Editor’s Book Choices 2014: Does International Law Respond to Grassroots Inequality?

Written by

Crisis and stagnation in the global economy is the new normal, so say The Financial Times, McKinsey & Co., Business Insider, and the World Economic Forum at Davos in 2013. It is twelve days before the end of 2014 as I write this, and today’s new crisis is how the Russian rouble is spiralling dramatically in a deep currency crisis forcing Russia to take defensive measures against capital flight. Other main drivers of the world’s economy are not necessarily on safe footing. The Eurozone and the United States are still on the road to economic recovery from the global financial crises; Japan remains mired in recession despite the grand claims of ‘Abenomics’ to stem the tide; and this year, China – the main engine of global economic growth in the past decade – for the first time posted its slowest GDP growth rate in five years. Since the world plunged into global financial crisis around 2008, the promise and allure of globalization and global economic growth has waxed and waned, multinational and transnational business profit expectations have muted, and – as the International Monetary Fund put it rather bleakly in October of this year – growth will never be as good before the global crisis: “pessimism about the future was as strong [during the Great Depression] as it is now”. The International Labour Organization (ILO) dubs 2014 the year for the “risk of a jobless recovery”. If globalization is supposedly dying, as Princeton University Social Science Professor Dani Rodrik declares, is its inseparable fabric – international law – also headed for demise? In a postmodern crisis-saturated world now so riven by “economic insecurity and the rise of nationalism”, can international law still meaningfully respond?

My pursuit of this question throughout this year led me to three provocative books outside of international law – two in political economy, one in contemporary literature. These works helped me, at least, in provoking a reframing of the economic and social configurations we accept – and to a certain extent, author and promote – in international law, especially in international economic law specializations in trade, finance, and investment. Long before French economist Thomas Piketty’s Capital in the Twentieth Century became the rage in economic and political circles around the world in 2014, it was Nobel Prize laureate Joseph Stiglitz’s The Price of Inequality (W.W. Norton & Company, 2012) that made the powerful argument against the seeming inevitability of inequality, pointing out that so much of today’s debilitating income inequality – as seen in the example of the United States – is a product of the rents and inefficiencies created through the wrongful exercise of political power in legislative and regulatory processes. Stiglitz points to the economic capture of American regulatory authorities through unequal voices in the political process. Because the highest income-earners tend to wield more influence and exercise leverage over public regulatory, administrative, and legislative decisions that impact market share with little public transparency in relation to all other ‘voices’ among economic stakeholders, outcomes are often designed ex ante in ways that favor fiscal and monetary decision-making to protect such interests: “…we have a political system that gives inordinate power to those at the top, and they have used that power not only to limit the extent of redistribution but also to shape the rules of the game in their favor…Economists have a name for these activities; they call them rent seeking, getting income not as a reward to creating wealth but by grabbing a larger share of the wealth that would have otherwise been produced without their effort.” (Stiglitz, at pp. 39-40) Lawyers, in his view, are intrinsic to the making and perpetuation of this pathology: “The legal framework is supposed to make our economy more efficient by providing incentives for individuals and firms not to behave badly. But we have designed a legal system that is an arms race: the two protagonists work hard to out-lawyer each other, which is to say outspend each other, since good and clever lawyers are expensive. The outcome is often determined less by the merits of the case or issue than by the depth of the pockets. In the process, there is massive distortion of resources, not just in litigation but in actions taken to affect the outcome of litigation and to prevent litigation in the first place.” (Stiglitz, p. 125).

Stiglitz’ thesis has resonance for those of us who think the horizontal international legal system is the apotheosis of regulatory decision-making, and who also constantly question the processes by which States’ authoritative decision-makers shape local economic and social configurations when issuing their decisions in world trade, international finance, and especially, international investment. When sovereign debt agreements are concluded, foreign investment projects are publicly bidded, and export markets are opened up, are international lawyers minded to seek out transparency, equal participation between all private and public stakeholders in the international transaction, as well as to design a system for monitoring and accountability for performance of obligations? Does international law only mandate a leaden and formalistic version of inter-State and intra-State coordination when shaping international legal rules that most immediately impact income inequality? Do the duties of “international cooperation” in the UN Charter ultimately entail deeper binding commitments for States under more “liberal theories of international law”? [see Andrew Moravsik, Liberal Theories of International Law, in Jeffrey L. Dunoff and Mark A. Pollack, Interdisciplinary Perspectives on International Law and International Relations: The State of the Art (Cambridge University Press, 2012)]. Stiglitz’ book starkly reminded me this 2014 that international lawyers have a critical role in the establishment, maintenance, and oversight of the global economic system and its innumerable international and transnational transactions. International lawyers impact directly on the felt inequalities of local communities and national economies, more than we might expect, because they can either empower and legitimize the distortionary rent-seeking entrenches income inequality, or act as the global economic system’s first gatekeepers with a genuine international rule of law designed to be resistant and vigilant against regulatory capture.

