The Law of Market Society

A Sociology of International Economic Law and Beyond[footnoteRef:1] [1: Final publication:Frerichs, Sabine, 2016: The Law of Market Society: A Sociology of International Law and Beyond. (2012/2013) Finnish Yearbook of International Law, Vol. 23, pp. 173-237https://www.bloomsburyprofessional.com/uk/finnish-yearbook-of-international-law-volume-23-2012-2013-9781782254362/]

Sabine Frerichs

Abstract

International economic law is dominated by ‘international law’ and ‘economic law’ perspectives. Socio-legal perspectives do gain ground at the margins of the field, but a sociology of international economic law, which addresses not only the subject matter but also the disciplinary dynamics of the field, has so far been missing. Drawing on Polanyi’s The Great Transformation and recent work in the economic sociology of law, this article puts the ‘law of market society’ centre stage in developing a genuine sociology of international economic law. This includes a sociology of law and economics, which exposes how the discipline (power structure) of international economic law is articulated with the discipline (knowledge structure) of law and economics.

The law of market society includes all types of law that constitute or regulate the market, be it public or private law, national, international or even transnational law. Taking off from Polanyian ideas, law is conceived as a social institution ‘embedding’ the economy, but also as a ‘fictitious commodity’ which is itself subject to market forces. The tension between law’s commodifying and decommodifying functions, which these concepts illuminate, is reflected in legal discourse. Moreover, it seems to drive ‘law’s great transformation’ from its universalist origins in the nineteenth century to its national closings in the twentieth century, and to its transnational openings in the twenty-first century. In this sense, the law of market society follows itself a ‘double movement’.

Keywords

law, sociology, economics, market society, Polanyi, cognitive embeddedness, fictitious commodities, economic sociology of law

Table of Contents

Introduction: ‘Polanyian’ Agendas in International Economic Law1

1. The Disciplines of International Economic Law: Law, Economics, Sociology3

1.1. Disciplinary Perspectives of International Economic Law5

1.2. The Socio-Legal Approach to International Economic Law11

1.3. Outlining a Critical Sociology of International Economic Law17

2. The Law of Market Society: Re-reading Polanyi’s The Great Transformation23

2.1. Polanyi’s Historical Approach to Market Society24

2.2. Economic Law in the Shadow of Speenhamland27

2.3. Instituting the International Political Economy31

2.4. From Rule of Law to Fictitious Commodities33

2.5. Between Commodification and Decommodification37

3. Law’s Great Transformation: A Short History of the Law of Market Society41

3.1. Nineteenth Century: Universalist Origins43

3.2. Twentieth Century: National Closings47

3.3. Twenty-First Century: Transnational Openings51

3.4. The Example of European Regulatory Private Law57

Conclusion: Transformation of the Law, Reformation of the Market?60

Introduction: ‘Polanyian’ Agendas in International Economic Law

The aim of this article is to outline a sociology of international economic law, which draws on Karl Polanyi’s historically oriented economic sociology as well as on recent developments in the ‘economic sociology of law’.

Taking account of the core institutions of the international political economy, Polanyi naturally entered the field of international economic law. Moreover, he was not only interested in the normative and factual elements of the international economic order, but also in its cognitive underpinnings, namely, its embeddedness in the ‘philosophy of economic liberalism’, or what became the mainstream of the economic discipline. In fact, liberal economics had a great influence on the development of international economic law, both as a subject matter and a scholarly discipline. The self-regulating market, which Polanyi considers a chimera of economic liberalism, has been ‘instituted’ through fictitious commodities, which would ideally circulate on a global scale. A Polanyian sociology of international economic law would therefore have to start from the regulation of land, labour, and money in the context of the international political economy (including its national and transnational underpinnings).

Polanyian research agendas in international economic law are indeed on the rise. A pioneer in this respect is Christian Joerges, for whom Polanyi’s study of the ‘rise and fall’ of the market economy in its national and international context is not only a source of inspiration, but a necessary complement to thinking about law in the ‘postnational constellation’.[footnoteRef:2] Important signposts in taking Polanyi to the law are his co-edited volumes ‘Economy as a polity: The political constitution of contemporary capitalism’[footnoteRef:3] and ‘Karl Polanyi, globalisation and the potential of law in transnational markets’.[footnoteRef:4] The latter volume exemplifies how international economic law can be ‘reconstructed’ from a Polanyian point of view: while the theoretical contributions discuss the applicability of Polanyi’s analytical framework to the law of transnational markets, the empirical contributions focus on the regulation of different fictitious commodities on the European or global scale. [2: Jürgen Habermas, The Postnational Constellation: Political Essays (MIT Press, 2001).] [3: Christian Joerges, Bo Stråth and Peter Wagner (eds.), Economy as a Polity: The Political Constitution of Contemporary Capitalism (UCL Press, 2005).] [4: Christian Joerges and Josef Falke, Josef (eds.), Karl Polanyi, Globalisation and the Potential of Law in Transnational Markets (Hart Publishing: Oxford, 2011).]

Similar ‘Polanyi-inspired’[footnoteRef:5] agendas in international economic law include Amanda Perry-Kessaris’s edited volume ‘Socio-legal approaches to international economic law: Text, context, subtext’[footnoteRef:6] and Bettina Lange and Dania Thomas’s edited volume ‘From economy to society? Perspectives on transnational risk regulation’.[footnoteRef:7] A systematic account of the law of the (globalised) market society has, however, as yet been missing. In order to fill this gap, this article lays ground for a sociology of international economic law, which draws on Polanyi’s classical work, namely The Great Transformation,[footnoteRef:8] but which also connects it with contemporary research interests in the ‘economic sociology of law’. As a sociological sub- or, rather, meta-discipline, the latter aims to reconnect thinking about law, economy and society beyond the limits of the established disciplines of law, economics, and sociology. More specifically, the economic sociology of law can be understood as a complement to, or corrective of, law and economics, which replaces the latter’s ‘disembedded’ view with a more ‘embedded’ view of law and economy in society. While a sociology of international economic law à la Polanyi would take the functional definition of international economic law seriously, which economists (or lawyer-economists) have come to use, it would also expose its disciplinary effects. In the ‘economic law’ perspective, it is not so much the origin of the norms than the object of regulation, which matters. The governmental premise as well as promise of this perspective is less the coherence of international law than the integration of global markets. A Polanyian sociology of international economic law would go beyond this functional imperative and highlight how the global economy is actually embedded in (law and) economics and, hence, shaped by highly selective economic theories. Not surprisingly then, international economic law increasingly lends itself to ‘economic law’ descriptions. [5: Sally Randles, ‘Issues for a Neo-Polanyian Research Agenda in Economic Sociology’, 13 International Review of Sociology (2003) 409-434, at 409; emphasis omitted.] [6: Amanda Perry-Kessaris (ed.), Socio-Legal Approaches to International Economic Law: Text, Context, Subtext (Routledge: London, 2012).] [7: Bettina Lange and Dania Thomas (eds.), ‘Special Issue: From Economy to Society? Perspectives on Transnational Risk Regulation’, 62 Studies in Law, Politics and Society (2013) 1-22.] [8: Karl Polanyi, The Great Transformation (Beacon Press: Boston, 1957 [1944]).]

The argument is structured as follows: Section 1 introduces the disciplines of international economic law, focusing on the ‘international law’ approach, the ‘economic law’ approach, and the ‘socio-legal’ approach, which draw inspirations from law, economics, and sociology, respectively. Compared to the first two approaches, which share the disciplinary sensibilities of law, on the one hand, and economics, on the other, the third approach can be considered more interdisciplinary and pluralistic in character. Its critical interest in how international economic law is actually ‘constituted’ in normative as well as cognitive terms takes us to an understanding of the sociology of international economic law as a meta-discipline which reflects upon the very disciplines that dominate the field.

Section 2 draws on a fresh reading of The Great Transformation and reconstructs the role of law therein. After introducing Polanyi’s historical approach and considering the legal and economic developments which the market society was premised upon, the law of market society will be systematised in two complementary ways: as the ‘fifth’ institution, or the missing link, between the key institutions of the international political economy (gold standard, balance-of-power system, liberal state, and self-regulating market), and as the ‘fourth’ fictitious commodity, which is – other than land (nature) and labour (humans) – lacking a clear substance, but which mediates – similarly as money – between economic and political functions and may itself take embedded or commodified forms.

Section 3 draws on contemporary legal discourse in order to reconstruct the history of the law of market society until today. The major lines of development are framed in Polanyi’s terms of a ‘movement’ and ‘countermovement’, which arguably matter as much on the academic level as on the political level. The development of the law of market society is retraced from its ‘universalist’ origins in the nineteenth century to its national ‘closings’ in the twentieth century, and to its transnational ‘openings’ in the twenty-first century. Tensions are highlighted between the divergent rationalities of liberalism and nationalism, formalism and instrumentalism, privatisation and politicisation, and overall between ‘the economic’ and ‘the social’, which are manifest in the law and rationalised in legal discourse.

