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Part I
Franz L. Neumann, Globalization, and the Rule of Law
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1
Franz Neumann
Legal Theorist of Globalization?
Few facets of the Frankfurt School theorist Franz L. Neumann’s political and legal theory are as unfashionable today as his neo-Marxist account of the decline of classical formal law. Even sympathetic commentators concede that Neumann relied on an idealized and probably unrealistic portrayal of classical liberal jurisprudence, as well as an excessively functionalist interpretation of legal development.1 At times, Neumann indeed stressed the inexorable decay of modern law in a manner that obfuscates its key features at least as much as it helps make sense of them. Although Neumann sought to overcome the normative deficits of traditional left-wing legal theory by ascribing an “ethical function” to the rule of law, even this facet of his theory always remained underdeveloped. Neumann never fully liberated himself from a Weberian-Marxist intellectual background that ultimately minimizes law’s immanent normative—and, more specifically, democratic—qualities.
Nonetheless, I would like to suggest that precisely those features of Neumann’s thinking most criticized by contemporary commentators represent a surprisingly rich starting point for understanding key contemporary legal trends. My aim is not to resurrect Neumann’s Marxism. It is striking, however, that Neumann’s brilliant account of the economic origins of the “deformalization” of law anticipates core legal attributes of the ongoing process of globalization. Furthermore, Neumann’s explanation for those trends seems prescient as well. Globalization provides substantial empirical support for Neumann’s thesis that the altered context of contemporary economic activity tends to reduces capital’s traditional reliance on relatively formalistic modes of law and legal reasoning. Neumann’s emphasis on the manner in which the traditional “elective affinity” between capitalism and formal law no longer obtains within contemporary capitalism offers a useful corrective to contemporary neoliberal conceptions of globalization, according to which market-oriented economic reforms and liberal legal reform necessarily represent two sides of the same coin.2 In contrast to the dominant neoliberal view, globalization suggests that Neumann was justified in suggesting that the relationship between capitalism and law was likely to be complicated by a limited interest among privileged business interests in achieving strict, clear, public, and prospective forms of general law.
I begin with an explanation for why I do not consider it implausible to interpret Neumann as having tackled issues presently grouped under the rubric of globalization. I then revisit his theory of the “functional transformation of law,” before suggesting its virtues as a preliminary basis for interpreting ongoing trends in contemporary international economic law. In Chapters 2 and 3, additional evidence is adduced to support Neumann’s counterintuitive insight that contemporary capitalism no longer relies as it once did on a panoply of legal institutions and devices long associated with the noble ideal of the “rule of law.” Before providing this evidence, however, I suggest ways in which the legal structure of economic globalization shows how Neumann’s analysis of legal development might be revised.
NEUMANN ON GLOBALIZATION
The present-day tendency to ignore the ways in which globalization represents a long-term historical process3 may lead us to miss the fact that features of the ongoing debate about globalization were anticipated by a series of heated disputes about international law in the 1930s and 1940s. Neumann’s main intellectual nemesis, and Germany’s leading twentieth-century right-wing authoritarian theorist, Carl Schmitt, played a key role in those debates. Neumann’s response to Schmitt represents a cautious attempt to grapple with what we nowadays describe as globalization.
