Financial Architecture. Report of an Independent Task Force. New York: Council on Foreign Relations, October 1999 (http://www.cfr.org/public/pubs/IFATaskForce.html). Fischer, Stanley (1999). On the Need for an International Lender of Last Resort, revised version of address to American Economic Association, IMF website (www.imf.org). Howse, Robert and Nicolaidis, Kalypso, Enhancing WTO Legitimacy: Constitutionalization or Global Subsidiarity? 16 GOVERNANCE 73 (2003). International Financial Institutions Advisory Commission (2000). Report of the International Financial Institutions Advisory Commission. Washington, D.C.(http://www.house.gov/jec/imf/ifiac.htm). Jackson, John H., WORLD TRADE AND THE LAW OF GATT (Bobbs-Merrill, 1969). _______. RESTRUCTURING THE GATT SYSTEM (Council on Foreign Relations Press, 1990). _______. THE WORLD TRADE ORGANIZATION: CONSTITUTION AND JURISPRUDENCE (Royal Institute of International Affairs, 1998). _______. Davey, William, and Sikes, Alan O. LEGAL PROBLEMS OF INTERNATIONAL ECONOMIC RELATIONS (West Group, 2002). Kennedy, David, New Approaches to Comparative Law: Comparativism and International Governance, 2 UTAH LAW REVIEW, 545 (1997). Langille, B.A. General Reflections on the Relationship of Trade and Labour (Or: Fair Trade Is Free Trade's Destiny) in FAIR TRADE AND HARMONIZATION. PREREQUISITES FOR FREE TRADE, (J.N. Bhagwati and R.E. Hudec. Eds. MIT Press, 1996) Ohnersorge, John, THE RULE OF LAW, ECONOMIC DEVELOPMENT, AND THE DEVELOPMENTAL STATES OF NORTHEAST ASIA, available at http://www.law.wisc.edu/facstaff/download.asp?ID=69 Organization for Economic Co-operation and Development, PRINCIPLES OF CORPORATE GOVERNANCE (OECD Centre for Co-operation with Non-Members, 1999). 8 _____. REPORT ON THE EXPERIENCES FROM THE WORLD BANK-OECD REGIONAL CORPORATE GOVERNANCE ROUNDTABLES (OECD Centre for Co-operation with Non-Members, 2003). Rodrik, Dani, THE GLOBAL GOVERNANCE OF TRADE AS IF DEVELOPMENT REALLY MATTERED (UNDP, 2001), available at http://ksghome.harvard.edu/~.drodrik.academic.ksg/UNDPtrade.PDF Roe, Mark, A Political Theory of American Corporate Finance, 91 COLUM. L. REV. 10 (1991). _____. Roe, Mark, POLITICAL DETERMININANTS OF CORPORATE GOVERNANCE (Oxford University Press, 2003) Ruskola, Teemu, Conceptualizing corporations and kinship: comparative law and development theory in a Chinese perspective, 52 STANFORD LAW REVIEW 1599, (2000). Scott, Hal S. INTERNATIONAL FINANCE: LAW AND REGULATION (Sweet & Maxwell, 2004) _____. and Wellons, Philip A. INTERNATIONAL FINANCE: TRANSACTIONS, POLICE, AND REGULATION (Foundation Press, 2003). Stephenson, Mathew, A Trojan Horse Behind Chinese Walls?: Problems and Prospects of USSponnsore "Rule of Law" Reform Projects in the PRC, CID Working Paper #47, Center for International Development, Harvard University. Stiglitz, Joseph, What I Learned at the World Economic Crisis, THE NEW REPUBLIC, April 17-24, 2000. Tarullo, Dan, Beyond Normalcy in the regulation of international trade, 100 HARVARD LAW REVIEW January 546 (1987). Trachtman, Joel P., Legal Aspects of a Poverty Agenda at the WTO: Trade Law and “Global Apartheid”, 6 JOURNAL OF INTERNATIONAL ECONOMIC LAW 3 (2003) _____. “Trade and...Problems, Cost-Benefit Analysis