1. The Disciplines of International Economic Law: Law, Economics, Sociology

This article is concerned with the question what the sociology of economic law is – or rather, what it could or should look like in a Polanyian spirit. At first consideration, the sociology of international law may be understood as one of the disciplines, or sub-disciplines, of international economic law, next to law (and political science) on the one hand and economics on the other. As such, it puts the subject matter of international economic law in a sociological perspective. However, as will be argued below, sociology can also be understood as a meta-discipline of international economic law, which goes beyond – and behind – both law and economics. If understood as a meta-discipline, the subject matter of the sociology of international economic law is the discipline of international economic law itself. Far from being beyond sociological interest, the definition and delimitation of international economic law both as a subject matter and as a field of study is, therefore, the first thing to analyse. Hence: ‘What is international economic law?’[footnoteRef:9] [9: Steve Charnovitz, ‘What Is International Economic Law?’, 14 Journal of International Economic Law (2011) 3-22.]

If one starts from this relatively unpretentious question, one is immediately faced with ambiguities. Not being able to find a concordant definition, Charnovitz breaks the subject matter of international economic law down into its components: accordingly, ‘international’ refers to all cross-border matters; ‘economic’ to ‘the economy itself (and perhaps also to economic analysis)’; and ‘law’ to hard law as well as soft law.[footnoteRef:10] What comes out is ‘a very broad body of law’ – if not ‘too broad’.[footnoteRef:11] The potential scope of international economic law is illustrated in the following: assuming that ‘[i]n its broadest sense, international economic law includes all national and international legal norms that affect transnational movements of goods, services, capital and labor’,[footnoteRef:12] Paul arrives at a lengthy list of pertinent fields and subjects, including [10: Ibid., at 4-5.] [11: Ibid., at 6.] [12: Joel R. Paul, ‘The New Movements in International Economic Law’, 10 American University Journal of International Law and Policy (1995) 607-617, at 609, footnote 9.]

international business transactions, private international law, international trade law, immigration law, European Communities law, comparative law, transnational litigation, international arbitration procedure, and aspects of banking, competition, employment, environmental, intellectual property, securities, tax, and telecommunications laws that regulate transnational transactions.[footnoteRef:13] [13: Ibid. ]

As an academic discipline, international economic law is ‘a relative newcomer, bursting out as an autonomous field of law only in the last decades’.[footnoteRef:14] Hence, one could suppose that its boundary lines are not fully established yet. While it is often considered part of public international law, international economic law is, in the eyes of leading scholars in the field, actually much more than that. Petersmann feels reminded of the ‘story of the blind men touching different parts of an elephant and describing the same animal in contradictory ways’: likewise, ‘private and public, national and international lawyers continue to perceive [international economic law] from competing perspectives’, without ever getting a grip on the whole.[footnoteRef:15] As will be shown in the following, international economic law may be ambiguous, but it is not amorphous. It is not ‘undisciplined’, but simultaneously confined to different disciplines. Most significant for the present discussion is the systematic difference between international law and economic law perspectives, which draw on law and politics and law and economics, respectively. [14: David Kennedy, ‘The Disciplines of International Law and Policy’, 12 Leiden Journal of International Law (1999) 9-133, at 38.] [15: Ernst-Ulrich Petersmann, ‘Methodological Pluralism and Its Critics in International Economic Law Research’, 15 Journal of International Economic Law (2012) 921-970, at 935.]

1.1. Disciplinary Perspectives of International Economic Law

To explore the difference between international law and economic law perspectives, we can start with David Kennedy’s comparison of the ‘disciplines’ of public international law and international economic law. A short synopsis of the diverging ‘world views of participants in the field’, here in the US context, is given in the following:

Public international lawyers look at the world and see states. They worry about how law will be possible among sovereigns; they remember wars and understand their history as progress from sovereign autonomy to international community, from formal rules to pragmatic principles and institutions. They look to political science for inspiration, and they want improved global governance.

International economic lawyers look out and see buyers and sellers hoping to trade. They worry about the myriad risks of transacting internationally, particularly those caused by governments; they remember the Great Depression and understand their history as progress toward ever lower tariff barriers and an ever more flexible legal/institutional structure for trade bargaining. They look to economics for disciplinary inspiration and they want an ever more reliable free trade regime.[footnoteRef:16] [16: David Kennedy, ‘The Twentieth-Century Discipline of International Law in the United States’, in Austin Sarat, Bryant Garth and Robert A Kagan (eds.), Looking Back at Law’s Century (Cornell University Press, 2002) 386-433, at 388; original emphasis.]

In terms of the distinctive ‘governmental sensibilities’ of the two disciplines,[footnoteRef:17] public international law is more about ‘regime construction’ whereas international economic law follows first and foremost the ‘spirit of trade liberalization’.[footnoteRef:18] One is about law and politics in international relations, the other about law and economics in the global market. [17: Kennedy, ‘Disciplines of International Law’, supra note 13, at 16.] [18: Ibid., at 46.]

Ortino and Ortino approach the discipline of international economic law from a slightly different point of view, which helps to clarify its hybrid nature between law on the one hand, and economics on the other. For that purpose, they distinguish between international law and economic law, both of which include a ‘branch’ called international economic law.[footnoteRef:19] [19: Federico Ortino and Matteo Ortino, ‘Law of the Global Economy: In Need of a New Methodological Approach?’, in Colin B. Picker, Isabella D. Bunn and Douglas W. Arner (eds.), International Economic Law: The State and Future of the Discipline (Hart Publishing: Oxford, 2008) 89-106.]

As a (sub-)discipline of international law, international economic law deals with the ‘international law of the economy’.[footnoteRef:20] In other words, it looks only at those sections of the economy, which are ‘governed by international law’,[footnoteRef:21] putting the legal origin of the respective rules first. As a (sub-)discipline of economic law, international economic law is ‘not defined by its legal sources but rather by its object: the global economic system’.[footnoteRef:22] It is the ‘law of the global economy’,[footnoteRef:23] which encompasses not only international law but also ‘national norms regarding transnational economic relations, as well as rules of private and public law concerning the ordering of cross-border economic relations’.[footnoteRef:24] Moreover, besides ‘formal laws’, it also includes ‘informal laws, such as non-legally binding customs and practices influencing economic behaviours’.[footnoteRef:25] Most importantly, however, economic law builds on the ‘laws’ of economics, which closely links it to the economic discipline. [20: Ibid., at 92.] [21: Ibid., at 92.] [22: Ibid., at 94.] [23: Ibid., at 94.] [24: Ibid., at 90.] [25: Ibid., at 93.]

In terms of its disciplinary inspiration we can thus distinguish between international economic law as a legal discipline, which preserves the preoccupations of lawyers with legal sources (i.e. the origin of norms), and an economic discipline, which serves the interests of economists in efficient transactions (i.e. the object of norms). In line with the economic law approach, Ortino and Ortino define international economic law as ‘the study of the legal rules regulating economic actors and activities that cross or have impacts across the boundaries of a single legal and economic system, and thus operate in or impact the global economic system’.[footnoteRef:26] Thus understood, the economic law approach ‘cuts across the boundaries between legal systems (e.g. national, regional, international and trans-national) and across those between traditional fields of law (e.g. constitutional, commercial and procedural law)’.[footnoteRef:27] [26: Ibid., at 89.] [27: Ibid., original emphasis.]

Similarly, Petersmann distinguishes between a ‘prevailing conception’ of international economic law ‘as “public international law regulating the economy”’, and a ‘competing conception’ of international economic law ‘as “multilevel economic regulation”’.[footnoteRef:28] As to the prevailing (international law) perspective, he speaks of ‘[s]tate-centered “top-down conceptions”’,[footnoteRef:29] which are also marked as ‘Westphalian conceptions’ of international economic law.[footnoteRef:30] As to the competing (economic law) view, this is understood to form part of ‘citizen-oriented “bottom-up conceptions”’ of international economic law’.[footnoteRef:31] ‘Multilevel economic regulation’ can be considered an economic law perspective in that it ‘focuses on the “functional unity” of private and public, national and international regulation of the economy’[footnoteRef:32] and conceives international economic law as ‘interdependent “social practices”, which regulate economic activities and transactions such as the “private ordering” of the international division of labor among billions of producers, investors, traders and consumers in 192 UN member states’.[footnoteRef:33] This ‘international’ division of labour is also referred to as ‘transnational division of labour’[footnoteRef:34], bringing cross-border transactions between individuals into focus. [28: Ernst-Ulrich Petersmann, ‘The Future of International Economic Law: A Research Agenda’, in Christian Joerges and Ernst-Ulrich Petersmann (eds.), Constitutionalism, Multilevel Trade Governance and International Economic Law (Hart Publishing: Oxford, 2011) 533-575, at 571.] [29: Ibid., at 544.] [30: Petersmann, ‘Methodological Pluralism’, supra note 14, at 946.] [31: Petersmann, ‘Future of International Economic Law’, supra note 27, at 544.] [32: Ibid., at 536.] [33: Ibid., at 537.] [34: Ibid., at 573; original emphasis.]