Schmitt’s infamous theory of the Grossraum [greater region] has rightly been criticized, not the least because of its unabashedly Nazi and anti-Semitic connotations.4 However despicable his political aims, Schmitt’s account of the Grossraum nonetheless succeeded in anticipating conspicuous features of the present-day debate about globalization. According to Schmitt’s analysis, modern technology and contemporary forms of economic organization outstrip the legal and regulatory capacities of the nation-state; the increasingly supranational composition of such activity cries out for no less supranational forms of regionally based political and legal authority. Modern mass media allow political propaganda to reach the homes of foreigners living thousands of miles away at the blink of an eye; contemporary air warfare renders traditional national borders porous to an extent unfathomable to our nineteenth-century predecessors; markets and economic activity increasingly rest on complex cross-border networks. Existing nation-state borders consequently tend ever more to possess limited relevance given the economic and technological possibilities of a globe that seems to shrink in size daily, and the modern nation-state is destined to be jettisoned for a set of “greater regions” better attuned to the functional imperatives of the “space revolution” [Raumrevolution] presently revolutionizing the time and space horizons of crucial forms of human activity.5 In this conceptual context, Schmitt not only viewed Nazi imperialism as a fitting answer to the political challenges of his time, but he also came to argue that a unified European continent (under German control, of course) might provide a better answer to the political and legal challenges at hand than its American and British competitors. Eerily echoing some contemporary right-wing critics of neoliberalism, Schmitt insisted on the need for extensive state intervention within contemporary capitalism and simultaneously insisted that indispensable forms of state coordination of the economy were destined to prove ineffective when undertaken on the global scale. In other words, a Nazi-dominated regionalized European Grossraum might succeed in negotiating the regulatory challenges of contemporary social and economic life, whereas the U.S. and British preference for a global free market—for Schmitt, nothing more than a specific form of imperialism derived from certain special traits of U.S. and British experience—risked stumbling on the instabilities of laissez-faire capitalism.6
If we bracket the unsightly facets of this account for just a moment, we can see that Schmitt managed to foretell at least three features of the contemporary debate on globalization. First, he rightly identified the nation-state’s declining capacity for providing effective regulatory answers to a host of core—and especially economic—problems. Second, he no less accurately began to grapple seriously with dramatic ongoing changes in the space and time horizons of human activity, anticipating many facets of the present exchange among social theorists about the centrality of the process of “time and space compression” for understanding globalization. Well before Zygmunt Bauman, Anthony Giddens, and David Harvey, Schmitt rightly presaged that we could only make sense of the decline of the nation-state by focusing on the manner in which the heightened pace of human activity tends to minimize the significance of distance.7 Third, he anticipated the increasingly widespread view that the best way to deal with the exigencies of globalization is by building regionally-based political and economic blocs able to protect its members from the vicissitudes of an unstable global neoliberalism under U.S. auspices. Of course, Schmitt would hardly have defended a social democratic European Union as a bulwark against the neoliberal “race to the bottom.” Yet he might have recognized in the European Union an attempt to come to grips with some of his own worries about what he described as the irresponsible Planfeindlichkeit [“hostility to planning”] of Anglo-American models of market capitalism.
From his exile at the Institute for Social Research in New York City, Franz Neumann carefully followed the development of a distinct Nazi discourse on international law, and a substantial portion of his encyclopedic discussion of National Socialism, Behemoth: The Structure and Practice of National Socialism, is devoted to providing a detailed survey of it. Unlike contemporary Schmitt apologists, Neumann had no illusions either about Schmitt’s significant role in that debate or the disturbing political implications of his reflections on the Grossraum. Although legitimately disgusted by Schmitt’s manifest enthusiasm for the Nazis, Neumann conceded that the technical and economic facets of Schmitt’s defense of the Grossraum raised difficult questions even for those hostile to Schmitt’s normative and political preferences: “The decline of the state in domestic and international law is not mere ideology; it expresses a major practical trend.”8 In a wide-ranging discussion of Nazi imperialism, Neumann underscored the peculiarities of German development—in particular, Germany’s status as a “late-comer” to industrialization—in order to explain the “efficiency and brutality” of Nazi imperialism.9 In the context of a world divided among “powerful states, each of them committed to protect its own economy,” free trade policies increasingly were unfeasible in interwar Europe.10 Germany’s far-reaching dependence on foreign trade thus meant that for Germany to integrate its neighbors’ economies advantageously into its own, it could no longer rely on “mere economic exchange … [O]nly with the help of political domination that incorporates the states into Germany’s currency system” could Germany hope “to trade successfully with them, that is, to transfer from them more labor for less labor.”11 Notwithstanding its distinct developmental traits, however, for Neumann there was no question that Nazi imperialism was integrally linked to structural components of organized (or, as he termed it, “monopoly”) capitalism. According to the neo-Marxist argumentation at the core of Behemoth, Nazi expansionism represented the most barbaric manifestation of trends latent within contemporary capitalist development. To the extent that those trends were universal, the decline in the significance of national borders evinced by the case of Nazi imperialism suggested that the decay of the core institutions of the nation-state potentially constituted a universal phenomenon as well.
