Afrasian Research Centre, Ryukoku University Phase 2

Working Paper SeriesStudies on Multicultural Societies No.7

The Formation of Global Economic Law:Under Aspects of the Autopoietic System

Satoko Kawamura

Mission of the Afrasian Research Centre Today's globalised world has witnessed astonishing political and economic growth in the regions of Asia and Africa. Such progress has been accompanied, however, with a high frequency of various types of conflicts and disputes. The Afrasian Research Centre aims to build on the achievements of its predecessor, the Afrasian Centre for Peace and Development Studies (ACPDS), by applying its great tradition of research towards Asia with the goal of building a new foundation for interdisciplinary research into multicultural societies in the fields of Immigration Studies, International Relations and Communication Theory. In addition, we seek to clarify the processes through which conflicts are resolved, reconciliation is achieved and multicultural societies are established. Building on the expertise and networks that have been accumulated in Ryukoku University in the past (listed below), we will organise research projects to tackle new and emerging issues in the age of globalisation. We aim to disseminate the results of our research internationally, through academic publications and engagement in public discourse.

A Tradition of Religious and Cultural Studies Expertise in Participatory Research/ Inter-Civic Relation Studies Expertise in Asian and Africa Studies Expertise in Communication and Education Studies New Approaches to the Understanding of Other Cultures in Japan Domestic and International Networks with Major Research Institutes

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Afrasian Research Centre, Ryukoku University

The Formation of Global Economic Law:Under Aspects of the Autopoietic System

Satoko Kawamura

Working Paper SeriesStudies on Multicultural Societies No.7

2012

978-4-904945-07-0

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The Formation of Global Economic Law: Under Aspects of the Autopoietic System

Satoko Kawamura*

Introduction In the global world, a society called “the global civil society” is being formed. In the global civil society, not only states and public International Organizations but also private actors such as multinational enterprises, non-governmental organizations (NGOs) and international expert groups which have been regarded, for a long time, as ancillary actors to the traditional International Relations field, are playing a very important role now. The operations of such private international associations are active. The tendency is welcomed. On the other hand, the arbitrary behaviours of the private power cause new problems. In order to integrate those private international associations into and to therefore reinforce global governance, States and Interstate organizations are required to making norms and to cooperate with them (Held 2004).

On the other hand, in the fields of economy, teleinformatics, health care and advanced science and technology, in which public legalization has not been advanced, private international associations make voluntary rules by themselves. These rules, known as “global law,” have attracted the attention of practitioners and scholars in International Relations and International Law (Lenoble and Maesschalck 2003). Especially in the field of international economy, it is undesirable for private actors to be restricted by rules made by the government, and necessary for them to be allowed to operate freely, therefore, the global economic law which is formed voluntarily by the free activities of private actors is expected to play an effective role in global governance. However, global economic law has problems. It is made by private actors, so its validity as law is doubtful because it lacks democratic procedures and it tends to be purpose-built (Hall and Biersteker 2002). To solve this problem, one needs to analyze global law and to find theories and systems which give global law legal validity.

The aim of this paper is to clarify the formation process of the global economic law and suggest some theories which support its validity as legal norms by means of autopoietic * Ph. D. in International Relations, Assistant Professor of International Relations and International Law, Faculty of Law, Toyo University.

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system analysis. Under autopoietic system theory, the global society is analyzed as an autopoietic system of communication. Communication has been differentiated into its functions in the social system and they have formed many sub-systems which have been specialized by their functions, for example the political system, the economic system, the legal system, etc. Communication about global economic law is involved in three systems; the economic system, the global political system, and the legal system. Today’s global society, while recognized as being formed by interstate relations, can be understood as a collection of global societies which are differentiated into law, politics, economy, etc. Such a global society does not have a central organization. Therefore, the autopoietic system theory becomes a valid methodology that can be applied to the global society as a multi-centred society. This theoretical model made possible through autopoietic system analysis enables one to clearly explain the function and the possibilities of global economic law in the global society.

