Journal of Law and Political Economy

Conservatives have long argued that progressive government policies tend to backfire (the “perversity thesis”). However, in American political discourse since the 1990s, this argument has been reframed in terms of “unintended consequences.” The article explores this rhetorical shift by tracing the concept of “unintended consequences” from classical social theory to contemporary public policy debates. It finds that the term was originally associated with the notion of the “invisible hand” of the market, and gradually became aligned with the perversity thesis under the influence of neoconservatism, collective action theories, and Chicago School economics. The article argues that, due to this transformation, the “unintended consequences” rhetoric became especially valuable for neoliberalism, expressing both the efficacy of markets and the perceived failure of the democratic regulatory state. As such, the appeal to “unintended consequences” is revealed as an ideological stance rather than a neutral observation about the effects of progressive reform.

Prompted by the failed attempt to increase Australia’s central bank independence through removal of the government’s override, this article examines the central bank’s unelected authority to determine monetary policy and assesses whether this is justifiable in a democracy. It shows how political—and thus the people’s—power over economic management has diminished, positioning central bank independence within an antipopulist and antidemocratic movement in constitutionalism that has quasi-constitutionalized neoliberal approaches. In setting interest rates, central banks make decisions that involve big distributional trade-offs: sacrificing employment to achieve price stability; redistributing wealth from labor to capital. This article argues that such trade-offs necessitate retention of ultimate democratic control. The article thus supports retaining and refining Australia’s qualified central bank independence, and suggests novel policy options—compulsory savings and a job guarantee—to reduce the trade-offs employed to control inflation, making delegation to an unelected entity more justifiable and compatible with constitutional democracy.

As accelerating inequality careens into plutocracy, and America tilts toward autocracy, Karl Polanyi and Thomas Piketty have become key resources for understanding the link between the social exclusions of capitalism and democracy in crisis. This and its companion article (Somers 2022a) explore each of these thinkers and put them into dialogue to generate the outlines of a democratic political economy that I dub a predistributive democracy. Deconstructing capitalism’s moral economy of market justice, building on legal and economic institutionalism, and advocating a movement of countervailing power against escalating commodification and dedemocratization are central components of the project. The first article focused on Polanyi’s contribution to a predistributive democracy. This one engages Piketty’s work as it evolves from a bent toward economic naturalism to a robust institutionalism and an agenda for a participatory democratic socialism. Neither Polanyi nor Piketty is a legal theorist, yet both thinkers are indispensable to the new Law and Political Economy (LPE) and the movement for a predistributive democracy.

This article clarifies standards for evaluating whether a firm’s unilateral labor market conduct (wage suppression) violates antitrust law. It begins by analyzing suppression of collective bargaining (union busting) as conduct that can violate Section 2 of the Sherman Act. This article is the first to argue that wage suppression can violate Section 2 if the conduct (1) harms the competitive process within a labor market and increases monopsony, (2) tends to exclude law-abiding rivals from product or service markets, or (3) forecloses any adjacent market. Conduct that satisfies any of these three standards can be restrained with antitrust law. The antitrust standards presented are applicable to any kind of unilateral labor market conduct, including worker misclassification, wage theft, vertical restraints, restrictive covenants, employer-driven debt, or child labor.