Governing the Economy: Markets, Experts, and Citizens
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Governing the Economy: Markets, Experts, and Citizens The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Citation Rahman, Kazi Sabeel Al-Jalal. 2013. Governing the Economy: Markets, Experts, and Citizens. Doctoral dissertation, Harvard University. Citable link http://nrs.harvard.edu/urn-3:HUL.InstRepos:11158260 Terms of Use This article was downloaded from Harvard University’s DASH repository, and is made available under the terms and conditions applicable to Other Posted Material, as set forth at http:// nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of- use#LAA GOVERNING THE ECONOMY Markets, Experts, and Citizens A dissertation presented by KAZI SABEEL AL-JALAL RAHMAN to THE DEPARTMENT OF GOVERNMENT in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY in the subject of POLITICAL SCIENCE HARVARD UNIVERSITY Cambridge, MA May 2013 © 2013 — KAZI SABEEL AL-JALAL RAHMAN ALL RIGHTS RESERVED. Dissertation advisor: Professor Michael Sandel (chair) Kazi Sabeel Al-Jalal Rahman GOVERNING THE ECONOMY Markets, Experts, and Citizens ABSTRACT The 2008 financial crisis provoked a debate over how we as a democratic society ought to govern the modern market economy. Our prevailing response to this problem of economic governance has been to appeal either to free markets as self-regulating, self- optimizing systems, or to technocratic rule by neutral experts. Both these systems are appealing because of they claim to promote the public good free of the corruption, irrationality, conflict, and vagaries of democratic politics. This project aims to overcome this skepticism to sketch an account of a democratic approach to economic governance, inspired by the thought and reforms of the Progressive Era. I argue below that ideal of democracy should be understood as a matter of political agency: we are free in a democratic society insofar as we experience the challenges and rewards of self-governance. Appeals to markets and experts, from this standpoint, are doubly flawed. Not only to they entrench threats to our individual and collective agency in the form of concentrated private power of firms, diffuse systemic power of markets, and the political authority of unaccountable experts; they also narrow the scope for citizens to experience genuine political agency. This view of democracy as experience highlights prospects for thickening democratic practice that are often overlooked in conventional democratic theories focused on elections, legislatures, and representation. Instead, I suggest that democratic agency can be fostered in three ways: first, through a iii reconstruction of regulatory agencies as sites of democracy; second, through an expansion of the role of local governments as another arena in which citizens can engage with the actual practice of governing; and third, through the broadening of economic policy discourses to encompass moral and political, not just technical concerns. The closing chapters apply these themes to the policy and institutional debates surrounding financial reform. Ultimately, this democratic approach to economic governance suggests a very different response to the financial crisis, pointing to the ways in which current institutions for economic governance can be reworked to foster, rather than supplant, the democratic agency of citizens. iv TABLE OF CONTENTS 1! ECONOMIC GOVERNANCE IN AN ANTI-POLITICAL AGE ........................................ 1! PART I .......................................................................................................................... ! 2! EXPERTISE AND DEMOCRACY IN FINANCIAL REFORM......................................... 43! 3! CONTESTING THE MARKET................................................................................. 74! 4! ANXIETIES OF EXPERTISE .................................................................................. 120! PART II......................................................................................................................... ! 5! ECONOMIC GOVERNANCE AS A PROBLEM OF AGENCY...................................... 158! 6! THE PROMISE AND LIMITS OF ADMINISTRATIVE LAW........................................ 182! 7! DEMOCRATIC POLITICAL AGENCY .................................................................... 209! PART III........................................................................................................................ ! 8! DEMOCRACY THROUGH REGULATION .............................................................. 247! 9! DEMOCRACY THROUGH THE CITY .................................................................... 277! 10! MORAL JUDGMENT AND THE COSTS OF AVOIDANCE......................................... 