In his work, Petersmann promotes a third, ‘cosmopolitan conception’ of international economic law, also dubbed ‘“multilevel constitutionalism”’, which re-interprets international economic regulation in the framework of generally accepted human rights.[footnoteRef:35] In doing so, he builds on the economic law perspective but also goes beyond. Bringing, at least prospectively, the ‘constitutional rights’ of global citizens to the fore,[footnoteRef:36] Petersmann enriches the economic law perspective of international economic law with normative premises of a different legal pedigree: international human rights. More generally, his aim is to complement the conventional understanding of international (economic) law as ‘international law among states’ with an advanced understanding of a ‘cosmopolitan law among individuals’ and an ‘international law among peoples’.[footnoteRef:37] [35: Ibid., at 572.] [36: Petersmann, ‘Methodological Pluralism’, supra note 14, at 927.] [37: Petersmann, ‘Future of International Economic Law’, supra note 27, at 574.]

With regard to international economic law, we can thus distinguish between an international law perspective which is related to political science, namely the subfield of international politics, but which also takes a legal-doctrinal approach, and an economic law perspective which is inspired by the discipline of economics and, first and foremost, interested in the regulatory framework of the economy (both as it is and as it ought to be), but which may also adopt other, distinctly legal perspectives, as is evident in Petersmann’s approach.

Now, what would a sociological approach to international economic law look like? Hirsch notes a general ‘scarcity of sociological analysis’ in the field.[footnoteRef:38] More specifically, he finds that the literature on regional trade agreements and their relations to the World Trade Organization, which is the focus of his research, is ‘dominated by abundant economic and political analyses’ while the ‘relevance of socio-cultural factors is under-emphasized’.[footnoteRef:39] What Hirsch then develops is, in fact, a sociology of international economic law in that he extensively draws on sociological theories. Moreover, it is also inspired by the sociology of law as a discipline that goes beyond legal norms in the strict sense (hard law) and also includes social norms (soft law), or, as Hirsch puts it, that takes the ‘normative role of non-formal norms in the international system’ seriously.[footnoteRef:40] However, in his version, the sociology of international economic law is still stuck with the international law side of the field while it neglects its economic law side. [38: Moshe Hirsch, ‘The Sociology of International Economic Law: Sociological Analysis of the Regulation of Regional Agreements in the World Trading System’, 19 European Journal of International Law (2008) 277-299, at 277.] [39: Ibid., at 287.] [40: Moshe Hirsch, ‘The Sociology of International Law: Invitation to Study International Rules in Their Social Context’, 55 University of Toronto Law Journal (2005) 891-939, at 894.]

Having first elaborated on the sociology of international law, Hirsch’s starting point is indeed in international law, and not in economic law.[footnoteRef:41] Likewise, what is classically known as the sociology of international law seems firmly rooted in international law (and politics) and to reflect its state-centeredness, such as in the work of Max Huber.[footnoteRef:42] Early notions of a ‘world society’ notwithstanding,[footnoteRef:43] this type of sociology is preoccupied with the ‘relationships between the state (the basic unit in the current international system) and various forms of international governance (prominently, international institutions)’.[footnoteRef:44] In Hirsch’s work, the position of the state in the international system is equated with the position of the individual in society. This allows him to directly apply sociological theories about the relations between individual and society to the relations between state and international system. [41: Ibid.] [42: Max Huber, ‘Beiträge zur Kenntnis der soziologischen Grundlagen des Völkerrechts und der Staatengesellschaft’, 4 Jahrbuch des öffentlichen Rechts der Gegenwart (1910) 56-134.] [43: Hirsch, ‘Sociology of International Law’, supra note 39, at 935.] [44: Ibid., at 931.]

The fact that different sociological theories – here systematised alongside the ‘structure-agency divide’ and the ‘consensus-conflict divide’ –[footnoteRef:45] ‘lead to different conceptions regarding the nature and goals of [international economic law]’,[footnoteRef:46] yields relevant insights for Hirsch’s own research but also accounts for its limitations. This can be illustrated with his analysis of international economic law, which is concerned with ‘the extensive powers of some international economic institutions vis-à-vis sovereign states (notably with regard to the IMF and the WTO)’.[footnoteRef:47] Drawing on micro-sociological theories, which emphasise individual agency, social interaction, and role- and rule-making ‘from below’, Hirsch makes a case for state autonomy in pluralistic settings. More specifically, he defends ‘socio-economic pluralism’ against ‘socio-economic integration’,[footnoteRef:48] conceding that this may decrease ‘legal coherence and certainty’ and increase ‘legal inconsistency and instability’.[footnoteRef:49] [45: Ibid., at 896.] [46: Hirsch, ‘Sociology of International Economic Law’, supra note 37, at 290.] [47: Hirsch, ‘Sociology of International Law’, supra note 39, at 937; reference omitted.] [48: Hirsch, ‘Sociology of International Economic Law’, supra note 37, at 297.] [49: Ibid., at 299.]

But even though Hirsch’s view of states is anything but reductionist (as he does not rely on their ‘realist’ or ‘rational’ interests only but also points to their ‘socio-cultural’ identities), and even though he even mentions ‘international economic relations among states and individuals’,[footnoteRef:50] he falls short of considering the economic law perspective on international economic law in any systematic way. Moreover, he also misses the opportunity to explore the perspective of economic sociology, which he briefly mentions,[footnoteRef:51] to any sufficient extent: this could have taken him beyond Granovetter,[footnoteRef:52] a representative of new economic sociology, who has little to do with international economic law, to Polanyi, who was actually much concerned with it. In this sense, Polanyi’s The Great Transformation can not only be read as a classic of economic sociology but also as an outline of the sociology of international economic law.[footnoteRef:53] [50: Ibid., at 280; emphasis added.] [51: Ibid.] [52: Mark Granovetter, ‘Economic Action and Social Structure: The Problem of Embeddedness’, 91 American Journal of Sociology (1985) 481-510.] [53: Polanyi, Great Transformation, supra note 7. ]

In his sociology of international economic law, Hirsch technically equates the state with homo sociologicus (preferring its micro-sociological variant to its more prominent macro-sociological variant). In this respect, there is a striking parallel to the more established discipline of ‘public international law and economics’,[footnoteRef:54] or the ‘economic analysis of international law’.[footnoteRef:55] If this is the international law version of international law and economics, its economic law version could, perhaps, better be termed the law and economics of international economic law: this would emphasise the functional unity of economic law across borders and preserve the reference to individuals, and not states, as its primary actors. Public international law and economics actually seems to do the opposite: ‘In search of international homo economicus’[footnoteRef:56] it falls into the same methodological trap as its sociological cousin: ‘the focus that was before on the individual turns now upon the state’.[footnoteRef:57] By equating states with individuals, it not only loses sight of the latter but also of the transnational network of economic and legal relations that underpins international economic law as the law of the globalised market society. [54: Anne Van Aaken, Christoph Engel and Tom Ginsburg, ‘Public International Law and Economics: Symposium Introduction’, University of Illinois Law Review (2008) 1-4.] [55: Andreas L. Paulus, ‘Potential and Limits of the Economic Analysis of International Law: A View from Public International Law’, 165 Journal of Institutional and Theoretical Economics (2009) 170-184.] [56: Rene Urueña, No Citizens Here: Global Subjects and Participation in International Law (Centre of Excellence in Global Governance Research: University of Helsinki, 2008) at 50.] [57: Ibid., at 61.]

The only difference between the two accounts is that, this time, the state is not identified as homo sociologicus but as homo economicus. In both cases, we can speak of a move from methodological individualism to methodological nationalism, or rather, to ‘methodological statism’ (granting that the sociological account is less individualist and more interactionist than the economic account). At the same time, the economic law variant of international economic law seems predestined to bring individuals back in. After all, a distinction between ‘domestic and international’ law and economics[footnoteRef:58] would be at odds with the proclaimed functional unity of its subject matter, not to mention assertions of ‘disciplinary unity’ within mainstream economics. In the end, the question of the right ‘level of analysis: states or individuals’[footnoteRef:59] for international economic law would best be answered with: both. Even in its international law variant, private actors can no longer be ignored, with international investment law serving as a prime example of new forms of ‘subjectivation’[footnoteRef:60] that put states and firms side-by-side as ‘legitimate’ legal subjects. [58: Ibid., at 57.] [59: Paulus, ‘Potential and Limits’, supra note 54, at 175.] [60: Urueña, No Citizens, supra note 55, at 69.]

So far we have focused on the international law approach and the economic law approach to international economic law, which draw on the disciplines of (international) law and politics and (international) law and economics, respectively. In addition, we have considered a sociological approach to international economic law, which is more interested in the sociology of international law than in the sociology of economic law. However, in order to account for the law of the globalised market society, a focus on public international law seems not sufficient. Instead, emphasis has to be put on international and transnational, public and private economic regulation alike. Moreover, if the sociology of international economic law is not only conceived as a sub-discipline which studies the normative framework of the market society, but also as a meta-discipline which studies the market society as an artefact of law and economics, the ‘disciplines’ of international economic law become a subject matter in their own right. Before elaborating on this ambivalent position of sociology ‘within’ and ‘above’ the field, we will explore what is referred to as the socio-legal approach to international economic law.

