Law and Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World

Law and Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World

Law and Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World

Law and Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World

Synopsis

Recent high-profile corporate scandals- such as those involving Enron in the United States, Yukos in Russia, and Livedoor in Japan- demonstrate challenges to legal regulation of business practices in capitalist economies. Setting forth a new analytic framework for understanding these problems,Law and Capitalismexamines such contemporary corporate governance crises in six countries, to shed light on the interaction of legal systems and economic change. This provocative book debunks the simplistic view of law's instrumental function for financial market development and economic growth. Using comparative case studies that address the United States, China, Germany, Japan, Korea, and Russia, Curtis J. Milhaupt and Katharina Pistor argue that a disparate blend of legal and nonlegal mechanisms have supported economic growth around the world. Their groundbreaking findings show that law and markets evolve together in a "rolling relationship," and legal systems, including those of the most successful economies, therefore differ significantly in their organizational characteristics. Innovative and insightful,Law and Capitalismwill change the way lawyers, economists, policy makers, and business leaders think about legal regulation in an increasingly global market for capital and corporate governance.

Excerpt

Several years ago, a series of conversations about our mutual interest in the role of law in economic development and our shared frustration with the current state of the literature about the topic led to a decision to teach a seminar in which we would explore the relation between legal institutions and market-oriented economic institutions. Early on, we decided that the best way to explore this relation was to combine the reading of theoretical and empirical studies about the topic with in-depth analyses of contemporary events in countries in different stages of economic development. We also decided that corporate governance, another of our shared research interests, provided an excellent focal point through which to examine this topic, for reasons that we explain in the introduction. We called the seminar “Law and Capitalism: a Comparative Approach,” and we have taught it twice at Columbia Law School. This book is a direct outgrowth of those seminars.

Drafts of many chapters were presented at conferences and workshops around the world. the locations include Boalt Hall School of Law at the University of California at Berkeley, Columbia Law School, Hong Kong University Law School, the Latin American Law and Economics Association, the Research Institute of Economy, Trade, and Industry in Tokyo, Seoul National University, and the Tsinghua University Economics Department in Beijing. We are indebted to participants in those events for clarifying and challenging our arguments. Many people gave generously of their time to read all or portions of early versions of the manuscript. Others provided helpful feedback on our initial idea for this project, read all or parts of the manuscript, or discussed the major ideas of the book with us. Their criticisms and suggestions pushed us to make the book you are reading better than the one we would have produced if left to our own devices.

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