Public markets, private orderings and corporate governance

In the New Property Rights approach the degree of incompleteness of markets is taken independently of the cost of the public ordering and of their efficiency relatively to private orderings. In this approach “public markets,” similarly to a Swiss cheese, are either assumed to be nonexistent empty holes (because of infinite third party verification costs) or assumed to be smooth and efficient (because of zero third party verification costs). When we allow for positive but not infinite third party verification costs we are necessarily pushed back to the insights of Commons, Coase, Fuller and Williamson. The degree of (in)completeness of public markets becomes an endogenous economic problem and managers can be seen as agents that make “second order” specific investments to run specific relations that cannot be efficiently handled by public markets. Managers and the public authorities build respectively private and public “legal equilibria” that set the working rules within which transactions can take place. Private and public legal equilibria are not only substitutes but also complements. This complementarity is an important source of the path dependency that characterizes the development of different legal systems. The framework is applied to GM’s acquisition of Fisher Body. We suggest that, contrary to the claims of the New property Rights approach, the advantages of the acquisition were not due to the superior incentives of the new private owners but should be rather related to the replacement of public markets by the new private ordering set up by Alfred Sloan.     

Fragmented power and state-corporate killings: a critique of blackwater in Iraq

Especially given the invasion of Iraq, a growing number of criminologists have been attending to the transformation of state power and security within a neo-liberal political context. Although the capacity and influence of the state is not disappearing altogether there is a discernible erosion of authority within the sovereign state. In the realm of policing, we witness continued fragmentation of authority in which state power is relinquished to expanding commercial markets. The de-coupling of policing and government raises serious questions about the changing architecture of liberal democratic societies, prompting concerns over the waning monopoly of legitimate coercion. The project here explores the controversy over the use of private military firms in occupied Iraq, particularly the recent killings of civilians by Blackwater personnel. While offering specific details of those incidents, the analysis elaborates on state–corporate crime by revealing how state power is dispersed to the private sector; by doing so, the article examines how private military personnel evade prosecution for war crimes and other human rights abuses.     

The Global Financial Crisis: Learning from Regulatory and Governance Studies

Regulatory and governance studies help locate power and responsibility in the global financial crisis. I argue that corporate and state power worked together in centers like New York and London to shape regulation and that power was spread around the world. In the response to the crisis, responsibility for regulation will remain largely systems‐based rather than centrally directed. However, those systems should be located in the culture of the elites, which are socially and spatially based, as much as in the economics of the markets or the cognition of the firms. And that responsibility has limits, so there should be greater democratic control of finance and less dependence on finance capitalism for essential services, social security, and environment protection.     

Private Military and Security Companies and the Liberal Conception of Violence

Abstract

The institution of war is the broad framework of rules, norms, and organizations dedicated to the prevention, prosecution, and resolution of violent conflict between political entities. Important parts of that institution consist of the accountability arrangements that hold between armed forces, the political leaders who oversee and direct the use of those forces, and the people in whose name the leaders act and from whose ranks the members of the armed forces are drawn. Like other parts of the institution, these arrangements are responsive to changes in military technology and needs, to geopolitical facts, and to moral and political norms. In particular, they are sensitive to the forms that military organization takes. Since the emergence of modern states in Europe some 500 years ago, there have been three main such forms: private providers—in the form of mercenaries, in early modern Europe—then professional standing armies, which in turn developed into citizen armies. Although elements of the three organizations have coexisted in many armies, the citizen army model has dominated until recently. That model brought with it a particular conception of the accountability relations between the army, the state, and the people. The state had authority over and directed the army, which was accountable to it. In turn the state was accountable for its use of the army to the people, on whose behalf it acted.

The dominance of state authority over the military is now under strain, with the professional and private elements—in the form of private military and security companies (PMSCs)—having increasing importance. As those elements increase in power and presence, so it becomes more difficult to make the state accountable to the people for its use of the military, and more difficult for the people to act as a restraining force on the way in which the military used.

In this essay, I outline and assess these developments—with particular emphasis on the emergence of PMSCs—in the light of a liberal view of (political) violence. The essay focuses on the situation in the United States, which possesses by far the most important military force in the world today, and in which the use of PMSCs is most developed. The paper has three main sections and a brief conclusion: the first section sketches the liberal view of violence and its implications for organizations dedicated to its use; the second outlines the salient characteristics of the three historically dominant forms of armies; and the third looks at the current situation in which the three forms coexist uneasily.     