1.2. The Socio-Legal Approach to International Economic Law

Perry-Kessaris takes the multiplicity of international economic law as a starting point to explore ‘what [...] it mean[s] to take a socio-legal approach’.[footnoteRef:61] Accordingly, ‘[i]nternational economic law is not a discipline. It is a field of study. So it falls to each of us individually to decide how to approach it’.[footnoteRef:62] She suggests mapping the differences between socio-legal perspectives and other approaches to international economic law (including the international law and the economic law approach) in analytical, empirical, and normative terms – which would yield much variety also within socio-legal scholarship.[footnoteRef:63] [61: Amanda Perry-Kessaris, ‘What Does It Mean to Take a Socio-legal Approach to International Economic Law?’, in Amanda Perry-Kessaris (ed.), Socio-Legal Approaches to International Economic Law: Text, Context, Subtext (Routledge: London, 2012) 3-18.] [62: Ibid., at 3.] [63: Victoria Nourse and Gregory Shaffer, ‘Varieties of New Legal Realism: Can a New World Order Prompt a New Legal Theory?’, 95 Cornell Law Review (2009) 61-137.]

The ‘analytical’ components of an approach are the concepts and relationships it deploys to organise the field of study. The ‘empirical’ components of an approach are the facts and methods that may be used to confirm the real-life existence, or absence, of concepts and relationships. The normative components of an approach are the values and interests that it foregrounds or privileges.[footnoteRef:64] [64: Perry-Kessaris, ‘Socio-legal Approach’, supra note 60, at 4; original emphasis.]

Perry-Kessaris’s baseline definition of ‘the’ socio-legal approach is ‘that it is interdisciplinary and sociologically attuned’,[footnoteRef:65] which does not say much in the positive but implies at least two things in the negative. The first attribute – interdisciplinary – distinguishes it from doctrinal legal work, which is conceived as an ‘in-discipline approach’ that builds analytically, empirically, and normatively on the legal discipline.[footnoteRef:66] The second attribute – sociologically attuned – distinguishes the socio-legal approach, first of all, from the economic analysis of law, which takes economics to the law. Paradoxically, law and economics likewise comes close to an ‘in-discipline approach’ in that it imports its ‘normative, analytical and empirical frame’ from the economic discipline, and only applies it to a new subject matter: law.[footnoteRef:67] In contrast to the relatively ‘unitary’ character of legal and economic approaches to international economic law, the socio-legal approach is not only more open to different ‘disciplinary sensibilities’[footnoteRef:68] but also more pluralistic as to how to ‘balance’ theory, reality, and morality.[footnoteRef:69] [65: Ibid.] [66: Ibid.] [67: Ibid., at 14.] [68: Kennedy, ‘Disciplines of International Law’, supra note 13, at 14.] [69: Perry-Kessaris, ‘Socio-legal Approach’, supra note 60, at 10.]

Hence, in its interdisciplinarity and plurality, socio-legal research in international economic law clearly differs from the much more coherent international law and economic law approaches prevailing in the field. To explore the wealth of scholarship outside these disciplines, one could start from the four constitutive elements which socio-legal research in international economic law generally combines: the ‘legal’ element, the ‘social’ element, the ‘economic’ element, and the ‘global’ element (here going beyond ‘international’).[footnoteRef:70] While the socio-legal approach may, at first, appear to be under-theorised and over-specialised, it actually stands in the tradition of much more encompassing (‘holistic’) projects in the history of socio-legal thinking, which aim to bring law, economy, and society together, and not to isolate them in different scholarly disciplines.[footnoteRef:71] [70: Sabine Frerichs, ‘Law, Economy and Society in the Global Age: A Study Guide’, in Amanda Perry-Kessaris (ed.), Socio-Legal Approaches to International Economic Law: Text, Context, Subtext (Routledge: London, 2012) 36-49.] [71: Sabine Frerichs, ‘Studying Law, Economy, and Society: A Short History of Socio-legal Thinking’, 19 Helsinki Legal Studies Research Paper (2009) 1-80.]

In the present context, it may suffice to point to actual developments in international economic law, which suggest rethinking the classic legal-doctrinal and legal-political approach. According to Tan, regulation in this field has witnessed a ‘movement away from hard coercive power as a mechanism of enforcing compliance towards a subtle, more reproductive form of persuasive power’, which can best be depicted as a ‘transition from hierarchical, inter-state law to plural, transnational law’.[footnoteRef:72] Arguably, the ‘discernible shift in the disciplinary apparatus of international economic law’,[footnoteRef:73] that is, in how ‘power is institutionalised’,[footnoteRef:74] also affects the preferred disciplinary (or interdisciplinary) approaches to international economic law: implying a shift from law to economics or to more ‘sociologically attuned’ approaches. [72: Celine Tan, ‘Navigating New Landscapes: Socio-legal Mapping of Plurality and Power in International Economic Law’, in Amanda Perry-Kessaris (ed.), Socio-Legal Approaches to International Economic Law: Text, Context, Subtext (Routledge: London, 2012) 19-35, at 33.] [73: Ibid., at 32.] [74: Ibid., at 33.]

A similar argument is made by Petersmann, who sees a ‘need for interdisciplinary research challenging state-centred methodologies underlying Westphalian conceptions’ of international (economic) law.[footnoteRef:75] To cure this deficit, he refers to the ‘economic analysis of law’ as well as to ‘[p]olitical and legal philosophy’.[footnoteRef:76] In a different context – thinking about regulatory failure – he also comes to speak of socio-legal perspectives: [75: Petersmann, ‘Methodological Pluralism’, supra note 14, at 936.] [76: Ibid., at 936.]

The dangerous gap between the “law in the books” and the “law in action” (e.g. in terms of the incapacity of UN and WTO institutions to protect international public goods and cosmopolitan rights) not only prompts “new legal realist scholars” to call for multidisciplinary and comparative analyses of the “new legal pluralism” of multilevel governance regimes and of the increasing interactions between national and international rules and institutions.[footnoteRef:77] [77: Ibid., at 947.]

The two movements, or developments, mentioned in this quote – new legal realism and new legal pluralism – deserve further attention as they illustrate the benefits of taking a socio-legal approach to international economic law. While new legal realism has to do with the ‘social’ element, new legal pluralism has to do with the ‘global’ element of socio-legal research in international economic law. We will address both aspects in turn.

‘The social’ became a central reference of twentieth century legal thinking, with law being increasingly understood as a part of social engineering, that is, as a regulatory means to further social progress.[footnoteRef:78] Legal realism was a central driving force in this respect. By furthering social scientific approaches to the law, realist scholarship brings the social context of the law back into a discipline which has come to be dominated by formalist and positivist legal reasoning. Both the law and society (L&S) movement and the law and economics (L&E) movement, which developed in the second half of the twentieth century, inherited their ‘“scientific outlook”’ and their ‘consequentialist’ (means-end oriented) concept of law from legal realism,[footnoteRef:79] but they have taken different turns as to how they approach the social context and the social function of law. The L&S movement can be understood as a truly interdisciplinary movement, which even includes ‘lesser bits of economics’.[footnoteRef:80] Nevertheless, sociological theories and methods do play a decisive role in guiding socio-legal research.[footnoteRef:81] In contrast, the L&E movement is strongly linked to mainstream economics and, hence, much more ‘disciplinary’ in orientation. Its standard method is the rational choice approach. [78: Duncan Kennedy, ‘Three Globalizations of Law and Legal Thought: 1850-2000’, in David M. Trubek and Alvaro Santos (eds), The New Law and Economic Development (Cambridge University Press, 2006) 19-73, at 22.] [79: Marc Galanter and Mark Alan Edwards, ‘Introduction: The Path of the Law Ands’, 72 Wisconsin Law Review (1997) 375-387, at 377.] [80: Ibid., at 379.] [81: John Hagan, ‘Review: The Law & Society Movement Comes of Age’, 17 Contemporary Sociology (1988) 648-650, at 648.]

What distinguishes L&S scholars from L&E scholars, then, is that L&S scholars are interested in the interrelations between ‘the economic’ and ‘the social’, and how the one came to dominate the other, whereas L&E scholars approach ‘the social’ usually through the lens of ‘the economic’ only. Against this backdrop, a division of labour between L&S and L&E scholarship, which leaves the ‘the social’ to the former and ‘the economic’ to the latter, would result in a loss of analytical and critical capacities. Instead, L&S scholars can and should include the economy in their research and approach it with their own distinctive methodologies and theoretical frameworks.

This point was made by Edelman in her 2004 Presidential Address to the American L&S Association, in which she discusses the relationship between L&S and L&E scholarship and the ‘contested terrain’ between the two.[footnoteRef:82] As to the L&E movement, she argues that this has been ‘extremely influential in the policy realm, so much so that concepts of law and justice are increasingly defined in economic terms and understood through the lens of market efficiency’.[footnoteRef:83] In her view, the political (and cultural) impact of the L&E movement calls for critical commentary on the part of L&S scholars, whose perspectives are understood to have ‘important, if largely unexplored, implications for the nexus of market rationality and justice’, that is, at the interface of law and economy.[footnoteRef:84] Edelman highlights, in this respect, the concept of economic rationality, which is an unproblematic assumption in L&E (at least in its mainstream) but regarded as a highly contingent social phenomenon in L&S scholarship. Accordingly, ‘L&S scholars would call attention to the social, political, and legal construction of rational economic behaviour’, and not simply take it as given.[footnoteRef:85] [82: Lauren B. Edelman, ‘Rivers of Law and Contested Terrain: A Law and Society Approach to Economic Rationality’, 38 Law and Society Review (2004) 181-197.] [83: Ibid., at 182; original emphasis.] [84: Ibid., at 182.] [85: Ibid., at 184; emphasis omitted.]

