This essay argues that both the war and criminal justice models are too crude, particularly in their theory of deterrence, for responding to the problem of global terrorism. An alternative regulatory model is advanced that overlays the public health concepts of primary, secondary, and tertiary prevention with other older ideas of containment of injustice and enlargement of justice. An interconnected web of controls might enable an over-determined prevention of terrorism that, in spite of its redundancy, could be more cost-effective than the war model, because the principle of responsiveness means parsimony in resort to expensive coercion. It is possible to have an evidence-based approach to regulating rare events like 9/11 terrorism by applying the principles of evidence-based regulation to micro-elements that are constitutive of macro-disasters. Viewed through this lens, support for pre-emptive wars on terrorism is not evidence-based, but grounded in other public philosophies, notably retribution.

RECONSIDERING DETERRENCE

An early version of this paper was presented at some conferences and published on the Internet in March 2002. The opening paragraph began: “Both the war model for confronting a transnational problem and the criminal justice model share a central commitment to the deterrence doctrine.” There is surely an important role for deterrence in confronting terrorism, especially if we deploy the more sophisticated models of deterrence of international relations (IR) theory, as opposed to those of criminology or law and economics. IR deterrence is more dynamic than the models that now dominate criminology.

Whatever the upshot of enquiries into the legality of the invasion of Iraq in 2003, we can feel confident that criminal justice journals will not be full of articles that argue ‘if it was right to convict Prime Minister Tojo and his cabinet for crimes of aggression, should not western cabinet ministers hear the clang of the jailhouse door over Iraq?’ We might excuse US journals for not being engaged with such a debate because the US does not acknowledge the jurisdiction of international criminal law over its leaders. We know this will not happen anywhere for Iraq because journals concerned with crime have never engaged in any major way with such debates when past leaders were Anglo-Saxon, or friends of the dominant western powers. We can have a debate over whether President Saddam Hussein should hang for crimes against the Kurds once he is a pariah in the west, but it is not a question worth discussing among criminologists when he is an ally during the period when he actually commits the crimes. Criminology can have a debate over whether Pol Pot and his communist Cambodian leadership should have been convicted, but not over whether President Suharto should have been convicted for the slaughter of half a million Indonesian communists, or for the invasion of West Papua or the invasion of East Timor.

Imperial international law

Much of the scholarship in this book implies that international law can be read as an imperialist institution with a history of dutiful service to the most powerful invading militaries. Note, however, that this charge is more about acquiescing in domination than in doing it. International law takes the form of Western law because almost all state law does. Only a tiny fraction of the world's Muslims are governed by Sharia law. Transplanted European legal systems govern in all of the largest Muslim societies. There is no society in the Americas ruled by the legal systems of the pre-European nations of those societies. Nor is there in Africa or Asia or even more traditional societies in Oceania a nation that has not modelled most of its laws and the structure of its laws (the idea of having criminal law as distinct from other wrongs, for example) on those of one of the colonial powers, even if it did not experience direct colonial occupation – no Hindu-law state, nor Buddhist, nor Confucian, nor animist. All these regulatory traditions persist in sub-national normative orders. Wood was able to map 99 per cent of the world's population as governed by one or another Western European legal tradition in respect of its financial laws (broadly conceived), the largest being 33 per cent of the world governed by the common law. Only seven Middle-Eastern Islamic law states accounted for the exceptions.

Forty-four is a long list of empirical conclusions for readers to remember. Yet the richness of the inductions about the thicket of actors, principles and mechanisms summarized in Tables 20.1 (pp. 476-7), 21.1 (p. 508) and 22.1 (p. 532) sets up a normative conclusion of considerable power and focus. This particularly follows from empirical conclusion number 31 in Chapter 5:

The very complexity of the webs of actors mobilizing mechanisms of global business regulation enables citizen groups, even individual citizens, to exert genuine influence over globalization. Our data document how entrepreneurship by the weak can prise open conflicts among stronger players, enrolling big business or strategic states in the cause of citizen groups. Modelling, which we find to be the most consistently important mechanism of globalization, is shown in some compelling ways (Chapter 25) to be more useful to the weak than to the powerful. For citizens to assert their sovereignty in the world system, they must understand the formidable array of strategies much more available to big players - from forum-shifting to military coercion to capacity-building. Part III of this book shows that the weapons of the weak are different from those of the strong. When NGOs touch the identities of mass publics and communicate with them through the mass media and the Internet, our data show that they often win. When they turn the strength of the strong against itself (political ju-jitsu) by deft working of epistemic communities, our data show that they often win.

