Taking Interdependence And Production More Seriously: Toward Mutual Rationality And A More Useful Law And Economics

ion regarding what became central to economic practices through the legalized definitions of capital and associated property rights in succeeding stages of capitalism: 12 * In merchant capitalism, based on exchange of goods and services, capital was largely tangible (e.g., land, buildings, resources, inventory) and was provided and controlled by individuals or families. * During industrial capitalism, based on production of scale and specificity, capital also included stock ownership and bond issuance, intangible but still traceable to specific assets, although managed increasingly by enterprise employees.' 4 * Under banker or finance capitalism, based on access to secured future performance, capital expanded to include debt instruments, more intangible because securities might not have value upon being due, managed in part by monitoring of enterprise success by banking managers external to the capital-utilizing enterprise." * In managerial capitalism, based increasingly on enterprise response to uncertainties of geographical dispersion and both internal and external risks expressed in monetized costs, capital included insurance and other risk-pooling devices, as well as the ability to export such risks beyond the firm, where-even when charged to the producing enterprise-they were managed by financial intermediaries largely independent of specific firms. * Finally, with money-manager capitalism, based on derivative financial instruments (resting on aggregated assumptions and depending on forecast economic expansion-or, in fact, bubbles) capital becomes financial flows: pure abstractions and legalized fictions in which the same underlying social relations are repeatedly bought and sold as derivatives." This form of capital adds little or nothing to usable production." Indeed, the consequences of exchanging such capital makes it impossible to enforce liabilities following a breakdown in economic performance, leaving third parties (often taxpayers) holding the bag. Further, even their existence is mythical without (1890-1933), managerial capitalism (1933-1982), and money-manager capitalism (1982-present). See Hyman P. Minsky, Uncertainty and the Institutional Structure of Capitalist Economies, 30 J. EcON. ISSUEs 357, 362 (1996); Charles J. Whalen, INTEGRATING SCHUMPETER AND KEYNES: HYMAN MINSKY'S THEORY OF CAPITALIST DEVELOPMENT, 35 J. EcON. ISSUEs 805, 810 (2001). 12. The key here is centrality to economic or market actions, not the precise date of their invention. For example, loans were certainly used from times preceding capitalism. 13. See Whalen, supra note 11, at 810. 14. See id. at 810, 812.