What is the global challenge? | SUSTAINABLE ECONOMIC GOVERNANCE
The looming future of the world is existentially dramatic: emerging ecological collapses, drastic political and social inequalities, regular economic instabilities, growing cultural suppression.
The current international political governance bodies (i.e. the United Nations) are weak and not powerful enough to solve these existential problems. Instead, the dominating and almost sole (self-) governance tools of the world are global markets.
Global markets are based on money mostly in form of credit. Debt is a core medium of the global economic system and key to economic world governance.
A purely (neoclassical) financial conception of debt is kept in the reductionist logic of endless economic growth and an essential driver of unsustainable development.
We need a more holistic and sustainable conception of debt and global governance mechanisms for reflexive debt deliberation.
How do we address it? | GOVERNING DEBT BY ITS LIMITS
Modern financial debt relations are legal relations. Debt relations are constructed by contract law. Yet, the even more decisive framing for debt relations and conditions comes from insolvency law.
Insolvency law offers a collective mechanism to deal with debt default (‘insolvency’) including solutions of (partial) debt relief and restructuring. As insolvency law defines the limits of debt, it could be a nucleus to rethink any conception of debt.
The project tries to shed light on the structures and normative background of priorities, restructuring and relief procedures across corporate, consumer and sovereign debt. The core studies implement comparative analyses of insolvency and restructuring laws worldwide. The project aims to trace normative patterns, legal origins, cultural paradigms and political economies. The quantitative and qualitative comparative analyses intend to enlighten the complex relation between law and debt as much as to identify possible leverage elements for global debt governance.
A further take on the problem is an experimental approach. Economic experiments study possible causal relations between the legal design of insolvency procedures (i.e. different distribution or procedures) and incentives to hand out credits.
Where are we heading? | REFLEXIVE DEBT DELIBERATION
The classic conservative understanding of ‘insolvency law’ was economic distribution of assets between creditors. The progressive turn of ‘resolvency law’ includes the economic rehabilitation of debtors. Yet, only including further (private and public) interests and actors allows for a more sustainable conception of ‘reflexive debt’.
‘Reflexive resolvency law’ means democratic debt deliberation that integrates other social interests and stakeholders. Only such a broad approach to insolvency law could constitute debt as a reflexive socio-economic medium integrating and balancing all social rationalities (economic, political, ecological and cultural).
Where do we come from? | THEORETICAL CONTEXT
The understanding of law as reflexive deliberation builds on three theoretical models (legal constitutionalism, discoursive normative grammar, reflexive sustainabilities), which will also be further elaborated within the project.
(1) LEGAL CONSTITUTIONALISM means that the legal system serves as an essentiel institutional constitution for other social systems (e.g. contract and property for the economic system). Different legal desgins are considered to transform other social systems (e.g. change the economic market structure).
(2) DISCOURSIVE NORMATIVE GRAMMAR is a reconstructive model of basic normative values for social (legal) argumentation as a common framework (‘grammar’). The model allows e.g. for a normative comparison of different legal orders and the reconstruction of its normative paradigms.
(3) REFLEXIVE SUSTAINABILITIES is a complex sustainability model differentiating natural from social systems sustainability. The model reads a system specific sustainability as core normative foundation of every social system (economic sustainability, political sustainability, cultural sustainability, ecological sustainability). As these system specific sustainabilities could not only conflict with each other but also with natural sustainability a reflexive approach is needed to balance different natural and social system normativities.