Abhijit V. Banerjee and Esther Duflo’s Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty (Public Affairs, 2012) is my second book of 2014, for the reason that it effectively resituates poverty decision-making from the standpoint not of State decision-makers, but from a practical understanding of the distinct preferences, hard choices, and little-understood decisions of the world’s poor. One cannot begin to understand how to translate binding State obligations under the International Covenant on Economic, Social and Cultural Rights – such as minimum core obligations on providing the conditions for individuals to attain an adequate standard of living – without thinking of the constituencies of these State obligations as active subjects of international law, and not mere objects of international legal protection. As these founders of the MIT Poverty Action Lab aptly put it: “Good policies can also help break the vicious cycle of low expectations: If the government starts to deliver, people will start taking politics more seriously and put pressure on the government to deliver more, rather than opting out or voting unthinkingly for their co-ethnics or taking up arms against the government.” (Banerjee and Duflo, p. 262) Rather than constantly looking at the design of broad political institutions, they powerfully argue that “[c]areful understanding of the motivations and constraints of everyone (poor people, civil servants, taxpayers, elected politicians, and so on) can lead to policies and institutions that are better designed, and less likely to be perverted by corruption or dereliction of duty. These changes will be incremental, but they will sustain and build on themselves. They can be the start of a quiet revolution.” (Banerjee and Duflo, p. 265) This book brought me to ask, to what extent do we meaningfully bring the world’s poor – over 1 billion people living in extreme poverty, and 2.2 billion people living on less than US$2 a day – to the negotiating table when international treaties and agreements are concluded by world leaders, when budgets are set for international institutions, courts, and tribunals, and when international programs are designed for the world’s poor? Banerjee and Duflo’s book provoked me to rethink, at microscopic and operational levels, what “international cooperation” ought to seriously entail in truly making local communities the active subjects of international law authoring their own development – beyond the lean and contested discussions of “international cooperation” so far in the comments and issuances of the Committee on Economic, Social, and Cultural Rights in the last five decades.

Finally, my third book for 2014 was one I happened to pick up between airports, en route to international project work. I finished Teju Cole’s Every Day is for the Thief (Random House, 2014) during the long-haul flight and found much in this book that will resonate for international lawyers coming from developing countries, familiar with deeply embedded elite stratifications, entrenched landed interests, and corruption as a pervasive social norm: “…corruption, in the form of piracy or of graft, means that most people remain on the margins. The systems that could lift the majority out of poverty are undercut at every turn. Precisely because everyone takes a shortcut, nothing works and, for this reason, the only way to get anything done is to take another shortcut. The advantage in these situations goes to the highest bidders, those individuals most willing to pay money or to test the limits of the law.”

If crisis and stagnation is indeed the new normal that we – international lawyers and international law professors – all live with in this decade, and that our clients, governments, communities and law students now contend against as the ‘new’ human condition, the three books above led me to pathways in thinking about how international law can create, or destroy, income inequality. We are all architects of that choice.

Print Friendly, PDF & Email


No tags available

Leave a Comment

Comments for this post are closed


Aoife Nolan says

December 29, 2014

Thanks for this post, Diane. A lot of my work recently has focused on the (somewhat related) issue of whether human rights can respond to the recent financial and economic crises. Given the works you cite above, this work, 'Economic and Social Rights after the Global Financial Crisis' (CUP, 2014) may be of some interest: http://www.cambridge.org/gb/academic/subjects/law/human-rights/economic-and-social-rights-after-global-financial-crisis. It focuses in particular on the interrelationship between contemporary and historic economic and financial crises, the responses thereto, and the resulting impact upon economic and social rights.

Patrick S. O'Donnell says

December 29, 2014

International law scholars and practitioners fairly new to systematic reflections on questions of absolute and relative global inequality (in the first instance, economic), or simply provoked by the theme of this post, might want to familiarize themselves with the breadth and depth of the existing literature (here, within the constraints of 'books only,' in English) as represented in my compilation, "The Ethics, Economics & Politics of Global Distributive Justice: A Select Bibliography," found here (if the preview is not available, you can download the PDF doc.): https://www.academia.edu/4844026/Global_Distributive_Justice_bibliography

And should there remain a few recalcitrant skeptics unpersuaded about the urgency (in the widest and most profound sense) of inequality in our world today, please consider it a personal obligation to read one book that should, at last, convince you otherwise (if not, you're outside the circle of amenability to rational and moral argument): Göran Therborn, The Killing Fields of Inequality. Cambridge, UK: Polity Press, 2013.