With such enquiries we are entering the realm of ‘new’ legal realism: a rather heterogeneous current of contemporary socio-legal research, which is presented as a critical response to law and economics.[footnoteRef:86] It namely takes issue with the neoclassical mainstream of law and economics, which is no longer considered a legitimate representative of legal realism, even though this is what it once emerged from.[footnoteRef:87] Instead, law and economics is charged with furthering a new legal formalism, which has replaced legal principles with economic assumptions but is, otherwise, as axiomatic as the old legal formalism: the ‘self-enclosed’ type of legal scholarship which ‘old’ legal realism sought to overcome. By ‘over-emphasising theory to the exclusion of empirics’, law and economics has indeed developed into a type of ‘armchair social science’.[footnoteRef:88] In contrast, new legal realism – including the ‘“new legal realist” orientation in international economic law’ –[footnoteRef:89] is not only identified by its empirical orientation but also qualified by a normative interest in countering [86: Nourse and Shaffer, ‘New Legal Realism’, supra note 62.] [87: Frerichs, ‘Studying Law, Economy, and Society’, supra note 70.] [88: Joel P. Trachtman, ‘International Economic Law Research: A Taxonomy’, in Colin B. Picker, Isabella D. Bunn and Douglas W. Arner (eds.), International Economic Law: The State and Future of the Discipline (Hart Publishing: Oxford, 2008) 43-51, at 51.] [89: Gregory Shaffer, ‘A New Legal Realism: Method in International Economic Law Scholarship’, in Colin B. Picker, Isabella D. Bunn and Douglas W. Arner (eds.), International Economic Law: The State and Future of the Discipline (Hart Publishing: Oxford, 2008) 29-42, at 29; Paul, ‘New Movements’, supra note 11.]

the re-triumphalism of market laissez-faire [...], a cynicism toward an unresponsive state, and the hollowing out of traditional conceptions of law in light of new governance challenges from below and the challenges of new global and transnational institutions from above – in sum, the new world order before us.[footnoteRef:90] [90: Nourse and Shaffer, ‘New Legal Realism’, supra note 62 at 128-129.]

This description of the new (economic) world order resonates with Petersmann’s above reference to the ‘“new legal pluralism” of multilevel governance regimes’.[footnoteRef:91] This takes us to the ‘global’ element of the socio-legal approach. [91: Petersmann, ‘Methodological Pluralism’, supra note 14, at 947.]

It has become trivial to state that we are living in a ‘global age’,[footnoteRef:92] and notions of ‘globalisation’ have recently been used in such an inflationary way that they may actually work to conceal continuities in transnational interdependencies and exchange, which go well beyond the last few decades. However, references to ‘the global’ also help to overcome the methodological nationalism which has long been prevalent in the social sciences: a preoccupation with the nation and the nation state in all ‘sciences of the state’, including jurisprudence and political science as much as economics and sociology. To emphasise the global element in socio-legal research means to take the dynamics of the modernisation process seriously, which does not end at national borders but brings about a highly interdependent ‘world society’.[footnoteRef:93] Even criticisms of this trend, and related countermovements, are, in many ways, globalised. While it can be questioned if economic, legal, and social practices are really global today (the bulk of it is not), the effects of globalisation – or of a global frame of reference – can be perceived (almost) everywhere, and long before we are all ‘going global’. [92: Martin Albrow, The Global Age: State and Society Beyond Modernity (Polity Press: Cambridge, 1996).] [93: Georg Krücken and Gili S. Drori (eds.), World Society: The Writings of John W. Meyer (Oxford University Press, 2009).]

While there is an increasing literature on the globalisation of law, we will here focus on a phenomenon which has been referred to as ‘global legal pluralism’. Global legal pluralism combines something old (legal pluralism) with something new (the global) and, hence, falls nicely into the realm of socio-legal scholarship. Legal pluralism has long been perceived as a rather marginal, sociological or anthropological discourse which deals not only with official but also unofficial law, and has only lately found its way into the strongholds of legal thought. Michaels depicts the global comeback of legal pluralism as follows: ‘The irreducible plurality of legal orders in the world, the coexistence of domestic state law with other legal orders, the absence of a hierarchically superior position transcending the differences – all of these topics of legal pluralism reappear on the global sphere.’[footnoteRef:94] [94: Ralf Michaels, ‘Global Legal Pluralism’, 5 Annual Review of Law and Social Science (2009) 243-262, at 244.]

Tamanaha distinguishes between six systems, or categories, of ‘normative ordering’, which are ‘commonly discussed in studies of legal pluralism’.[footnoteRef:95] Besides official legal systems, these include various cultural normative systems, namely, customary systems (made up by shared customs, norms, and institutions), religious systems (often merged with customary systems), and community systems (‘imagined communities’ of any scale, be it local, national, or global). In addition, Tamanaha also mentions functional normative systems (which regulate specific social spheres or sectors) and singles out economic normative systems (namely the capitalist market economy).[footnoteRef:96] He thus lists a number of normative orders which do interact or conflict with official law, but which are, by themselves, not confined to state borders. One of his claims is ‘that, riding on the tidal wave of economic globalisation, the most powerful contemporary impetus, momentum, and penetration of new norms is taking place through the economic/capitalist normative system’.[footnoteRef:97] It is this process which also affects the form and contents of international economic law as the law and economics of globalisation. [95: Brian Z. Tamanaha, ‘Understanding Legal Pluralism: Past to Present, Local to Global’, 30 Sydney Law Review (2008) 375-411, at 397.] [96: Ibid., at 397-399.] [97: Ibid., at 406.]

Both of these developments – new legal realism and new legal pluralism – help to define the role and to understand the added value of socio-legal research in international economic law. They point beyond state-centred legal-doctrinal (and legal-political) approaches, which have shaped the international law approach to international economic law; but they also put the economic law approach into perspective. Instead of being preoccupied with the functional normative system of the economy only, they make conflicts between this and other systems of normative ordering visible and open the subject matter of international economic law to multiple perspectives. Instead of rendering the principles of economic analysis absolute, they expose the contingencies of economic reasoning and its effects in constructing and confining (‘disciplining’) the subject matter of international economic law in just another one-sided way. These interdisciplinary sensibilities can be harvested in a sociology of international economic law, which understands sociology not only as a sub-discipline but as a meta-discipline.

1.3. Outlining a Critical Sociology of International Economic Law

The sociology of international economic law can be understood both as sub-discipline and a meta-discipline of international economic law. As a sub-discipline it puts the subject matter of international economic law in a sociological perspective. As a meta-discipline its subject matter is the discipline of international economic law itself. In the following, we will go beyond the more conventional, or more agreeable, perspective of sociology as a (sub-)discipline of international economic law next to international law and politics and international law and economics.

Drawing on the ‘interdisciplinary and sociologically attuned’ research orientation of the socio-legal approach[footnoteRef:98] elaborated above, we may claim that a sociological approach to international economic law is neither bound to the international law perspective, nor to the economic law perspective, even though it can align itself with either of these. But it can also bring in a third perspective, such as that of new legal realism or global legal pluralism, or even transcend all these perspectives, by making the ‘perspectivism’ of different approaches to international economic law its very subject matter. In this article, we start from the economic law perspective, but articulate it with the perspective of the economic sociology of law. In so doing, we subject the discipline of (law and) economics, the driving force behind the economic law perspective, to a sociological critique. [98: Perry-Kessaris, ‘Socio-legal Approach’, supra note 60, at 4.]

The move from a sub-discipline to a meta-discipline of international economic law brings the relation of power and knowledge into focus. Both are involved in the ‘confrontation of disciplines’:

[I]f disciplines are understood as social constructs [...] a confrontation of disciplines will never be a confrontation of “pure” knowledges or methodologies with its outcome determined by intellectual criteria such as methodological rigour, sophistication of theoretical analysis, or depth of empirical reference. Such a confrontation will always ultimately be a social conflict (in certain aspects, a political conflict in the sense of a competition for power or an attempt to exercise power).[footnoteRef:99] [99: Roger Cotterrell, Law’s Community: Legal Theory in Sociological Perspective (Clarendon Press: Oxford, 1995) at 48; original emphasis.]

While Cotterrell speaks about the disciplines of law and sociology, he could also be referring to the disciplines of international economic law. The perspective of the sociology of international economic law as a meta-discipline can be derived from the following specification of academic disciplines as subject matter of sociological enquiry:

In so far as intellectual disciplines and structures of power in society are closely interconnected, sociology is necessarily eventually drawn by its concern in understanding social structure to make the knowledge-claims of other disciplines part of its subject-matter (and so merely social data rather than “truths”) so as to examine the contribution of these disciplinary knowledges to the maintenance, organization, and transformation of patterns of power relationships and social structure generally.[footnoteRef:100] [100: Ibid., at 62-63.]