While large corporations and their home governments usually dominate agendas through the formidable set of strategies at their disposal, the significance of epistemic communities in our analysis is that global regulation is surprisingly deliberative. It has to be, because coercion is so often counterproductive. At the end of the twentieth century, for example, political power more effectively comes from the barrel of a gun within states than between them. Although we find that national sovereignty over business regulation is in decline and will continue to decline, Chapter 26 concludes that there is no certainty that globalization will erode the sovereignty of the people conceived in a republican way.

Interviews and Informants

The domains of regulation chosen were those that a previous national study (Grabosky & Braithwaite 1986) had identified as the domains covered by the most important 101 business regulatory agencies in Australia. That study warranted some claim to being systematic in its coverage of the most consequential fields of regulation. As the most comprehensive study of the business regulatory agencies of a single nation, it laid a foundation for the sweep of this global study of regulation. Second, sticking with the same domains meant that one of the authors began this study with knowledge from having interviewed top regulators in ninety-six regulatory agencies and read all acts and key policy documents, for at least one country. Third, we could ask those national regulators who were the crucial players at the global level for us to interview.

As our interviews and reading proceeded, new types of actors emerged as important in shaping the globalization of different forms of regulation. Similarly, it became clear that the actors recurrently mentioned some principles in explaining what the globalizers were pursuing or the resisters were resisting. Our interviews therefore made sense of a view that globalization might be understood as a contest of principles. We are not the only scholars to reach this conclusion: for example, Meyer (1994: 128ff) and Teubner (1997) describe the resilient softness of the Lex Mercatoria as ‘more a law of values and principles than a law of structures and rules’ (Teubner 1997: 21). Finally, our informants spoke of what we came to call ‘mechanisms of globalization'. The research was able to identify recurrently important mechanisms.

A deficiency in selecting what contemporaries regard as the most important domains of regulation for study today is that we neglect forms of regulation that were more important in an earlier era. For example, the regulation of postal services is not included, yet it was probably the first elaborate form of business regulation to develop. Globalization of this industry's regulation works so smoothly today that we take it for granted. The Persian empire 2500 years ago set up a sophisticated system for regulating mail deliveries (Luard 1977: 11). Roman, Arab and Habsburg (under the entrepreneurship of Franz von Taxis) international regimes followed. In 1670 there was a postal treaty between England and France.

History of Globalization

Tolls, Tariffs and the Mercantilist State System

Winham (1992: 10) is surely wrong when he says ‘regulation and taxing of trade are almost as old as trade itself. Cuneiform tablets found at Tell el-Amarna certainly show that a commercial treaty between the kings of Egypt and Babylon involved duties on imports; Kautilya's Arthasastra, a manual of Indian statecraft written at least two millennia ago, contains a tariff schedule (Winham 1992: 14-16); Carthage had a trade treaty with Rome in 509 BC (the first extant document from Rome (Mann 1986: 251) and is believed to have had earlier treaties with the Etruscans (Law 1990: 124). Yet the movement of obsidian used in blades indicates trading from boats around the Mediterranean by 7000 BC (Curtin 1984: 71) and we assume from ethnographic work among pre-urban civilizations in places such as Africa that rich trading relationships go back millennia before tariff schedules were conceived.

As we saw in Chapter 7, the spread of the Law Merchant in the Middle Ages, modelled by diasporas of Venetian, Genoan, Jewish and other merchants across Europe and the Levant and into Asia, was critical to the growth in trade between cities. Bills of exchange, sale of goods rules and dispute resolution practices, along with standard forms of contract and ways of interpreting them in a partially globalized form, were taken from the Lex Mercatoria into national laws as states progressively nationalized law from the twelfth century. Unlike other areas of law, therefore, those derived from the Lex Mercatoria started existence as national laws in a partially harmonized shape.