Special report on taxation. New IRS revenue procedure clarifies tax classification of limited liability companies

Although its rules are complex, the publication of Revenue Procedure 95-10 will substantially facilitate the use of LLCs in those states with statutes that permit significant flexibility in the structuring of LLCs. Previously, the only way to assure that LLCs in those states would be classified as partnerships for income tax purposes was to obtain a private letter ruling from the IRS, often resulting in lengthy delays. The new revenue procedure should provide sufficient guidance in the vast majority of cases to allow tax counsel to determine the appropriate treatment for tax purposes without having to seek an IRS private letter ruling.     

The EU's Private Law in the Regulated Sectors: Competitive Market Handmaiden or Institutional Platform?

The article contests the claim that EU private law is narrowly circumscribed by a market rationality. Such a claim tracks broader criticism of EU functional legal integration, although it tends to obscure the underlying transformative pressures on private law and regulation and the role EU law plays in coping with such pressures. To offer a number of counter‐narratives, the article draws on examples from the regulated sectors, including telecommunications and energy, to reveal their experimentalist features. These suggest that EU private law is constructed through a process of error‐corrections, which allows for mutual adjustment of instruments and hybridisation of EU and local policy goals. The process results in more finely grained assemblages of autonomy and regulation to respond to concrete problems or newly salient policy goals, so that markets are understood as social institutions that are always works‐in‐progress rather than convergence points. Thus, EU private law provides a platform for transnational market‐building through innovating institutions that promote various normative and policy commitments despite the interdependencies that could undermine them.     

Public-private partnerships in the fight against terrorism?

Based on a case study of the role of private financial institutions in the fight against terrorist financing, this article examines the rationales for, and actual results of, public-private partnerships in counterterrorism. It shows that there is still a lack of appreciation of the roles that regular private business play, both willingly and unwillingly, in the fight against terrorism. As profit, rather than security, maximizers, private sector actors may decide to take certain security risks rather than addressing them directly, which in contrast is expected from public agencies. As a consequence, public-private partnerships have not been the silver bullet that the representatives of public agencies had hoped for since 9/11. In fact, to many private sector representatives, they are more akin to public-private dictatorships.     

从使用武力法看保护的责任理论

保护的责任是21世纪初国际上出现的新理论。将该理论中的军事干涉因素与《联合国宪章》关于使用武力的规定进行比较,观察近10年来国际社会的有关实践,可以认为该理论并未在国际法上改变现行的使用武力法规则,国际社会对该理论中军事干涉问题并未形成共识。现阶段对以军事手段实施保护责任应持谨慎态度。     

Policing Protest Events: The Great Strike of 1877 and WTO Protests of 1999

The notion of the police as protecting dominant economic interests is explored by presenting two case studies of direct action social movements occurring nearly 100 years apart. Recent protests in response to a non-state international organization (the World Trade Organization) are compared with a major labor strike of the late 19th century (the Great Strike of 1877). Historical data supports the contention that, despite many changes to contemporary policing strategies, the police are routinely used to protect existing economic structures. These narratives demonstrate how shifts in economic institutions shape formal social control practices. Comparing these events reveals how new technologies have allowed for certain adaptations and innovations for contemporary protesting and protest breaking activities. It is argued that the police institution should not be understood as only charged with responding reactively to criminal violations, but rather as serving more important social functions such as protecting dominant economic structures.     

论专属经济区军事利用的法律问题

专属经济区是海洋法公约创设的自成一类的新海域和新制度。沿岸国对其自然资源拥有主权并享有专属管辖权。其他国家在沿岸国专属经济区虽享有“航行、飞越”等有关军事利用的自由,但这种自由不属于传统的公海自由,其上覆区域也不是“国际空域”。因此,任何国家任何形式的军事利用活动,都必须尊重沿岸国的主权和安全,只用于和平目的,禁止一切非法活动。沿岸国和其他国家在专属经济区水体和海床军事利用权限的范围和程度上是有区别的。     