The sociology of international economic law – and of any other academic field or discipline – thus includes the aim to understand the intellectual force of the discipline as well as the social forces behind the discipline, in short: its theoretical implications and practical effects. These ‘power-knowledge effects’ (Foucault) can be conceived on a more abstract, structural level or on a more concrete, individual level.

For David Kennedy, disciplines provide the ‘argumentative, doctrinal, and institutional materials’ through which scholars pursue their ‘personal, professional, political’ projects.[footnoteRef:101] Broude emphasises, in this respect, that international economic law scholars have mostly acted as ‘advocates of universal economic liberalism’.[footnoteRef:102] In fact, the discipline of international economic law seems to have its ‘paradigmatic roots’ in the ‘Ricardian-Smithian traditions of liberal economic theories of market economics and international free trade’.[footnoteRef:103] In this sense, international economic law ‘enables the discipline of economics to transform itself from theory to practice’.[footnoteRef:104] [101: Kennedy, ‘Disciplines of International Law’, supra note 13, at 14.] [102: Tomer Broude, ‘At the End of the Yellow Brick Road: International Economic Law Research in Times of Uncertainty’, in Colin B. Picker, Isabella D. Bunn and Douglas W. Arner (eds.), International Economic Law: The State and Future of the Discipline (Hart Publishing: Oxford, 2008) 15-28, at 18.] [103: Ibid., at 17-18.] [104: Ibid., at 20.]

From a sociological perspective, the definition of international economic law is not only a question of principles which can be settled theoretically (a priori), but also a question of practices to be studied empirically (a posteriori): the actual subject matter of international economic law. It is not only about picking the right conceptual framework and knowledge base, but also about capturing the real state of affairs as regards the normative authority and enforcement power of different economic regimes. Broude notes that, in reality, international economic regimes include ‘Keynesian allowances for limited public and national manipulations of trade’, which go beyond the ideals of ‘liberal economic theory’.[footnoteRef:105] Considering this ‘pragmatic’ side of international economic law, he argues that it can, perhaps, better be understood as ‘“political economy” than economics’,[footnoteRef:106] which manifests itself in ‘embedded’ forms of liberalism.[footnoteRef:107] [105: Ibid., at 18.] [106: Ibid.] [107: Ibid., at 19.]

These practical concessions notwithstanding, our starting point is the law of market society as it is shaped by the mainstream of the economic discipline, or by what Polanyi refers to as the ‘philosophy of economic liberalism’.[footnoteRef:108] It is for this reason that a sociology of international economic law may find the economic law definition of the field analytically and empirically more adequate than the international law definition. However, if sociology is understood as a meta-discipline, this perspective would not be treated as normatively superior but it would be exposed in its disciplinary effects. Accordingly, the discipline (power structure) of international economic law is justified in terms of the discipline (knowledge structure) of law and economics – and vice versa. [108: Polanyi, Great Transformation, supra note 7, at 269.]

Thus defined, the sociology of international economic law is part and parcel of the ‘economic sociology of law’: a field of research, which has recently attracted increasing scholarly attention.[footnoteRef:109] Our above definition – or outline – of the sociology of international economic law is in line with how to conceive of the economic sociology of law, more generally. Accordingly, the economic sociology of law is located in the midst of three established disciplines (economics, sociology, jurisprudence) and three interdisciplinary research fields (economy and society, law and society, law and economy). Like the sociology of international economic law, the economic sociology of law could be understood as a relatively narrow sub-discipline; but, again, it can also be framed as a meta-discipline which reflects on the normative and performative effects of the existing interdisciplinary division of labour at the intersection of law, economy, and society. [109: Richard Swedberg, ‘The Case for an Economic Sociology of Law’, 32 Theory and Society (2003) 1-37; Richard Swedberg, ‘ Max Weber’s Contribution to the Economic Sociology of Law’, 2 Annual Review of Law and Social Science (2006) 61-81; Sabine Frerichs, ‘The Legal Constitution of Market Society: Probing the Economic Sociology of Law’, 10(3) Economic Sociology – European Electronic Newsletter (2009) 20-25; Sabine Frerichs, ‘Re-embedding Neo-liberal Constitutionalism: A Polanyian Case for the Economic Sociology of Law’, in Christian Joerges and Josef Falke (eds.), Karl Polanyi, Globalisation and the Potential of Law in Transnational Markets (Hart Publishing: Oxford, 2011) 65-84; Diamond Ashiagbor, Prabha Kotiswaran and Amanda Perry-Kessaris (eds.), ‘Special Issue: Towards an Economic Sociology of Law’, 40 Journal of Law and Society (2013) 1-6.]

While the economic sociology of law generally emphasises the ‘embeddedness’ of law and economy in society, its more specific task is to complement and contextualise law and economics (broadly understood) from a sociological point of view. Embeddedness is considered the core concept, or lowest common denominator, of economic sociology, and first of all connected with Polanyi’s work. The embeddedness approach distinguishes economic sociology, which is ‘institutionalist’ by its very nature, from economic theory, which furthers, in its neoclassical mainstream, a ‘disembedded’ view of the (market) economy. At the same time, the idea of embeddedness links economic sociology to general sociology and its manifold theories of integration and differentiation. If understood in its most encompassing sense, economic sociology thus includes all levels of sociological analysis: the micro-level of actors, the meso-level of relations, the macro-level of regimes, and the meta-level of rationalities.[footnoteRef:110] It goes without saying that different approaches emphasise different levels of analysis. For example, ‘new’ (American) economic sociology, as launched, amongst others, by Granovetter, who was briefly mentioned above,[footnoteRef:111] puts emphasis on the micro- and meso-levels, whereas ‘old’ (European) economic sociology, which includes Polanyi’s work, aims at the macro- and meta-levels of sociological analysis. [110: Frerichs, ‘Legal Constitution’, supra note 108; Frerichs, ‘Re-embedding Neo-liberal Constitutionalism’, supra note 108.] [111: In the context of Hirsch’s sociology of international (economic) law; see Hirsch, ‘Sociology of International Economic Law’, supra note 37, at 280; Granovetter, ‘Economic Action’, supra note 51.]

The economic sociology of law can be understood as an extension of economic sociology (and as a specification of general sociology), but it can likewise be seen as an extension of legal sociology. In fact, the dissociation of economic theory and economic sociology in thinking about the economy seems to be reflected in an analogous dissociation of legal theory and legal sociology in thinking about the law. In other words, the leading theories in both disciplines – economics and jurisprudence – have come to reflect the autonomy and separateness of economic and legal spheres rather than their social embeddedness. Both law and economics are thus dominated by ‘disembedded’ views of the economy and the law respectively. Moreover, much of today’s economic and legal sociology seems preoccupied with the micro- and meso-levels of actors and relations, at the expense of a broader understanding of regimes and rationalities at the macro- and meta-levels of sociological analysis. Similarly, what has been reduced to law and economics (or, more precisely, the economic analysis of law) lacks a sociological framing which would shed light on the interaction of law and economy in society.

In response to these shortcomings, economic sociology not only includes a ‘sociology of economy’, but also a ‘sociology of economics’:[footnoteRef:112] hence, a sociology of the economic discipline, and of scientific knowledge more generally. Likewise, the sociology of law includes a ‘sociology of jurisprudence’, that is, a critical interest in legal scholarship, which it shares with critical legal studies. As regards the economic sociology of law, the cognitive turn from the subject matter of the law and the economy to the disciplines constructing and reproducing these spheres of reality, takes the form of a criticism of law and economics, or of any positive (or normative) theory that describes (or prescribes) how legal and economic rationalities are (to be) mediated. [112: Milan Zafirovski, ‘Sociology of Economics or Sociology of Economy? Theoretical-Methodological Arguments for Sociological Economics’, 31 Forum for Social Economics (2001) 27-58.]

What the following reconstruction of Polanyi’s work and of the role of law therein emphasises is not only ‘normative embeddedness’ on the level of regimes but also ‘cognitive embeddedness’ on the level of rationalities.[footnoteRef:113] On the one hand, the idea of the social embeddedness of the economy – which is considered the ‘normal’ case throughout history – is taken as a normative standard to pinpoint processes ‘disembedding’ or ‘re-embedding’ the market in modern society. On the other hand, we can also emphasise the cognitive dimension of the market society, which relies, by and large, on the ‘embeddedness of economic markets in economics’.[footnoteRef:114] Moreover, market society as such seems to be embedded in the concepts and visions of the economic discipline. Arguably, this also affects the law of market society, and – with law and economics as a mediator – the legal discipline. [113: Frerichs, ‘Re-embedding Neo-liberal Constitutionalism’, supra note 108.] [114: Michel Callon, ‘Introduction: The Embeddedness of Economic Markets in Economics’, in Michel Callon, Michel (ed.), The Laws of the Markets (Blackwell, Oxford, 1998) 1-57.]