The most important feature of the history of the past millennium, compared with previous millennia, has been the rise of the nation-state. One reason this form of human organization globalized from Western European origins is that the parts of the world that formed nation-states earliest flourished and dominated regions where the nation-state rose later. A major reason why the early nation-states flourished is that they created pacified spaces where trade could flow more freely. It became more possible to travel with goods from one town to another without fear of robbers. Equally importantly, tolls and entry restrictions on the flow of goods between cities were progressively dismantled. Technical standards became more standardized, avoiding many technical barriers to free intranational trade.

Overview

Chapter 1 showed that the globalization of business regulation is a process with a long history. Roman legal principles continue to be transmitted through our regulatory traditions even though Roman armies have long ceased marching. In this process both state and non-state actors strive to establish principles of their choosing using the mechanisms at their disposal. In each of our case studies (Chapters 7-19) we present globalization as a contest of principles - a contest, for example, between the principle of harmonization and the principle of national sovereignty. Our study identifies a number of recurrently important principles (summarized in Chapter 21) and mechanisms (summarized in Chapter 22) in global business regulation. The contest among actors (summarized in Chapter 20) is unequal. Actors like the US can mobilize coercion mechanisms that are not available to weaker actors like community groups. Actors with large markets can impose trade sanctions. When staring at defeat in one international forum, they can shift the contest to a more favourable forum (Chapter 24). Yet there is one mechanism that weaker actors can use to shape regulatory outcomes - the mechanism of modelling (Chapter 25). Through devising and proliferating alternative models of regulation, the weak create opportunities for themselves to change existing regulatory orders.

In the thirteen case studies in this book no one actor appears as master of the world. Similarly, there is no master mechanism of globalization. Instead, there are webs of influence (Chapter 23). We divide these webs of influence into webs of coercion and dialogic webs. We find that actors prefer to work through webs of dialogue rather than webs of coercion. Understanding the different strands that make up these webs is fundamental to accomplishing global regulatory change. With this understanding, strategies can be developed for intervening in the webs. Successful interventions are not, as our case studies demonstrate, confined to powerful actors. Dialogic webs offer individuals the possibility of micro action to secure macro change. We do not claim that possibilities for micro action pervade dialogic webs, merely that these webs sometimes allow individuals to bring about globalization sequences that culminate in global regulatory change.

History of Globalization

Money: The Root of All Financial Regulation

Financial regulation begins with money. In a barter economy the wants of the parties have to coincide. Nothing more needs to happen for a transaction to take place. When trade or exchange takes place via the medium of money the transaction becomes more normatively complex. If money is to carry out its functions - payment and a standard of value - it must be accepted by the parties to the transaction. This role of promoting the acceptance of money by credibly stabilizing its functions has generally been carried out by some third party, a party who through regulatory devices creates money so that desires can be satisfied.

Money has a long, long history. Exactly when money originated nobody knows. As Keynes puts it, ‘Its origins are lost in the mists when the ice was melting’ (Keynes in G. Davies 1994: 48). We do know that lots of different objects have served the role of money, including dogs’ and whales’ teeth. Rings appear to have been used as money in Egypt in the fourth millennium BC. Babylon had a legally regulated money economy by the third millennium BC. The Code of Hammurabi (c. 2123-2081 BC) contains provisions regulating the use of grain and silver as money and dealing with the supply of credit (Einzig 1949: 212-14). Gold appears to have functioned as an international currency in the second millennium when Egypt was the leading gold producer (Einzig 1949: 207). China probably has the longest history of coinage of any civilization, and invented paper money. After money come accounting records, which date at least from 2300 BC in Egypt (Carruthers & Espeland 1991) and in 1999 are globally harmonized.