Coasean markets

Coase’s work emphasized the economic importance of very small markets and made a new, more marginalist form of economic “institutionalism” acceptable within mainstream economics. A Coasean market is an association of persons with competing claims on a legal entitlement that can be traded. The boundaries of both Coasean markets and Coasean firms are determined by measuring not only the costs of bargaining but also the absolute costs of moving resources from one place to another. The boundaries of a Coasean market, just as those of the Coasean business firm, are defined by the line where the marginal cost of reaching a value-maximizing bargain by trading inside just equals the marginal cost of going outside. This focus on very small markets is a defining characteristic of modern Transaction Cost Economics. In analyzing such markets Coase ignored the eclectic, historical and behaviorist approach of the old institutionalists and applied the greater formalism and of marginal analysis. In the process, however, Coase assumed away important issues that the first generation of institutionalists were trying to address and created some new ones, such as how equilibrium is attained in Coasean as opposed to neoclassical markets. The most important difference between the two is that a Coasean market requires the unanimous consent of all participants before a trade can be made—a condition imposed by Coase’s own requirement of reciprocity, developed in The Problem of Social Cost (J Law Econ 3:1, 1960). The equilibrium problem is substantial but its significance has not been sufficiently developed. As a result, Coasean analysis of the business firm has made much more progress than has Cosean analysis of markets for legal entitlements. Further, the superiority of private governance over legislation, an important attribute of Coase’s argument, loses much of its force as the number of participants in Coasean markets increases beyond two. Research on the management of commons resources has contributed greatly to our understanding of when private resource allocation decisions by larger groups of owners succeed and when they fail. While not all common resources markets are of the kind contemplated by Coase they share many relevant characteristics. Further, the economic literature on private governance arrangements for the commons has found it necessary to step beyond the strict marginalist methodologies of Coasean economics and look more broadly to the historical, biological and social motivations for human cooperation.     

The governance of the financial action task force: an analysis of power and influence throughout the years

The international fight against money laundering illustrates changes in global governance as a result of the increasingly cross-border nature of crime and the need it creates for all involved to cooperate. The economic priorities and security concerns that surround it contributed to the strong evolution of global governance in this area and the status of anti-money laundering as a shared problem. The creation of the Financial Action Task Force (FATF), its expansion and cementation throughout the years, is a good example of the many forces working together to responding to the demands of emerging criminal threats and trends. It offers a good illustration of how relationships in global governance have influenced FATF’s priorities and action and ultimately the way in which illicit financial flows are tackled. This analysis offers an overview of FATF’s network across time taking into account the role of states, international organisations, and the private sector in the decision-making processes. It argues that Great Powers – a small, but aligned, group of states of global economic relevance – are responsible for FATF’s direction and the international efforts against illicit financial flows. It suggests, however, that unlike what could be expected, their power is declining following the rise of private sector influence through resourceful, organised and transnational actions e.g. on information sharing.     

Tertiary Education in Security and Policing in Australia

This paper reports on the current status of police and security education in Australian universities and technical colleges. The study was undertaken in the context of calls for greater professionalisation of policing and security along with a variety of conduct scandals that have driven reform agendas for both sectors. The study found that police studies had a significant profile in universities with a wide range of courses available, but virtually no profile in technical and further education (TAFE) colleges. Conversely, protective security offerings were proportionately more prominent in the TAFE sector than in universities. Courses in information and communication technology security were more common across universities and TAFE. The research also found that, of the 39 Australian universities, 9 have research centres related generally to policing and security. These also appeared to favour policing over security. We argue that these findings should be of concern, given the fact that private and public sector security services have eclipsed police, in numbers at least, in many jurisdictions. Security should, we argue, be counted as an equal partner with police in crime prevention services. In addition, we argue that those engaged in security management should be given greater opportunities for study at the university level. Moreover, security studies should have an expanded research focus.     

THE CASE OF EXPORT CARTEL EXEMPTIONS: BETWEEN COMPETITION AND PROTECTIONISM

Most competition laws do not prohibit anticompetitive conductthat affects foreign target markets as long as there is no spillover effect on the home market. The U.S. in particular justifiesthis leniency towards export cartels by the aim of increasingefficiency in target markets that are suffering from high entrancebarriers for importers. Attempts to use the legal regime ofthe WTO to overcome private restrictions of competition arelikely to fail, because of the fundamental differences betweentrade policy and competition policy. Although a multilateralcompetition policy would be best suited to challenge exportcartels, the current state of the political debate makes itmore likely that second-best solutions such as capacity buildingin lesser developed target states will have to be established.     

