-> LAW IN FINANCE
Contemporary financial systems are coded in law.
Their building blocks are contracts, property and collateral law, trust, entity and bankruptcy law, designed to fit within the scaffolding of prudential regulation. Law determines the hierarchy of claims and delineates assets. States enforce priority rights coded in law not among contracting parties, but against others. Law’s power to exert third-party effects makes law central to finance. It implies that controlling the process of coding finance in law is a source of power.
Understanding who controls this process, who benefits and who loses from coding finance in law is critical for understanding the political economy of modern financial capitalism.
The themes for Law in Finance were crystallized in a series of interdisciplinary research projects outlined below.
Workshops and Colloquia
The Global Law and Finance Initiative 2010-2013
The initiative assembled a group of researchers from economics, law, political sciences and sociology to advance our understanding of the relation between law and finance. It set out to establish an empirically founded critique of existing theories and use this critique to generate ideas for alternative theoretical approaches. The two year research project, which was funded by the Institute for New Economic Thinking (INET) produced the “Legal Theory of Finance” (LTF).
LTF holds that law is in finance rather than an additive. It has four building blocks: (1) Finance is constructed in law. (2) Law not only builds finance, but the relentless enforcement of legal commitments can bring the financial system to the abyss, from which it can be saved only by relaxing the full force of the law (Law-Finance Paradox). (3) As a system constructed in law that depends on backstopping by states finance is neither public nor private, but essentially hybrid. (4) Reliance on ex post elasticity of law to protect the financial system from self-destruction points to the close relation of both finance and law to power.
LTF is the foundation for ongoing research projects by the Global Law in Finance Network.
Global Law in Finance Network, GLawFiN
GLawFiN was established with the financial backing of the Max Planck Research Award Pistor received in 2012 and additional funding by INET. GLawFiN currently has three affiliated institutions – Columbia Law School, Goethe University/House of Finance, and Oxford University – represented by Katharina Pistor, Brigitte Haar, and Dan Awrey respectively.
GLawFiN sponsors postdocs, doctoral students, and research fellows. Their individual research projects are described here. Joint research projects pursued by the group, which have resulted in further conferences and workshops include “Justice and Finance”, “Law and Liquidity” and “The Legal Hierarchy of Moneys”. The network holds regular workshops with members and invited guests to explore these and similar topics. Past workshop themes include “Justice and Finance” (Paris, January 2014) , “Law and Liquidity” (Oxford, June 2015), and the “Hierarchy of Money” (New York, October 2016)
GLawFiN has organized several round tables with practitioners as well as conferences. In December 2015 it co-sponsored with SAFE at Goethe University in Frankfurt a conference on “Finance between Liquidity and Insolvency”.
September 2017, New York
The Re-Imagining Finance workshop brought together scholars and practitioners from computer science, law, finance, and the social sciences to explore whether decentralized technologies such as blockchain offer new solutions to re-imagine complex credit-based financial systems. Contemporary finance has become a hierarchical and highly centralized system that ultimately depends on the use of discretionary power for its survival. New decentralized technologies may offer solutions to transform finance to a sustainable, rule-based system that manages to contain crisis and offer governance solutions even in times of crises. This workshop at Columbia Law School facilitated the deeply interdisciplinary conversation needed to explore these solutions. The workshop was sponsored by the Max Planck Society/Humboldt Foundation.