Money crossed borders well before its regulation did so. The cowrie, for instance, has been used as a currency among the peoples of Africa, China and the Pacific. This phenomenon of money crossing borders and constituting markets is repeated throughout history - Eurocurrencies (the money of a state deposited in a bank outside that state) are another example. A history of monetary regulation in Europe can perhaps begin when issuing metallic coins became a practice. This practice is said to have originated with the Lydians in the seventh century BC. From Lydia the practice of coining was quickly diffused to Asia Minor, Greece, Italy, Sicily and Carthage (Burns 1965: 52).

History of Globalization

Eisenhower's Historic Bargain

The history of nuclear regulation is the shortest, but among the most intriguing, in this book. This is a study of business regulation, so the regulation of the military uses of nuclear power by states is beyond its scope. Nevertheless, the history of the regulation of commercial nuclear applications cannot be understood in a way that is divorced from the geopolitics of nuclear weapons. The story begins with the Manhattan Project sponsored by the US to develop atom-splitting technology during the Second World War (Hawkins 1983). After the atom bomb descended on Japan in 1945, the US pursued a policy of unilateralist control of nuclear technology, a policy which had an eye to both military hegemony and commercial monopoly. After the Soviet nuclear program detonated an atom bomb in 1949, the US continued to struggle for a Western monopoly of the technology, just as the Soviets monopolized the technology within the Soviet bloc. But in 1952, the UK detonated its first bomb and the genie seemed out of the bottle (Simpson 1983). In December 1953, President Eisenhower abandoned the policy of sole US control of nuclear technology by announcing in a speech to the UN the ‘Atoms for Peace' program which laid the foundations for the establishment of the International Atomic Energy Agency (IAEA).

Atoms for Peace meant that the US would release a great amount of scientific and technical information on nuclear energy and supply enriched uranium, heavy water and other essential materials through the UN agency (IAEA) to nations who committed to controls to ensure the materials would be used for peaceful purposes (Scheinman 1987: 18). Following this announcement of intent, nuclear energy production was privatized in the US in 1954. After the Atomic Energy Act 1954, US companies in the electrical equipment engineering sector embarked on an era of world domination of nuclear power production. The Atomic Energy Commission (AEC) was transformed from a monopoly public producer of nuclear technology to a regulator of private production. The next step was for the US to enter bilateral agreements with cooperative countries for transfer of nuclear technology and materials in exchange for safeguards against diversion to non-peaceful use. These safeguards were guaranteed though inspections on foreign soil by US inspectors.

There are important contextual conclusions in each chapter about the globalization of each specific domain of regulation. Clearly, what is true of the regulation of finance (Chapter 8, which covers monetary policy, banking, tax and insurance), is very different from what is true of drugs (Chapter 15, which covers prescription drugs, over-the-counter drugs, illicit drugs, alcohol and tobacco). Indeed, it follows from our ‘webs of influence’ model that each web is contextually complex and paradoxical and therefore requires less a law-like understanding and more a clinical diagnosis of when a particular web tightens or unravels. Although contextual understanding is ultimately the most useful, we have forty-four things of general import to say

The Process of Globalization

Powerful Actors

1. 1 The US state has been by far the most influential actor in accomplishing the globalization of regulation. Today the European Commission (EC) is beginning to approach US influence. When the US and EC can agree on which direction global regulatory change should take, that is usually the direction it does take. Japan's influence is remarkably weak.

2. 2 States have always been objects as well as subjects of regulation, regulators and regulatees. States were regulated by the Fuggers in the sixteenth century, the British East India Company in the eighteenth century, the Rothschilds until the 1930s, and today by business organizations like the Big Five accounting firms, IATA, the Société Générale de Surveillance, Moody's and Standard & Poor's plus international organizations like the IMF and World Bank. In 1999, British mercenary corporation Sandline International, in a dispute over its involvement in the war in Bougainville, took legal action to freeze various overseas funds of the Papua New Guinea government in order to chill its capacity for overseas borrowing.

3. 3 The most recurrently effective actors in enrolling the power of states and the power of the most potent international organizations (e.g. the WTO and IMF) are large US corporations.

4. 4 The ICC is an important actor in the globalization of regulation because, in addition to having an interest-group strategy for shaping regulation, for seventy years it has had a private ordering strategy based on recording its members’ customary practices and releasing them in the form of model rules and agreements.