Critiquing the regulation of private security in the United Kingdom: views from inside the sector

ABSTRACT

The UK Private Security Industry Act 2001 provided the legal mechanism for the statutory regulation of parts of the private security sector with the explicit aim of reducing criminality in the industry and raising standards. It created the Security Industry Authority as the regulator which commenced operation in 2003. Since then, it has received mixed reviews, and proposals have been forwarded to change its status and the way it works. This paper provides insights from two groups most affected by regulation: security specialists who buy security, and managers and directors of security companies who are subject to regulation and work with its strengths and weaknesses. The paper reports on their views of both the existing regime and some proposed changes. It suggests that the regulator and the industry share similar views albeit there has been a lack of emphasis on what it takes to enhance the ability of the industry to support the public generally rather than just those who pay.     

Common past - different paths: Exploring state regulation of private security industry in Eastern Europe and post-Soviet republics

ABSTRACT

In this paper, we explore the nature of the security guard industry with a focus on security guard employment relative to police officer, the diverse legislative guidelines pertaining to the scope of their functions, employment eligibility, training, and legal powers in the new independent and post-socialist countries in Eastern Europe and post-Soviet republics. Findings suggest that despite the rapid proliferation of private security industry in the post-socialist countries relative to the gradual growth experienced in the European continent in many of the new independent states, public police continue to play a critical role in the form of employees of state-owned security guard companies. Further, we find considerable disparity in the employment ratios of police officers and security guards in these countries though not much variation in the rigor of legislative framework for private security guard employment in the post-socialist nations appeared, which was minimal at best.     

Subcontracting military power: The privatisation of security in contemporary Sub-Saharan Africa

This article seeks to establish a clear differencebetween the classical view of mercenaries as hiredguns and the more recent, business oriented,phenomenon of private security companies. Thelimitations of the definitions currently used ininternational law will be explored and their impact onthe control of private military forces assessed. Thearticle will then go on to identify the particularcircumstances existing in Africa that provide such afertile environment for the operation of privatesecurity companies. The activities of ExecutiveOutcomes and Sandline International Ltd will be usedas case studies, particularly their operations inSierra Leone. Their corporate connections will behighlighted, especially their links to mineralextraction companies, and how these are used tofinance their operations by the host countries.Finally, recent attempts to legislate to control theactivities of these companies are examined.     

私人自治与法律行为

私人自治在民法中居立龙头之地位,而法律行为乃实践私人自治的工具。由于我国对法律行为的这一思想基础与价值内核认识得并不深切,因此,在理论、立法与司法诸层面上都肇致了明显的弊端。私人自治虽非包治百病的灵丹妙药,私法亦应诉诸自治外的其他法律价值以使自己能顺应社会发展与时代变迁,但私人自治构成私法的公理性原则却属无可动摇的既定事实,执掌权柄者时刻都应毋忘“自由主义的剃刀”。在我国,就法律行为制度的应然状态而论,目前最主要问题并非其“私人自治”的烙印过深,而是“私人自治”的色彩还太过薄弱。立法者应在真正理解私人自治精神的基础上,本着捍卫私人自治的信念来从事民法典中法律行为制度的具体构建与设计。     

Unaccountable: The Current State of Private Military and Security Companies

Abstract

The current accountability system for private military and security contractors (PMSCs) is woefully inadequate, and mere enhancements in oversight cannot hope to remedy that failing. I contend that once we recognize the kind of accountability required of PMSCs, we will realize that radical changes in the foundational relationship between PMSCs and the state are required. More specifically, in order to be appropriately accountable, members of PMSCs must become a part of or, at the very least, directly responsible to the legitimate authoritative military or police structures, and there must be a clear and precise delineation of responsibility among public officials for holding individual members of PMSCs criminally liable.     

Revisiting the Role of Private Military and Security Companies

Abstract

This essay addresses the role of private military and security companies (PMSCs) in security governance. In this context, it offers a historical overview of some of the main developments in the evolution of private warfare and critically discusses some of the key challenges confronting the quest for holding PMSCs accountable in accordance with international human rights and humanitarian norms.