REVIEWS
“A brilliant exploration of the legal infrastructure that underlies global financial markets. Combining legal expertise and sociological insight, Professor Riles offers a lucid and illuminating investigation of the role that legal elites in Japan and other developed economies played in reforming legal doctrines to facilitate trillions of dollars of trading in OTC derivatives. While these reforms are often characterized as freeing private markets to shoulder financial risks, Collateral Knowledge persuasively argues—and the global financial crisis confirms—that the legal infrastructure for derivative transactions could not protect private investors from their own folly nor insulate the general public from the consequences of private miscalculation.”
— Howell E. Jackson, Harvard Law School
“Collateral Knowledge is a complex, clever, stimulating, and ambitious text on an important topic. Annelise Riles upends current debates about regulation and deregulation, private versus public interest, and financial globalization by calling our attention to the unobtrusive yet pervasive technical devices that private actors use to do their business. Innovative and interesting, the book makes a key scholarly contribution while engaging a wide audience concerned with global markets. Collateral Knowledge is a real blockbuster.”
— Bruce Carruthers, Northwestern University
“Collateral Knowledge provides a complex, rigorous, and compelling analysis of collateral—the tools and techniques that are meant to assert that ‘property’ lies somehow behind a financial transaction and underwrites it. Riles shows how the set of legal techniques and knowledges that constitute collateral is centrally implicated in the practices of global finance and in the ideological discourses promoted by figures from Hayek to De Soto on the privatization of public goods and the substitution of law by arbitration. She unpacks collateral’s technicalities, its position in a network of technocratic rationalities and actions, and its political effects in relation to legal process and understandings of law and state in the financial markets.”
— Bill Maurer, University of California, Irvine
“[A] fresh and thought-provoking perspective. . . . Collateral Knowledge is a worthwhile contribution to the discussion of the global financial crisis and the more democratic path we should forge in its wake.”
— Harvard Law Review
“Collateral Knowledge surely inspires difficult thinking about private law and financial regulation, using collateral in derivatives markets as a complex and interesting context.”
— Heather Hughes, Journal of Law and Commerce
“Riles, an expert on East Asia (and on Japan in particular), has spent years talking with Japanese finance lawyers and bureaucrats, and observing their activities. Empirically, she provides a firsthand account of all the legal issues and uncertainties related to exchanges of collateral, of the definitional issues, and of the daily negotiations that make such exchanges possible. She shows a deep knowledge of both theoretical legal issues and her particular field, and argues convincingly that all social scientists interested in global financial markets should pay close attention to the latter’s legal knowledge and institutions.”
— Alex Preda, King's College London, Law & Society Review
“Collateral Knowledge provides compelling evidence that global finance arises out of a distinct form of technical regulation. This work is essential reading because it sheds light on the constitutive power of the law in financial activity, which is being egregiously ignored in both scholarship and public policy discourse. Riles shears away laborious literature reviews and superfluous ethnographic detail to provide a robust example of what interdisciplinary financial scholarship can accomplish.”
— Martha Poon, New York University, American Anthropologist
“A refreshingly unconventional addition to the literature on law and finance.”
— Political and Legal Anthropology Revew
TABLE OF CONTENTS
Acknowledgments
Introduction: Private Governance, Global Markets, and the Legal Technologies of Collateral - Annelise Riles
DOI: 10.7208/chicago/9780226719344.003.0001
[global swap markets, technology of collateral, national bankruptcy codes, global governance, private governance, ethical abuse, free markets, self-regulation, derivatives traders, collateralization, global private law solutions]
Global swap markets are seen as economically irrational, financially dangerous, and prone to ethical abuse, another dimension of the same market has emerged as solid, respected, and even morally and ethically empowered. This chapter focuses on an element known as collateral. Collateral survived during a time of major changes in market ideologies with its reputation intact when so much else of what once was unquestionable belief—free markets, self-regulation, the innate brilliance, and rationality of derivatives traders—now seems like a quaint mythology from a strange other world. In the simple technology of collateral, this nexus of paper documents, legal theories, legal experts, clerical staff, computer technologies, statutes, and court decisions are encapsulated by some very grand hopes. As a transplanted legal technology, collateralization is paradigmatic of global private law solutions. Although collateral is rooted in multiple bodies of national law, it is also a device for running an end-game around certain aspects of national law, such as national bankruptcy codes. Global governance has increasingly become private governance—regulation through technical legal devices that take power out of the hands of public entities and put it in the hands of private individuals, corporations, and armies. (pages 1 - 28)
This chapter is available at:
https://academic.oup.com/chica...
What Is Collateral?: On Legal Technique - Annelise Riles
DOI: 10.7208/chicago/9780226719344.003.0002
[collateral, legal knowledge, legal technique, technocracy, legal theory, global banks, back offices, lawyers, documents]
Collateral sets the stage by introducing the lawyers and the documents in the back offices of derivatives units of global banks to consider what kind of knowledge and forms of subjectivity are being produced under the guise of “collateral.” The main function of collateral is to hold back risk, which simply means to place limits on the indeterminacies associated with social, political, economic, and temporal relations. How does collateral accomplish this? Collateral is sometimes a legal theory, sometimes a material object, sometimes a person, and sometimes an institution. In each case, however, collateral is a set of routinized knowledge practices. This chapter explores the role of these routinized practices in resolving or at least obviating the complex political and epistemological questions that surround derivatives trading. But rather than a smoothly oiled machine, collateral when seen from up close emerges as an assembly of glitches, of mistranslations, misunderstandings, and redundancies. (pages 29 - 84)
This chapter is available at:
https://academic.oup.com/chica...
