1. Of Currency Wars and Other Demons: Exchange Controls and the Governance of State-Capitalist Policies within Democratic Transition
Bruno Meyerhof Salama
FGV Law School, São Paulo, Brazil
Columbia Law School
Faculty Lunch Workshop, Fall 2010
November 16, 2010

2. What is this paper about?
Crisis – New mercantilist agendas
Change in regulatory “toolkit”
Developmental paradigm
FEX controls as administrative law

3. Arguments
Critique to standard developmental debate on financial regulation: misguided naturalization of relationship between institutional design and governance
Applied study – Brazil: Governance and institutional design partly independent and historically conditioned
Theory of L&D: “political contrariness in law” as additional explanation for failure of rule of law reforms

4. Developmental Debate – Post-WWII
Libertarianism
Comunism
Second World
First World
Third World
Ideological

5. Developmental Debate: Post-Soviet
State Capitalism
Market Capitalism
Non-Ideological

6. FEX Controls Developmental Debate: Post-Soviet
Heterodoxy
Orthodoxy
State Capitalist Policies
Market Capitalist Policies
Keynesian Macroeconomic Argument
Market Failure Argument
Neoclassic Economic Argument
Public Choice Argument

7. Where Law Matters Institutional Design: Efficiency
Governance: Legality & Legitimacy

8. A Misleading Comparison
Free Market
Legal Governance US A
Interventive States
Administrative Governance Ch i na

9. The Democratic Normative Bend
Interventive States
Free Market
Legal Governance >
Administrative governance <
Positive Variable: Degree of democractic entrenchment

10. FEX Controls – Where Brazil stands
Interventionism
Free Market
Institutional Design
Administrative
China
Governance
Brazil
Legal

11. Historical constraints
The 80s – threefold evolutionary process
Tensions in financial regulation:
Static: democracy x expediency
Dynamic: transient legal structure X intransient political regime
Historical note
2 illustrative narratives

12. Law & Development Theorization
Political contrariness in law
Demand-sided constraint to rule of law reforms