Description and Objectives
Global finance poses the greatest challenge for states as self-ordering entities in today’s world. Access to global sources of finance has enabled many states to fund themselves without having to raise taxes; to promote growth and development without tackling the underlying distributional effects; and to position themselves as the home to major global financial centers. The same processes have made states increasingly dependent on the exigencies of global finance, which have challenged their sovereignty in determining policy priorities and maintaining democratic self-governance of their citizens.
Prior to the global financial crisis, few questions were raised about this realignment of state-finance relations. On the contrary, financial markets were deemed efficient and superior allocators of society’s scarce resources as compared to states. The global financial crisis, however, demonstrated that in times of financial distress financial markets owe their survival to a public lender of last resort. This has also shed doubt on existing theories on the relation between law and finance. Law was seen primarily as a means for approximating efficient market outcomes where information asymmetries prevented them. The global financial crisis showed that even countries with "best practice" institutions according to this view – like the US – could experience a major financial crisis. This event was not only not predicted, it cannot be explained within conventional financial theories.
The Center for Global Transformation launched the Global Finance and Law Initiative in January 2011 to rethink the relation between law and finance. To this end, it has gathered an interdisciplinary group of scholars from law, sociology and economics to study the institutional structure and dynamics of foreign exchange, sovereign debt, derivatives and credit markets. A final conference was held on 21-22 September 2012 at Columbia Law School. The Initiative is sponsored by a grant from the Institute for New Economic Thinking.
Research Team
Daniel Awrey is a Lecturer in Law and Finance and Fellow of Linacre College at Oxford University. His research interests include the regulation of financial markets and institutions.
Bruce Carruthers is a Professor of Sociology at Northwestern University who focuses on the institutional foundations of market economies. His research interests include the construction and role of trust in markets, as well as the relationship between law and capitalism.
Anna Gelpern is an Associate Professor of Law at American University, Washington, and a visiting fellow at the Peter G. Peterson Institute for International Economics. Her research explores the legal and policy implications of debt, development, and financial globalization.
Mitu Gulati is a Professor of Law at Duke University. His research focuses on the evolution of contract language, the history of international financial law, and the measurement of judicial behavior.
Alya Guseva is an Associate Professor of Sociology at Boston University who researches the dynamics of market formation. Her recent research focuses on the development of new financial and consumer markets in the emerging economies of Eastern and Central Europe.
Rachel Harvey is a Postdoctoral Research Scholar with the Center on Global Legal Transformation. Her research focuses on the centrality of social and institutional processes in the emergence and development of global financial markets.
Tamara Lothian is a Principal with International Strategies Group, a Boston-based consultancy; a Lecturer at Columbia Law School; and a Research Fellow and Visiting Professor of Law at Fundacao Getulio Vargas, in Rio de Janeiro, Brazil. The central theme of her recent academic work focuses on rethinking core conceptualizations of finance and financial reform and in the United States and the global economy.
Perry Mehrling is a Professor of Economics at Barnard College. His research interests include the economics of money and banking, monetary theory and policy, and the history and foundations of monetary economics.
Akos Rona-Tas is an Associate Professor of Sociology at the University of California, San Diego, and a research associate at INRA, Paris. He is currently working on the problem of rationality and uncertainty in two different contexts: credit markets and the use of science in risk management.