The Technocratic State - Annelise Riles
DOI: 10.7208/chicago/9780226719344.003.0003
[Technocratic State, netting, Japanese legal reforms, technical legal knowledge, derivatives market practice, ethnography, neoliberal reforms, collaboration]
This chapter explores the public side of technical legal knowledge. What does technical legal knowledge look like? How is it different when it is practiced by agents of the state? The Technocratic State turns to the public side of legal knowledge practices—and in particular to how legal expertise is deployed within the regulatory state. This chapter is based on two examples from different times and places—the American legal reforms that radically revised the law of collateral into the law of “secured transactions,” and the initial stages of Japanese legal reforms aimed at resolving the question of the legality under the Japanese law of the derivatives market practice known as “netting”. There are important similarities between public and private legal expertise. But at the same time there are also differences. Technocrats' concern with making legal expertise realistic leads to an emphasis on mixing legal expertise with other forms of expertise, from economics to ethnography, and with a concern with technologies of collaboration with market participants. Over the last few decades, knowledge practices have become the target of a pervasive and sophisticated neoliberal critique. Early twentieth-century legal scholars put forward the technocrat as the model subject, and the judge, lawyer, and legal theorist were to think of themselves as technocratic administrators, nothing less and nothing more. The neoliberal reforms framed an attack on the very same character of the technocrat. (pages 85 - 112)
This chapter is available at:
https://academic.oup.com/chica...
Unwinding Technocracy - Annelise Riles
DOI: 10.7208/chicago/9780226719344.003.0004
[unwinding technocracy, nontransparent economy, technocratic state, bureaucratic rationality, governmental regulation, regulatory state, neoliberal revolt, market reforms, market]
This chapter explores the technocratic state which was framed as a problem of bureaucratic rationality. It does this through an ethnographic account of one instance of crisis surrounding the authority, legitimacy, and efficacy of governmental regulation of the market. This crisis involves a neoliberal revolt against the regulatory state and the chapter looks at its consequences. This chapter describes how this critique—originating in the academy, but picked up by politicians, journalists, and eventually by bureaucrats themselves—reframed the informal ways Japanese bureaucrats had long regulated the economy as “nontransparent” or even “corrupt,” and how the target of such political claims became the person of the bureaucrat and his or her personal ethics. At the same time, parallel “reformist” projects attacked the legal subjectivity of the population. Finally, this chapter presents arguments that state that many current proposals to reform the markets and their regulation, despite their cheerful modesty, make very much the same move. (pages 113 - 156)
This chapter is available at:
https://academic.oup.com/chica...
Placeholders: Engaging the Hayekian Critique of Financial Regulation - Annelise Riles
DOI: 10.7208/chicago/9780226719344.003.0005
[private governance, public governance, private legal technique, public legal expertise, over-the-counter derivatives markets, bureaucratic planning, market, private expertise, market risk]
This chapter provides a discussion of private and public governance by considering how private legal technique might translate into new public governance methods. The debate on the proper relationship between the state and the market, and regarding the optimal design of regulatory institutions, often turn on assumptions about the workings of legal expertise—and in particular about the difference between public expertise and private expertise. This chapter takes on Hayekian arguments against government regulation through a detailed examination of real-world examples of how public and private legal technologies manage the temporal dimensions of risk in the over-the-counter (OTC) derivatives markets. Hayek's description of the limitations of bureaucratic planning resonates with the sense of powerlessness and frustration experienced by many government officials as they attempt to manage economic fluctuations. But Hayek's account of the limits of well-meaning public legal expertise is far less complete when it comes to the strengths of private legal reasoning. Public reasoning has temporal weaknesses, so private reasoning must have equivalent temporal strengths. In order to understand the root of this legitimacy gap, the chapter considers how collateral, as a private legal technology, handles the temporal uncertainties surrounding market risk. (pages 157 - 184)
This chapter is available at:
https://academic.oup.com/chica...
Virtual Transparency - Annelise Riles
DOI: 10.7208/chicago/9780226719344.003.0006
[virtual transparency, global demands, netting problem, hollow core, legalism, legal aesthetics, legal interpretation, drafting]
This chapter focuses on the move from plans to solve the “netting problem” through a legal interpretation of existing law, to the drafting of an entirely new law with a very peculiar form—a “hollow core”, i.e., a law in which all the key terms, from whom it applies to, to what actions are permitted and what are sanctioned, are left to be filled in by bureaucrats at a later date. Although this new law was portrayed by its supporters as a departure from legalism in favor of a more economic approach to law, in line with the public choice approaches, argue that in fact it exemplifies the subtle power and efficacy of legal aesthetics. This exemplar of transparency-in-the-making therefore provides a platform for considering understandings of legal form and its uses, including the ways the very embrace of globally transparent legal form may provide a kind of camouflage age from the insatiable global demands for transparency itself. (pages 185 - 222)
This chapter is available at:
https://academic.oup.com/chica...
Conclusion: From Design to Technique in Global Financial Governance - Annelise Riles
DOI: 10.7208/chicago/9780226719344.003.0007
[global financial governance, regulation, financial regulatory reform, ethnography, global financial regulation, private regulatory governance, global financial system]
This chapter focuses on the implications of the ethnography for current debates about financial regulatory reform. It pulls forth the real-world examples presented in this book together to consider their implications for the limits of existing ways of thinking about regulation and governance, and the possibilities for imagining alternatives. This chapter shows how the techniques of private regulatory governance provide a little-noticed, less-glamorous, but ultimately highly effective and even potentially transformative alternative to most other current proposals to rebuild the “architecture” of global financial regulation. The ultimate goal is to shift the mood of crisis surrounding the regulation of the global financial system away from simple stories of good and bad apples, of villains and victims, cops and robbers, toward a more sophisticated public understanding of the techniques that make up private and public forms of governance. (pages 223 - 248)
This chapter is available at:
https://academic.oup.com/chica...
References
Index