308! 11! DEMOCRATIC THEORY AND PRACTICE ............................................................. 349! BIBLIOGRAPHY ......................................................................................................... 357! v ACKNOWLEDGEMENTS Thanks are due first and foremost to my advisors, Eric Beerbohm, Jerry Frug, Nancy Rosenblum, and Michael Sandel for their invaluable support, feedback, and guidance. Most of all, I thank them for providing me the license and encouragement to explore— and for cultivating a commitment to the role that political theory can and ought to play in the world of politics. I am grateful to a number of interlocutors among the academic community at Harvard, all of whom helped shape the project through conversations and comments on early drafts, especially: David Barron, Dan Carpenter, Akiba Covitz, Christine Desan, Archon Fung, Lani Guinier, Mort Horwitz, James Kloppenberg, Adam Levitin, Martha Minow, David Moss, Tomiko Brown-Nagin, Morgan Ricks, Joe Singer, Richard Tuck, and Adrian Vermeule. I have also been fortunate for support from a number of research centers and workshops. Thanks are especially due to John Cisternino and the staff of the Tobin Project for fostering a rich interdisciplinary dialogue in Cambridge around the study of democracy and markets. Thanks to the graduate students, faculty, and staff at the Edmond J. Safra Center for Ethics; the Harvard University Center for American Political Studies; the Office of Academic Advising and the Lewis Fellowship program at Harvard Law School; the Government department Political Theory Workshop; and the Harvard Law School Public Law Workshop for providing rich and inspiring forums and support. Andy Rich, Felicia Wong, and the staff at the Roosevelt Institute also provided additional support and opportunities to present findings. A work such as this is as much a product of a community as of an individual, and I have been fortunate to have found a vibrant community of friends, scholars, and thinkers with whom to share in this journey. I am tremendously grateful for their generosity, their commitment, and their inspiration. This book has largely been written thanks to, because of, and ultimately for them, in the hopes that it will help us continue our shared journey. Thanks in particular are due to: Oliver Bevan, Peter Buttigieg, Jonathan Bruno, Josh Cherniss, Tarun Chhabra, Prithvi Datta, Metin Eren, Jeremy Farris, Aaron Greenspan, Michael Lamb, Adam Lebovitz, Yascha Mounk, Justin Mutter, Beth Pearson, Ryan Rippel, Hollie Russon-Gillman, John Santore, Emma Saunders-Hastings, Vaughn Tan, Andrea Tivig, Bernardo Zacka. I must thank my parents Kazi A. Rahman and Shegufta Rahman, my family Shumona, Laboni, Marc, Leander, and Liam, for their love, support, and the millions of things large and small that they have done and continue to do to help make all of this—and much more—possible. And finally, I thank my partner, Noorain, who I first met before this project started, with whom I am grateful to share life after this work, and to whom I owe more than I can say. vi We have frequently printed the word Democracy. Yet … it is a word the real gist of which still sleeps, quite unawakened, notwithstanding the resonance and the many angry tempests out of which its syllables have come, from pen or tongue. It is a great word, whose history…remains unwritten, because that history has yet to be enacted” — WALT WHITMAN, “DEMOCRATIC VISTAS” (1871) vii 1 ECONOMIC GOVERNANCE IN AN ANTI-POLITICAL AGE On a bright but bitterly cold January morning, Barack Hussein Obama ascended the steps of the Capitol balcony to take the oath of office as President of the United States. It was January 2009, and the country was in the depths of the worst economic disaster since the Great Depression. In September 2008, the collapse of the subprime mortgage market had wiped out Lehman Brothers, one of the biggest—and most heavily interconnected—investment banks in the world. Within days, credit had effectively frozen, and the United States was staring down the abyss of the largest financial and economic collapse since 1929. And yet in the midst of the crisis, the mood in January 2009 was hopeful, even buoyant, with the promise of a new beginning. Obama cast himself as speaking to the extraordinary socioeconomic challenges of the day. In his inaugural address, Obama outlined the challenges facing the country as a stirring call to action: Time and again these men and women struggled and sacrificed and worked till their hands were raw so that we may live a better life. They saw America as bigger than the sum of our individual ambitions; greater than all the differences of birth or wealth or faction. This is the journey that we continue today. … Starting