Public Law and Finance: A History of Misunderstandings and a Discourse Theoretical Proposal

Abstract

This paper departs from the observation that many legal conflicts which emerged in the aftermath of the recent financial crisis are characterized by fault lines between the economic and the legal disciplines. These fault lines derive from two reasons which I describe as immanence and differentiation. Both are deeply rooted in the self-understanding of the economic and legal disciplines. In the economic literature, a mechanical view of the law prevails that has little to do with the self-understanding prevalent in the legal discipline. The legal discipline, in turn, is just as much to be blamed of immanence. However, the rationality of the legal discipline has become blurred, and there is great uncertainty how to deal with the rationalities of neighboring disciplines. As the idea of democratic capitalism relies on an autonomous law, this problem is of utmost urgency. The paper develops a discourse theoretical proposal that sees the rationality (or autonomy) of the law to reside in a specific kind of discourse. This understanding allows some hints as to how to integrate economic knowledge in legal decision-making. The paper then applies this understanding to the examples. This approach has certain repercussions for recent regulatory activities.