With regard to cognitive embeddedness and, more specifically, the ‘legal construction of economic rationalities’,[footnoteRef:115] Lang recently characterised the agenda of the (new) economic sociology of law as follows: [115: Andrew T.F. Lang, ‘The Legal Construction of Economic Rationalities’, 40 Journal of Law and Society (2013) 155-171.]

[I]n what ways, if any, are the cognitive infrastructures of markets – and therefore the particular forms of calculative rationality characteristic of such markets – created, entrenched, and mobilized through law and legal practices? What, in other words, is law’s role in the construction, maintenance, and transformation of frameworks of knowledge and their associated practices of economic rationality in particular market contexts?[footnoteRef:116] [116: Ibid., at 170.]

While Lang’s main interest is in the legal construction of economic rationalities, the economic sociology of law, as it is understood here, takes an equal interest in the economic construction, or transformation, of legal reasoning. This dual move, first, from economics to law and, then, from law to economics is already implied in Edelman’s above observation that ‘concepts of law and justice are increasingly defined in economic terms and understood through the lens of market efficiency’.[footnoteRef:117] In the following, Polanyi’s work will be reassessed, not least, against the backdrop of this cognitive turn in the sociology of law and economics, which strictly speaking forms not the context of Polanyi’s writings in the past but the context of his reception in the present.[footnoteRef:118] [117: Edelman, ‘Rivers of Law’, supra note 81, at 182; original emphasis.] [118: Sabine Frerichs, ‘Polanyi in an Hourglass: The Two Lives of a Sociological Classic’, 62 Studies in Law, Politics and Society (2013) 25-47.]

2. The Law of Market Society: Re-reading Polanyi’s The Great Transformation

The ‘Polanyian’ approach to international economic law to be introduced in this section is interdisciplinary in its orientation, but it has its roots in the sociological discipline. It exemplifies the ‘economic sociology of law’, which was inherent to the work of the sociological founding fathers, such as Karl Marx, Emile Durkheim, or Max Weber, and which has only recently been (re-)discovered as a subject of inquiry in its own right.[footnoteRef:119] [119: Swedberg, ‘Case for Economic Sociology of Law’, supra note 108; Swedberg, ‘Max Weber’s Contribution’, supra note 108; Frerichs, ‘Legal Constitution of Market Society’, supra note 108.]

In order to outline what a Polanyian approach to international economic law could mean, we will probe into the law of the ‘market society’ that is depicted in The Great Transformation[footnoteRef:120] and that continues to exist, in more or less contained forms, until today. Since the law was not in the focus of Polanyi’s enquiries, the following analysis goes beyond exegetical work, properly speaking. What the law of market society ultimately consists in is implied but not fully explicated in The Great Transformation. Polanyi mentions concrete instances of legal regulation – or deregulation, for that matter – that brought the market society into being, but he does not elaborate on the law of market society in any systematic way. [120: Polanyi, Great Transformation, supra note 7.]

Randles distinguishes between ‘Polanyi-given’ and ‘Polanyi-inspired’ research designs.[footnoteRef:121] Scholars who engage in a close reading of Polanyi’s work and ‘contextualize’ it within the ‘author’s life and times’ in order to further ‘a broader understanding of [his] concerns and normative position’ fall into the category of Polanyi-given research.[footnoteRef:122] Scholars who take Polanyi’s writings as a starting point to develop their own views of contemporary society, which will here be conceived in terms of a globalised market society, can be considered Polanyi-inspired instead: ‘[t]hey are inspired by the view that Polanyian insights, worked out over a period of some 30 years of the 20th century, appear to provide such a high degree of relevance and application to problems facing the world today’.[footnoteRef:123] [121: Randles, ‘Neo-Polanyian Research Agenda’, supra note 4, at 409; original emphasis.] [122: Ibid.,] [123: Ibid., at 410.]

Polanyi started his career as a doctor of law but gained his reputation elsewhere: as economic historian, economic sociologist, or economic anthropologist. From a ‘holistic’ point of view, which aims at society as a whole, it seems only legitimate to ‘bring the law back in’ and to elaborate an economic sociology of law, which enriches Polanyi’s sociological perspective on the economy with a sociological understanding of the law. A Polanyi-inspired economic sociology of law, which draws on Polanyi’s writings but also goes beyond, can combine historicist, realist, and constructivist readings of the law of market society.[footnoteRef:124] Since our aim is to lay the ground for a sociology of international economic law, which is theoretically and empirically up to date, it seems adequate also to include more contemporary points of view. [124: Frerichs, ‘Studying Law, Economy and Society’, supra note 70.]

As to the constructivist interpretation, which is informed by the cognitive turn in the social sciences, one of the core assumptions is that the law of market society is ultimately embedded in economics, with the (sub-)discipline of law and economics being one of its intermediaries. While the present section tries to reconstruct the law of the market society, its inherent conflicts and dynamics from a more theoretical point of view, the subsequent section adopts a more historical point of view on ‘law’s great transformation’ from the nineteenth century until today.

2.1. Polanyi’s Historical Approach to Market Society

In The Great Transformation, Polanyi describes the institutional and ideological foundations of the market society, which emerged in the nineteenth century and which ended in a catastrophe: two world wars and a world-economic crisis. Published at the height of the Second World War, his treatise aims at explanations for the civilisational breakdown that people were witnessing and experiencing at that time, and at critical lessons for the future. Surprisingly or not, Polanyi’s diagnosis of his time also seems to shed light on present developments. Under conditions of increasing global interdependencies and recurrent crises, scholars across the social sciences seek once again inspiration from his writings. While Polanyi can be considered a ‘late classicist’ in that he shares the holistic orientation of classical historical scholarship, the ‘early revival’ of his work reflects the new topicality – or continued relevance – of his criticism of the market society in recent decades.[footnoteRef:125] [125: Frerichs, ‘Polanyi in an Hourglass’, supra note 117.]

At the beginning of The Great Transformation, which spans several centuries of economic history, Polanyi emphasises: ‘Ours is not a historical work; what we are searching for is not a convincing sequence of outstanding events, but an explanation of their trend in terms of human institutions.’[footnoteRef:126] While not offering a plain history of events and developments, Polanyi’s work is, nevertheless, ‘historical’ in that it is rooted in the historical paradigm, which once united scholarship at the interface of law, economy, and society across the social sciences.[footnoteRef:127] This includes classical (historical) sociology as much as the historical school of jurisprudence, on the one hand, and the historical school of economics, on the other. [126: Polanyi, Great Transformation, supra note 7, at 4.] [127: Frerichs, ‘Studying Law, Economy and Society’, supra note 70.]

Polanyi’s work is representative of classical sociology in that it takes a ‘holistic’, historical-comparative approach which highlights the interdependencies of different social spheres (focusing on law and economy in society). Similarly, the historical schools of jurisprudence and economics, which originated in the German-speaking countries, as well as the traditions of ‘old’ institutional economics and ‘old’ legal realism, which had developed in the United States, generally considered society as a whole, be it in temporal, spatial or substantive terms.[footnoteRef:128] While there is little doubt that Polanyi was influenced by historical scholarship,[footnoteRef:129] he ‘probably had little familiarity with legal realism when he wrote The Great Transformation, but he was aware of the institutionalist tradition in United States economics’.[footnoteRef:130] [128: Ibid.; Frerichs, ‘Polanyi in an Hourglass’, supra note 117.] [129: Kurtuluş Gemici, ‘Karl Polanyi and the Antinomies of Embeddedness’, 6 Socio-Economic Review (2008) 5-34, at 20 and 23.] [130: Fred Block, ‘Relational Work and the Law: Recapturing the Legal Realist Critique of Market Fundamentalism’, 40 Journal of Law and Society (2013) 27-48, at 37-38, footnote 32; original emphasis.]

The Great Transformation reflects these historicist, institutionalist, and realist traditions. In contrast, it seems little influenced by the methodological debates that were taking place during Polanyi’s lifetime. In retrospect, the ‘positivist’ reform movement, which aimed to rid ‘grand’ theories of law, economy, and society of their moral ambitions and to boil the ‘great’ questions of the time down to empirically testable hypotheses, proved successful in bringing about a shift from more holistic to more reductionist approaches, and from cross-fertilisation between the disciplines to one-sided disciplinary specialisation. By and large, this coincides with a move away from macro- and meta-levels of social-scientific analysis to its micro- and meso-levels, or so-called ‘middle range approaches’.

In contrast, The Great Transformation is still characterised by a holistic research orientation, the different dimensions of which can be spelled out as follows. Polanyi’s concept of embeddedness, which became central for the interpretation of his work, starts from society as a whole, which includes an ‘interior relationship of the economic and the social’.[footnoteRef:131] Accordingly, economy and society – or, with a different accent, the economy and the state – are mutually constitutive, and appear only in a second step as separate spheres. Taking this argument one step further, going beyond Polanyi’s institutionalist (or ‘substantivist’) approach, one can even speak of economy and society as ‘discourses’ that are ‘constructed in relation to each other’.[footnoteRef:132] A holistic understanding also underlies Polanyi’s characterisation of the self-regulating market: [131: Greta R. Krippner and Anthony S. Alvarez, ‘Embeddedness and the Intellectual Projects of Economic Sociology’, 33 Annual Review of Sociology (2007) 219-240, at 233.] [132: Bettina Lange, ‘From Polanyi to Discourse Theory’, in Bettina Lange and Dania Thomas (eds.), Special Issue: From Economy to Society? Perspectives on Transnational Risk Regulation, 62 Studies in Law, Politics and Society (2013), 73-101, at 86.]