For Neumann, Schmitt’s theory of the Grossraum offered a particularly onerous answer to the challenges of contemporary capitalist economic development, just as the emergence of Nazism represented a paradigmatic attempt to achieve political and legal forms suitable to the profound pathologies of monopoly capitalism. Neumann offered two responses to the Nazi theoreticians of the Grossraum of special interest for the present-day debate on globalization. First, he considered the claim that the achievement of a European Grossraum would allow for the unshackling of Germany from the pressures of the world economy wishful but misleading ideological talk. In contrast to a picture of the Grossraum as a protective shield against global capitalism, Neumann pointed out that a German-dominated Europe would probably remain dependent on foreign trade (in particular, for raw materials); Germany’s real aim was to manipulate its hegemonic position within a regionalized European economic and political bloc in order to gain protection from some imports while using its enhanced powers to gain greater access to foreign markets.12 Neumann thereby rightly intimated that the relationship between regional blocs and the global economy might take a variety of distinct forms. In the Nazi case (and in Schmitt’s corresponding theory of the Grossraum), regionalization represented nothing more than an assault on the indispensable achievements of universalistic liberal international law. Its claim to immunize Germany from the global economy in reality constituted a mask for improving the competitive position of Germany’s leading capitalist interests within the global economy at large. Neumann’s warnings on this point remain relevant today.13
Second, Neumann seemed to interpret Schmitt’s account of the decline of the nation-state as containing a kernel of truth but as overstated nonetheless. Perhaps he would have accused Schmitt of succumbing to what David Held more recently has aptly described as the “hyper-globalization thesis,” according to which the traditional nation-state has now been stripped of any meaningful instruments for stemming the tide of globalization.14 In any event, Neumann ultimately embraced an institutionally defensive position, according to which the gradual decline of the nation-state “expresses a major practical trend,” while nonetheless continuing to insist on the lasting achievements of the Westphalian system of states in the face of the Nazi threat. For Neumann, the modern notion of the legal equality of states guarantees a modicum of predictability in international politics. Schmitt’s quest to replace the traditional state system with a narrow set of Grossräume—each committed to developing a legal system appropriate to its “distinct” and particularistic ethnic and racial attributes—should remind us of the “progressive” functions of traditional notions of state sovereignty. The nation-state may be experiencing decay, but allowing it to be replaced by an international system that sheds the universalistic impulses of the modern state system would inevitably leave us with a system vastly more brutal than the existing one.15
Of course, whether Neumann would continue to insist on the progressive implications of state sovereignty in the context of contemporary attempts to develop liberal-democratic forms of regional authority (for example, the European Union) must remain an open question. At the very least, his skepticism forces those of us committed to developing new forms of transnational political and economic authority to make sure that they offer real gains in terms of self-government and the rule of law.16
The Decline of Formal Law
These introductory comments place Neumann’s account of the deformalization of classical formal law in a fresh light. Neumann, of course, argued that the decline of classical law was ultimately generated by the economic structure of contemporary monopoly capitalism, and thus represented a more or less universal trend. In monopoly capitalism, Neumann posited, the classical entrepreneur tends to be replaced by cartels, syndicates, and massive bureaucratic firms of which he becomes little more than a functionary; capital and management functions diverge; the classical market declines and state intervention takes on unprecedented significance; many economic risks are eliminated for the largest firms. To the extent that “the antagonisms of capitalism are operating in Germany on a higher and, therefore, a more dangerous level,” however, Nazi-dominated Europe provided a more unadulterated example of legal decay than the capitalist liberal democracies.17 Since nonformal law chiefly serves privileged private interests, for Neumann it was no accident that the legal order most immediately subject to the interests of the oligarchic sectors of capitalism, Nazi Germany, would ultimately abandon classical formal law in a more radical manner than its rivals. The destruction of the rule of law was most complete under Nazism chiefly because of the virtually unchallenged hegemony there of the most privileged capitalist classes, in contrast to the situation in liberal democracy where political and legal devices function to limit the influence of monopoly capital.
I am not interested in defending every facet of Neumann’s Marxist interpretation of Nazism here; its weaknesses have been widely documented. Nevertheless, it is telling that Neumann’s interpretation of Nazi imperialism at least indirectly suggests a provocative view of the nexus between law and economic globalization. As we saw above, Neumann was well aware of the manner in which Nazi-dominated Europe constituted a developmental response to the nation-state’s declining ability to grapple with the technical and economic imperatives of contemporary society: Visions of a Nazi Grossraum provided an ominous answer to the growing mismatch between the traditional nation-state and the transnational scope of key technical and economic activities. So Neumann’s account of the relationship between the Nazi political economy and the decline of classical formal law, at least implicitly, amounts to suggesting that some features of what we presently describe as “globalization” are likely to exacerbate ant...
