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Law professor compares international legal traditions to understand crises

Mon, 11/07/2011
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LAWRENCE — John Head was conducting research in China and Italy when the international financial crisis of 2008 and 2009 hit. Observing how the respective legal system of each country, and that in his home nation, played into the market crashes and national responses drove home a point he’s been teaching for nearly 30 years: Law reflects culture.

Head, the Robert W. Wagstaff Distinguished Professor at the KU School of Law, has taught comparative law, international commerce and investment and international economic law for three decades. He recently published his latest book, “Great Legal Traditions: Civil Law, Common Law and Chinese Law in Historical and Operational Perspective.” As various countries around the world reacted to the economic meltdown, they had to do so within the frameworks of their own laws as well as international legal norms, driving home one of Head’s main points.

“Law captures the historical differences, cultural differences, linguistic differences and other differences that many people often don’t think about when considering other countries,” Head said.

Naturally, fingers of blame have been pointed in many directions after the economic meltdown. Head has written extensively on these accusations in proposing his own “evaluation of the critiques” and his own recommendations for revising the legal framework of international economic relations — partly of such global financial institutions as the World Bank and International Monetary Fund.

“There’s just so much nonsense being spouted about those financial institutions,” Head said. “I tried to separate the wheat from the chaff and find what truths are there.”

Among the common misconceptions he found are criticisms that financial organizations such as the World Bank and International Monetary Fund are consistently and callously encroaching on the independence of nations. Countries who borrow from those institutions in fact are only asked to follow general and fairly common-sense rules for prudent government operations. In addition, the complaint that small nations have no voice in the World Bank and the International Monetary Fund is an oversimplification.

Likewise, the idea that such organizations lack transparency is outdated.

“That would have been true 20 years ago, but it’s largely irrelevant now,” Head said.

Head hastens to add, however, that many of the complaints leveled at financial institutions are indeed valid — and it is those criticisms Head has emphasized in his writing. The “democracy deficit,” an idea that major international finance bodies are largely controlled by only six or seven countries in Europe and North America, is largely valid, Head said. That heavy concentration of influence probably encouraged an environment of overly lax regulations of commercial banks and other financial bodies, which in turn also created an atmosphere in which it was easier in the years preceding the 2008-2009 crash than in the past to get away with financial malfeasance.

Head’s views on international financial institutions and crises are closely related to his research and writing about different legal cultures around the world. Misunderstanding among such legal cultures causes many problems, especially in terms of striking the right balance between imposing prudent financial regulation while still encouraging entrepreneurial initiative. For these and other reasons, Head’s new book provides an in-depth examination of three of the most prevalent types of law practiced around the world today: European civil law, American and English common law, and Chinese law. Head, who has worked in various legal systems during his career, provides a survey of the three types of law and offers a two-part perspective, both historical and operational.

In teaching comparative law, Head has witnessed “aha moments” with many of his students when they step back and examine legal systems that are different from those they’ve known their whole lives. Understanding other cultures and various forms of law will be the only way to both solve and prevent international problems both small and on the scale of the recent financial turmoil.

“Until we have a single language and a single people and a single country, we won’t have a single law,” Head said. “That will never happen, of course, and should never happen, so instead, we need to learn about, and learn from, legal cultures different from our own.”




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