A self-regulating market demands nothing less than the institutional separation of society into an economic and political sphere. Such a dichotomy is, in effect, merely the restatement, from the point of view of society as a whole, of the existence of a self-regulating market.[footnoteRef:133] [133: Polanyi, Great Transformation, supra note 7, at 71; emphasis added.]

The hypostatisation of the self-regulating market in the market society results in ‘running society as an adjunct to the market’ – with catastrophic consequences.[footnoteRef:134] The self-regulating market is seen as an artefact of economic thinking, namely of the ‘philosophy of economic liberalism’, which – if imposed on reality – poses great dangers to social reproduction.[footnoteRef:135] Polanyi considers the premises of liberal economics refuted by the ‘testimony of modern research in various fields of social science such as social anthropology, primitive economics, the history of early civilization, and general economic history’.[footnoteRef:136] [134: Ibid., at 57.] [135: Ibid., at 269.] [136: Ibid.]

The historical perspective is pivotal for Polanyi’s argument about the peculiarity of the market society. With regard to the establishment of a self-regulating market he claims: ‘Neither under tribal, nor feudal, nor mercantile conditions was there [...] a separate economic system in society. Nineteenth century society, in which economic activity was isolated and imputed to a distinctive economic motive, was, indeed, a singular departure.’[footnoteRef:137] In spatial terms, Polanyi’s analysis goes, from the outset, beyond national economies and polities, and suggests a global frame of reference instead. This is already clear at the beginning of his book where he postulates that nineteenth century civilisation – the first market society in history – rested likewise on national and international institutions.[footnoteRef:138] Moreover, in Polanyi’s view, the international political economy had become subject to ‘[t]he global sweep of economic liberalism’.[footnoteRef:139] Accordingly, ‘[n]othing less than a self-regulating market on a world scale could ensure the functioning of this stupendous mechanism’, which resulted in unprecedented global interdependencies.[footnoteRef:140] Polanyi considered the market society as unsustainable and, at least in the long run, doomed to failure. Consequently, he recognises in the social countermovements of the late nineteenth and early twentieth century the ‘self-protection of society’[footnoteRef:141] against the ‘satanic mill’ of the market.[footnoteRef:142] His vision of a liberal socialism, which strives for ‘a society [that] can afford to be both just and free’,[footnoteRef:143] is itself rooted in the embeddedness paradigm and completes Polanyi’s holistic approach. Like the historical scholars which he drew inspiration from, Polanyi studied the history of the modern market society not least in moral terms. [137: Ibid., at 71.] [138: Ibid., at 3.] [139: Ibid., at 138.] [140: Ibid.] [141: Ibid., part II.2.] [142: Ibid., part II.1.] [143: Ibid., at 256.]

2.2. Economic Law in the Shadow of Speenhamland

Before turning to the role of institutions and commodities in Polanyi’s approach, which help to understand the ambiguities of the law, it seems useful to briefly summarise the ideal-typical stages of the great transformation, which his book is about and which can also be depicted in legal terms.[footnoteRef:144] [144: Frerichs, ‘Re-embedding Neo-liberal Constitutionalism’, supra note 108, at 82.]

According to Polanyi, the social organisation of pre-market societies is characterised by institutional patterns of symmetry, centricity and/or autarchy, which are supported by behavioural principles of reciprocity, re-distribution and/or householding. More generally speaking, the default state before the great transformation is characterised by social embeddedness, which includes the law: market exchange is still embedded in law, and law is embedded in society, underpinned by a strong collective conscience. Polanyi speaks of an (undifferentiated) complex of ‘custom and law, magic and religion’ in this respect, which kept the gain motive in check.[footnoteRef:145] [145: Polanyi, Great Transformation, supra note 7, at 55.]

The institutional pattern that distinguishes market society from pre-market societies is the market as predominant form of social organisation, which is supported by the behavioural principle of ‘[b]arter, truck, and exchange’.[footnoteRef:146] Polanyi emphasises that market institutions and market behaviour are not confined to the modern market society only; instead, they may very well ‘take a subordinate place in a society in which other [patterns and] principles are in the ascendant’.[footnoteRef:147] What the great transformation starts with, then, is a gradual but radical ‘disembedding’ of the market, that is, its liberalisation and prioritisation in modernizing economies. Normatively speaking, market exchange is then no longer restricted by ‘human laws’[footnoteRef:148] – or by a natural law of divine origin – but left to ‘the laws of Nature’.[footnoteRef:149] Put differently, man-made law starts mimicking quasi-natural laws, which are rationalised and popularised by liberal economics. This includes the new norm of profit-seeking behaviour in markets of whatever kind, which is normalised and legitimised under the principle of laissez-faire. Just as the market, the law thereby becomes disembedded. [146: Ibid., at 56.] [147: Ibid.] [148: Ibid., at 125.] [149: Ibid., at 114.]

With regard to the ‘re-embedding’ move, which completes the dialectics of the great transformation, Polanyi discusses contemporary efforts to re-regulate ‘self-regulating markets’ according to over-riding social needs. At the height of the Second World War he was faced with the blatant alternative of fascism or socialism, both of which he considered to be ‘rooted in a market society that refused to function’.[footnoteRef:150] However, Polanyi was as clear in his critique of the market society as he was in his rejection of totalitarian regimes. His vision of a re-embedded post-market society can best be described as a liberal form of socialism, which directly challenges the presumptions and pretensions of economic liberalism. Presumably, the naturalist and axiomatic language of the latter would then be replaced with an agenda that includes law as a means of progressive politics. In other words, law would be understood as a social instrument rather than as the (in-)visible hand of the market. In this regard, Polanyi’s position resonates with legal realism. [150: Ibid., at 239. The ‘collectivist’ countermovement’ is also framed in terms of socialism and nationalism; ibid., at 145.]

The role of law in The Great Transformation is often discussed in connection with Polanyi’s analysis of the Speenhamland Law, which was meant to protect the poor, but which apparently had perverse effects, as it actually seemed to increase the number of ‘working poor’ which had to rely on subsidies:

The Speenhamland Law which had sheltered rural England, and thereby the laboring population in general, from the full force of the market mechanism was eating into the marrow of society. By the time of its repeal huge masses of the laboring population resembled more the specters that might haunt a nightmare than human beings.[footnoteRef:151] [151: Polanyi, Great Transformation, supra note 7, at 102.]

This paradoxical development allowed liberal economists to push towards the deregulation of the labour market, which became one of the key projects of the market society. Polanyi notes in this respect:

It is no exaggeration to say that the social history of the nineteenth century was determined by the logic of the market system proper after it was released by the Poor Law Reform Act of 1834. The starting point of this dynamic was the Speenhamland Law.[footnoteRef:152] [152: Ibid., at 83.]

Border and Somers comment Polanyi’s contribution to the debate on this fateful episode in English social history – or what has been depicted as such – as follows:

Polanyi was determined to challenge the use that market liberals – specially the Austrians von Mises and Hayek – had made of Speenhamland. They had argued that Speenhamland precisely prefigured the disastrous consequences of state interventionism in the late nineteenth and early twentieth centuries. They claimed that all efforts to use government to improve the life chances of the poor would end up undermining the economy’s vitality and would ultimately hurt the people that the policies had been intended to help.[footnoteRef:153] [153: Fred Block and Margaret Somers, ‘In the Shadow of Speenhamland: Social Policy and the Old Poor Law’, 31 Politics & Society (2003) 283-323, at 291; reference omitted; Fred Block, ‘Karl Polanyi and the Writing of The Great Transformation’, 32 Theory and Society (2003) 275-306, at 289-294.]

With regard to the constitutive role of economics in bringing about the modern market society, Polanyi’s chapter on ‘Political economy and the discovery of society’ seems most instructive.[footnoteRef:154] Polanyi’s point is here not only the ‘discovery of society’ as a subject matter, but also the ‘discovery of a science’ which both re-discovers and re-constructs society according to the laws of the market: namely, the science of political economy, or the discipline of economics. From a constructivist point of view, economic theory produces and performs the very economic reality that it is supposed to describe. In this sense, it actually creates the economic rationalities that are later ‘found’ in society. Not surprisingly then, ‘[t]he discovery of economics […] hastened greatly the transformation of society’.[footnoteRef:155] [154: Polanyi, Great Transformation, supra note 7, chapter 10.] [155: Ibid., at 119.]

Hence, what the economic discipline allowed discovering were ‘the laws governing a complex society’,[footnoteRef:156] which were identified with, enforced as, and reinforced by the laws of economics. In the end, the principle of self-regulating markets ‘required that the individual [should] respect economic law even if it happened to destroy him’.[footnoteRef:157] While Polanyi acknowledges the laudable intentions of a ‘science’ of national wealth and social welfare, he is deeply concerned with the real-life consequences of the ‘utopian experiment’ of the market society.[footnoteRef:158] Besides it