and Subsidiarity,” 9 EUROPEAN JOURNAL OF INTERNATIONAL LAW 32 (1998). _____. International Regulation Competition, Externalization and Jurisdiction, 34 HARV. INT’L L.J. 47, 66-67 (1993) 9 2.4. Theory of Institutional Development Professor Frederick Schauer (Kennedy School of Government) Description: In this field I will study the theory of institutional development that supports this wave of legal reforms in Latin America. One important aspect of this process is an attempt to transplant institutions from developed countries that are supposed to have a positive effect on economic development. I will try to understand this problem in the contemporary context of Latin America, analyzing the conflicts between interests of international organizations funding reforms and internal demands for different kinds of reforms. Reading List: Berkowitz, Daniel, Katharina Pistor, and Jean-Francois Richard, The Transplant Effect, 51 AMERICAN JOURNAL OF COMPARATIVE LAW 163-87 (2003) Carothers, Thomas, Promoting the Rule of Law Abroad: The Problem of Knowledge, working paper of the Carnegie Endowment for Int'l Peace, 34 Rule of Law Series (2003). John Helliwell, Empirical Linkages Between Democracy and Economic Growth, WORKING PAPER 4066 (National Bureau of Economic Research, 1994). Huntington, Samuel P., Modernization and Corruption, in POLITICAL CORRUPTION: READINGS IN COMPARATIVE ANALYSIS 462-500 (Arnold J. Heidenheimer, Ed., Holt Reinehart, 1964). North, Douglas, INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC PERFORMANCE (Cambridge University Press, 1990) Posner, Richard A., Creating a Legal Framework for Economic Development, 13 WORLD BANK RES. OBSERVER 1 (1998) Przeworski, Adam, DEMOCRACY AND THE MARKET: POLITICAL AND ECONOMIC REFORMS IN EASTERN EUROPE AND LATIN AMERICA (Cambridge University Press 1991) Putman, Robert D., MAKING DEMOCRACY WORK: CIVIC TRADITIONS IN MODERN ITALY (Princeton University Press, 1993). Rose-Ackerman, Susan, CORRUPTION AND GOVERNMENT: CAUSES, CONSEQUENCES, AND REFORM (Cambridge University Press, 1999). Przeworski, Adam and Limongi, Fernando, Democracy and Development, in DEMOCRACY’S VICTORY AND CRISIS: NOBEL SYMPOSIUM N. 93 (Cambridge University Press, 1997). Schumpeter, Joseph A., CAPITALISM, SOCIALISM, AND DEMOCRACY (Allen and Unwin, 1981). Sen, Amartya K., The Impossibility of the Parential Liberal, 78 JOURNAL OF POLITICAL ECONOMY, 152-157 (1970) _____. CHOICE, WELFARE, AND MEASUREMENT. (Blackwell, 1982). _____. INEQUALITY REEXAMINED (Harvard University Press, 1995) _____. The Possibility of Social Choice, 89 AMERICAN ECONOMIC REVIEW (1999) 10 _____. DEVELOPMENT AS FREEDOM (Anchor, 1999) Schauer, Frederick, The Politics and Incentives of Legal Transplantation, in GOVERNANCE IN A GLOBALIZING WORLD 253-68 (John Donahue and Joseph Nye, eds., Brookings, 2000) WORLD BANK, LEGAL AND JUDICIAL REFORM: OBSERVATIONS, EXPERIENCES, AND APPROACH OF THE LEGAL VICE-PRESIDENT (World Bank, 2002) ______. HELPING COUNTRIES TO FIGHT CORRUPTION: THE ROLE OF THE WORLD BANK (World Bank, 1997) ______. INEQUALITY IN LATIN AMERICA AND THE CARIBBEAN 412 (David de Ferranti, Guilhermo E. Perri et al., Eds., The International Bank for Reconstruction and Development /The World Bank, 2003)