Volume 14, Issue 1 - Framing the policy-making: theories, expertise and the law

The global financial crisis of 2007–08 provided an obvious reason for rethinking finance, its regulation, and benefits for society. Economics experts, in particular, issued policy reports on how to fix the financial system. Whether and how such policy recommendations translated into law is the topic of this article. It introduces a set of theories elaborating on how the legal system may tap social theory in general and economic expertise in particular, arguing for the concept of framing as a focal point. A case study on the Kay Review of UK equity markets tests and illustrates the theory. The study highlights the normative, technical, political, and capture issues that arise all the way down from a specific policy proposal rooted in economic theory and empirical research to the technical details of financial law and concludes with a comment on the current reform efforts of the Financial Conduct Authority on a new consumer duty. Eventually, the case study allows us to reflect on the strengths and limitations of the existing theories of how social theory and law interact and to provide some directions for future research.

The ways in which epistemic foundations of academic disciplines shape policy paradigms have been an understudied area. We illustrate such dynamics by focusing on paradigm shifts between economics and legal scholarship. Our case study focuses on the evolution of the Finnish corporate tax policy between 1991 and 2014 to illuminate complex policy diffusion through professions. First, in 1993, Finnish corporate tax policy was aligned with the neoclassical ideas of the time in a lawyer-driven process. Second, in the early 2000s, initiatives from the EU and the OECD provided these lawyers a new epistemic source for broadening their argumentation. Third, in the 2010s, the disciplinary base shifted from legal studies to economics, which coincided with administrative reforms emphasizing quantitative impact assessments. These transformations completed the shift from legal scholarship to economics in tax policy design, paving way to the entrance of economic theoretical arguments to tax policy discussions. Our findings highlight five overlapping and mutually reinforcing factors that shape knowledge production in expert groups that influence economic policy: (1) the extent to which politicians rely on expertise; (2) the balance of power between academic disciplines in evidence-based policy-making; (3) the disciplinary base to which the dominant expert groups rely on; (4) the shifts in the epistemological, ontological and methodological mainstream within particular disciplines; and, (5) the extent to which international organizations are seen as epistemic versus policy-driven authorities.

Antitrust is high on the reform agenda at present, associated with calls to “break up big tech.” Proponents of reform have invoked history with regularity in making their case. They say reform is essential to reverse the baleful influence of the Chicago School of antitrust, which, in their telling, disastrously and abruptly ended in the 1980s a “golden” era of beneficially lively antitrust enforcement. In fact, antitrust enforcement was, at best, uneven, from the early 20th century through to the end of the 1970s. As for the antitrust “counter-revolution” of the late 20th century, this was fostered as much by fears of foreign competition and skepticism of government regulation as Chicago School theorizing. The pattern helped to ensure that the counter-revolution was largely sustained through the opening decades of the 21st century. This article, in addition to getting antitrust and history in tune by drawing attention to the foregoing points, provides insights regarding antitrust’s future direction.

This article uses doctrinal analysis of UK tax law to address the question in political economy of where the ‘production boundary’ around value creation lies. It concludes that the ‘classical’ production boundary around material production may be encountered as an emergent feature of forensic investigations of the ontology of surplus in real world commercial contexts. This is particularly important for political economists of the global production network because of the contrasting structural phenomenon whereby value is predominantly added in immaterial production processes.