Lawyers, Guns and Money: Wall Street Lawyers, Investment Bankers and Global Financial Crises

Late 19th to Early 21st Century
29 July 2010

Over the last two centuries corporate lawyers and investment bankers have been central to the undemocratic consolidation of private corporate power.

Published in: Nexus: Chapman's Journal of Law & Policy, 2009-2010, Volume 15, Special Issue on "The  80th Anniversary of the Great Crash of 1929:  Law, Markets & the Role  of the State."

Commenting that the "manufacturing aristocracy" was "one of the harshest that [had] ever existed in the world" Alexis de Tocqueville cautioned in 1845 that "the friends of democracy should keep their eyes anxiously fixed in this direction" predicting that this would be the source of any future permanent inequality and aristrocracy. And he was right.

In this paper, Reifer looks at the global financial crisis in a long historical context, drawing on the perspective of Fernand Braudel. In it we see how the legal ammendment in New Jersey that created the corporation in the 19th century led to the circumvention of barriers by private owners of capital, allowing them to play states off against one another in a neverending race to compete for mobile capital.

The lawyers themselves, de Tocqueville saw as "bullwarks against democracy" for their role in enabling the removal of laws that would prevent consolidation of private corporate power and the formation of monopolies. We see how this led to the rise of Wall Street, and the cycles of financial crisis and instability that enabled further consolidation over the next century. The military budget and imperial conquests of the United States helped maintain surplus accumulation despite falling profits and overaccumulation, while neoliberal measures helped extend and deepend the reach of the market with globalization. The paper traces this long-term development, dicussing the role of corporate lawyers and investment bankers as key agents driving the consolidation of capitalism, and considers what lies next, the role of a "Beijing Consensus" and the implications this has for global inequality and possibility of alternative, more sustainable paths for the world economy.