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18 Berkeley La Raza L.J. 47 (2007)
American Corporate Governance and Globalization

handle is hein.journals/berklarlj18 and id is 55 raw text is: American Corporate Governance and Globalization Steven A. Ramirez* Recently, major flaws in the legal framework governing globalization have become apparent.' Indeed, it is fair to say that the market fundamentalism approach to globalization is under siege.2 The whirlwind of criticisms launched against the neo-liberal model3 of freer trade has recently boiled over from academic circles into trade negotiations, which have fueled globalization since World War 1I.4 The very process of further globalization now seems in doubt.5 This article will demonstrate that the flawed market fundamentalism model of globalization has its roots in the Loyola University Chicago School of Law. sramir3@luc.edu 1. See, e.g., JOSEPH E. STIGLITZ, GLOBALIZATION AND ITS DISCONTENTS XIII (2002) (stating that decisions regarding international trade were made on the basis of what seemed like a curious blend of ideology and bad economics, dogma that sometimes seemed to be thinly veiling special interests and that the most fundamental change that is required to make globalization work . . . is a change in governance at the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO)). Joseph Stiglitz is the former Chief Economist of the World Bank and a Nobel Laureate in economics. See also Steven A. Ramirez, Market Fundamentalism's New Fiasco: Globalization as Exhibit B in the Case for a New Law & Economics, 24 MICH. J. INT'L L. 831, 833, 837 (2003) (reviewing GLOBALIZATION AND ITS DISCONTENTS (2002)). Within economics there is some controversy over some of Stiglitz's policy prescriptions; nevertheless, the key point he makes, that economic growth requires economic and legal infrastructure beyond free markets alone, is broadly in accordance with mainstream economic science. Id. at 849-52. Moreover, there is little controversy that the international financial institutions have in the past failed to impound this central lesson from economic science into their policymaking. Id. 2. The term market fundamentalism is used in this article to denote the religious-like certitude of those who believe in the moral superiority of organizing all dimensions of social life according to market principles. See Margaret R. Somers & Fred Block, From Poverty to Perversity: Ideas, Markets, and Institutions over 200 Years of Welfare Debate, 70 AM. Socio. REV. 260, 260-61 (2005) (Social Scientists have been surprised by the extraordinary revival of market fundamentalism, which was widely assumed to have died off in the Great Depression of the 1930s.). In terms of globalization, market fundamentalism means minimal governmental interference with markets, lowering trade barriers immediately with no allowance for transition costs, capital market liberalization worldwide, and immediate privatization of all state industries. See also Ramirez, Market Fundamentalism's New Fiasco: Globalization as Exhibit B in the Case for a New Law & Economics, supra note 1, at 835. According to Stiglitz, this approach fails to take on board the lessons of economic science which teaches that a more balanced view of the role of government is needed. See also STIGLITZ, supra note 1, at 250. 3. 1 use the terms neo-liberal, laissez-faire, and market fundamentalism interchangeably. Each is based upon the idea that free markets work perfectly and there is therefore no need for government. See STIGLITZ, supra note 1, at 74. This approach is also referred to as neoclassical economics. 4. One of the most vociferous opponents of market fundamentalism is George Soros, who has made billions from exploiting the current global economic regime. See GEORGE SOROS, ON GLOBALIZATION 178-79 (2002) (stating that market fundamentalism is a perversion of human nature). 5. The Future of Globalization, ECONOMIST, July 29, 2006, at Il (stating that the recent breakdown in the Doha round of trade negotiations was a debacle that threatens to corrode the trading system as a whole).

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