Legal and Political Foundations of Capitalism

In this book Moudud expands upon a simple and compelling thesis: Power struggles over the legal design of social and economic life and the monetary system need to be at the core of economic analysis. Weaving together economic theory, history, close legal analysis, and political theory -- with a stunning range of references, from Marx and Polanyi to Wolfgang Streeck and Kimberle Crenshaw -- Moudud has produced a foundational text for understanding how state and market actors shape and engage with political economy through law. Deeply researched yet accessibly written, this book is full of insights on every page. Moudud explains, among other things, how law and legal institutions constitute the economy; how businesses set prices in the real world; how there is no such thing as “market failure;” how realizing constitutional economic and social rights requires the ability to mobilize public finance; and how racism and colonialism produced one system of financial governance for the global North and another for the global South. Skewering neoclassical pieties and fuzzy thinking, Moudud inspires us to take economics away from the technocrats and to embrace both law and economics as centers of political struggle.

- Angela Harris, Distinguished Professor (Emerita) at University of California Davis School of Law and Co-Editor-in-Chief, Journal of Law and Political Economy.

Jamee K. Moudud brilliantly delivered on a long awaited Herculean task: reconstruct contemporary political economy by firmly grounding it in the Original Institutional Economics (OIE) matrix from which it became severed due to the dominance of Neoclassical Economics. Beyond debunking the myth of laissez-faire and the related view of markets as “natural” constructs located outside the realm of politics and the law, he convincingly shows that “institutions matter” indeed but for reasons other than those put forward by the New Institutional Economics (NIE) and some dissenters within mainstream economics who legitimate “state intervention” on the grounds of putative “market failures”. By centering his theoretical investigation on the “legal-economic nexus”, Moudud allows us to understand how, under capitalism, “economic” realities such as property rights, firm behavior and money are shaped by law and political struggles. His social conflict theory of distribution is illustrated by a myriad of empirical examples past and present across the globe.

A scholarly tour de force, Legal and Political Foundations of Capitalism is a generous intellectual gift to all those who are thirsty for a 21st century Economics conceived as the study of the art and politics of democratic social provisioning.

- Dr. Ndongo Samba Sylla, Head of Research and Policy for Africa/International Development Economics Associates (IDEAs), Senegal.

In his new book, Jamee Moudud takes a deep dive into the legal and political conditions that enable the global political economy to function. Offering an original and persuasive analysis of the nature and interactions between the critical institutions that underpin capitalism - property, money, and the firm –Moudud has produced the first rigorous theorisation of the institutional fabric of contemporary capitalism from a Law and Political Economy (LPE) perspective. His compelling analysis demonstrates that not only do institutions matter, but that the politics that shapes those institutions is decisive in fabricating the economy. Firms, central banks, and governments are inescapably ‘planning institutions’ and must be reconceptualised as such if progressive economic policies are to be advanced. The book further develops innovative new concepts, such as ‘constitutional vulnerability’, that shed new light on longstanding legal conundrums, including the tension between property rights and efforts to implement socio-economic and environmental rights. Moudud’s contribution is essential reading for anyone seeking to understand the role of law in an inescapably political political economy, and it will be a valuable resource for researchers, teachers, and policymakers for years to come.

- Dr. Anna Chadwick, Senior Lecturer in Law, University of Glasgow, Scotland.

Jamee Moudud's "Legal and Political Foundation of Capitalism: the End of Laissez-Faire?" is a tour de force. The book explains to economists why they must take into account legal and political analysis if they are going to grasp the nature and implications of markets; and it explains to legal scholars, sociologists and political scientists why an understanding of economics is essential to understanding power, class and racial dynamics. Students will find here a treasure trove of insights, compelling historical explorations, and numerous aha moments that pull together strands of understanding from multiple areas. This is a terrific, and I dare say, necessary book."

- Gerald Epstein, Professor of Economics and Co-Director, Political Economy Research Institute (PERI) University of Massachusetts Amherst.

Legal and Political Foundations of Capitalism masterfully combines methodological innovation with profound insight. Drawing on an encyclopedic range of references in economics and social theory, Moudud definitively refutes laissez-faire not only as an ideal, but as a possibility. He offers instead a clarifying account of economic life as inevitably grounded in legal institutions and social relations. Erudite and urgent, this book should be part of the canon of law and political economy.

- Frank Pasquale, Professor of Law, Cornell Tech and Cornell Law School.

This is economics as it should be. Jamee Moudud understands that “regulation” does not interfere with “the free market” or “property rights.” Rather, regulation is what makes them possible. The question is not whether to regulate but how. That requires value choices by the political community. Because law is needed to define legitimate property and contract rights, economics was always political economy. Moudud shows what it means to take that insight seriously.

- Joseph William Singer, Bussey Professor of Law, Harvard Law School.

Moudud’s study is an engrossing history of economic and legal ideas and institutions built around a set of methodological and theoretical questions and an argument for a progressive alternative to conservative constitutionalism and market-led law and governance. Drawing on a range of intellectual traditions – such as American legal realism, first wave institutional economics, and contemporary approaches within the emerging literature on law and political economy – the study takes the reader on a journey to reimagine the legal institutional hardwiring across what may be conceived as foundations of capitalism: property/contract rights, monetary sovereignty, industry design and value modelling. More than a critique of market forces guiding social life, Moudud’s work is a unique and engaging intellectual experiment into what is possible at the intersection of expertise in law and economics

- Dr. John Haskell, Professor and Chair in Law, University of Manchester and Junior Faculty at the Harvard Law School Institute for Global Law and Policy.

Read this book to understand Law and Political Economy and why it matters. Moudud takes us on a deep dive into economic institutions, illuminating the firm, property, and money as core systems of contested, dynamic legal and political power. We emerge with tools to resist the authoritarian politics of free market ideology and re-orient the interrelated powers of law, finance, and economic production toward democracy and social justice.

- Martha McCluskey, Professor Emerita State University of New York, University at Buffalo Law School.

Moudud has written a brilliant work exploring the simple but mostly misunderstood idea that there is no such thing as the “economy” that can be separated from “politics.” This mistake, made by scholars ranging from orthodox Marxists to rightwing economists as well as politicians across the political spectrum, results in a failure to grasp how what we refer to as “the economy” actually functions. Moudud has done scholarship an enormous service by exploring this idea across a range of domains, tracing the contours of a new paradigm, Law and Political Economy, that moves us beyond this fundamental misconception.

- Lawrence King, Professor of Economics, University of Massachusetts Amherst.

In the last decade, we have observed the development of a timely and challenging movement in US academia: Law and Political Economy. In virtue of an impressive and nuanced reconstruction of the legal-economic nexus as originally understood by Economic Institutionalists and American Legal Realists, Jamee Moudud’s book represents the first classic of that movement, and it is destined to become for the LPE movement what John Commons’ Legal Foundations of Capitalism had been for Economic Institutionalism.

- Dr. Marco Goldoni, Professor of Philosophy of Law, University of Glasgow, Scotland.

Jamee Moudud has produced a tour de force, a masterful and learned argument for a Political Economy that builds upon the idea that the terms of economic life are constructed by law and politics. Moudud brings the insights of the law and political economy movement from the periphery into the heartland of political economy, calling for a new synthesis between critical traditions in economics and in law that in the process brings politics back in. Moudud challenges the presuppositions of both mainstream and non-mainstream economists, and points the way to a new and more dynamic understanding of the possible relations between society, state and market. The consequence is nothing less than a clarion call to re-envision economics

- Dr. Sanjay Reddy, Chair of Economics at the New School for Social Research.