Learning from Enron

This essay argues that the Enron affair has been misunderstood as a failure of monitoring, with adverse consequences for the drafting of the Sarbanes-Oxley Act and the Higgs report. Where Enron’s board failed was in underestimating the risks that were inherent in the company’s business plan and failing to implement an effective system of internal control. Enron demonstrates the limits of the monitoring board and points the way to a stewardship model in which the board takes responsibility for ensuring the sustainability of the company’s assets over time

Collective Employee Representation and the Impact of Law: Initial Response to the Employment Relations Act 1999.

Using data gathered primarily during interviews with managers and trade union officials, this article examines how trade unions and employers have reacted to the introduction of the statutory procedure for union recognition in the Employment Relations Act 1999 (ERA). Findings indicate that the ERA and the drift of EU influence have had a substantial effect in shifting the balance of employer attitudes towards greater approval of trade unions and have accelerated the rate at which employers are redesigning their relationships with unions. Although employers are tending to restrict unions' influence over traditional issues such as pay-setting, they are increasingly seeking their assistance in implementing difficult organisational changes. The article explores the impact of such changes on trade union activity and collective representation more broadly.Collective bargaining, employee representation, trade union recognition labour legislation

Anglo-American corporate governance and the employment relationship: a case to answer

The corporate governance environment in the UK and US is generally thought to be hostile to the emergence of cooperative employment relations of the kind exemplified by labour-management partnerships. We discuss case study evidence from the UK which suggests that, contrary to this widespread perception, enduring and proactive partnerships may develop, in conditions where management can convince shareholders of the long-term gains from this approach, and where other regulatory factors operate to extend the time-horizon for financial returns. We conclude that there is more scope than is commonly allowed for measures which could reconcile liquidity in capital markets with cooperation in labour relations

Contracts and Capabilities: An Evolutionary Perspective on the Autonomy-Paternalism Debate

An evolutionary conception of contract law is suggested as a basis for assessing claims made in the autonomy-paternalism debate. Paternalism forms one part – although by no means the whole – of a discriminating approach to contract enforcement. Selective enforcement is a long-standing feature of contract law systems, which have developed alongside the emergence of market-based economies in liberal democratic societies. Contractual regulation of this kind can be justified in normative terms by reference to capability theory. Markets are significant capability-enhancing institutions, but their effect depends on complementary regulatory mechanisms, including some of those commonly (if not always accurately) termed ‘paternalistic’

On Heaven's Lathe: State, Rule of Law, and Economic Development

AbstractWe propose a theoretical framework for understanding the evolution of the rule of law state, which is conceived as the equilibrium of a societal game in which actors accept the legitimacy of publicly enunciated legal rules. A meta-norm of respect for the sovereign legal power of the state is not self-forming on the basis of private conduct, but requires the coevolution of impersonal market exchange with effective state capacity to constitute and regulate markets. A functioning legal system must acquire the means not just to control private power but to constrain other organs of government. The emergence of such a ‘self-limiting state’ is an historical process which, while complementary to a market order, is also contingent and path-dependent, and is not preordained. Illustrating our argument with empirical evidence drawn from the contemporary experience of middle-income countries, with a focus on China, we argue that alternatives to the rule of law state, including interpersonal trust, closed networks and authoritarian political control, can only achieve limited scale and scope effects, and are prone to high deadweight costs arising from corruption and the capture of the public sphere by private interests. We also discuss the potential of transplants of legal rules and institutions to catalyse the transition to impersonal trade based on the rule of law, and present evidence, from time-series econometric analysis, that the diffusion of shareholder protection laws has the potential to support financial development in emerging markets. Evolution towards the rule of law state is, we conclude, one possible developmental path for middle-income countries.This is the final version of the article. It first appeared from De Gruyter via http://dx.doi.org/10.1515/ldr-2014-003

How should India reform its labour laws?

This paper examines the current policy debate around the reform of labour laws in India, which has been stimulated in part by the success of the “Gujarat model of economic development.” Gujarat’s deregulatory reforms have included changes to the legal regime governing employment terminations, which could form a basis for a change in national-level labour laws. Evidence linking labour law deregulation to growth, however, is weak, whether the focus is on India or the experience of other countries. Building labour market institutions is a long-term process which requires investment in state capacity for the management of risks associated with the transition to a formal economy.ESRCThis is the final version of the article. It first appeared from Sameeksha Trust via http://www.epw.in/journal/2015/12/special-articles/how-should-india-reform-its-labour-laws.htm