In its first section, this paper deals with the characteristics of the autopoietic system, and explains three systems; the economic system, the political system, and the legal system, which are related to global economic law as viewed from the autopoietic system. The second section of this paper discusses the legal sources of global economic law to clarify the formation of global economic law on the basis of the autopoietic system and, hence, describes the outline of global economic law. This paper also deals with problems of global economic law and tries to suggest solutions for them. 1. Global Economic Law in the Context of the Autopoietic System

1.1. Characteristics of autopoietic system theory Autopoietic system theory borrows the theory of a self-produced system of life, in which component parts are cells (Maturana and Varela 1979). The autopoietic system theory in this paper is based on the social system theory of Niklas Luhmann and Gunther Teubner in the field of Sociology of Law (Kawamura 2008, 144-147). Stated quite simply, there are five characteristics of the theory.

(1) The essence of “a system” is the reduction of complexity by distinguishing the system

from its environment. Each System has “a code” which distinguishes between the inside and outside of the system. The code decides what kinds of things exist in the system and the “programs” are the criteria for the code. Each system has an “eigenvalue” which stabilizes the system.1

1 Heinz von Foerster who researches cybernetics introduced the concept of the eigenvalue in his book Sicht und Einsicht in 1985 (Von Foerster 1985/2006).

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(2) The system is not a united organization, but the difference between the system and the environment. The system draws a boundary between what is inside and outside of it through its operations. This means that the operations of the system are producing component parts of the system. The operation makes the structure of the system, not vice-versa. The mechanism of self-reference forms the circulation of the self-preservation of the system.

(3) The system is closed against its environment, so that there is neither direct input nor

output from the environment. There are four concepts of the relation between the system and the environment. First is “external observation,” by which the system observes the environment according to its code. Second is “resonance,” by which a system is stimulated by the environment through the external observation of the system. Third is “operational coupling,” which means that some operations of one system are also some operations of another system, simultaneously (Luhmann 2004, 381). Fourth is “structural coupling,” which means that a part of the structure of a system depends on the other system. Even though two systems are in the condition of structural coupling, each system reacts to an event at a different pace. There is the synchronicity of each operation of two systems, but it does not guarantee the synchronization of each operation of them (Ibid. 383). These four concepts of relationship between the system and the environment are regarded as “performance” by the observation of the whole social system (Kawamura 2008, 147).

(4) The system differentiates into some sub-systems by its function. Inside a system, there

are sub-systems. The system refers to elements which are produced by its sub-systems for its operation, and sub-systems refer to elements which are produced by the system for its operations. Referring to elements which are produced by the other sub-systems, a hyper-cycle between the system and sub-systems is constructed.

(5) Functionally differentiated systems operate individually, without seeing the operation

of the whole social system. From the view of the social system, operations of each system are regarded as the function of each system.

By using the autopoietic system theory which has such characteristics, the society is visualized as a social system which is constituted by communication network. In the context of this theory, communication means a combination between selections of what information is to be communicated, which way it is communicated and how it is understood by someone being communicated with (Luhmann 1984, 147). The communication as a combination between these three selections always contains the contingency, so it is always complicated. Therefore, the social system which is constructed by communication is also complicated and differentiated into sub-systems. It should be noted that the subject of the communication is

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not a person, but a personality. Of course, a person is indispensable for the social communication. However, the system of mind and the system of consciousness of a person are not social facts. In the context of autopoietic system theory, an individual person means a generic name for multilayered personalities, and each communication belongs to each personality.2

The global society attains the stage of functional differentiation, through the stage of segmental differentiation, by which the social system has been differentiated into equal groups, and of stratificational differentiation, by which the social system has been differentiated into non-equal groups. Inside the social system, each sub-system of it, for example the legal system, the political system, and the economic system, is closed against the environment and self-referential, and performs its own operation without seeing the purpose of the whole social system.3

1.2. Three functional differentiated systems related to global economic law I will deal with three functionally differentiated systems related to global economic law in this paper. First is the economic system. The economic system has been differentiated from such other systems as the political system or the religious system, and has been closed since there are limitations on what can be bought with money. In the medieval period, people were able to purchase salvation, political posts, citizenships, etc. Then the economic system was not closed (Luhmann 1989, 51).

The code of the economic system is “to pay/not to pay.” Money is the media which helps communication inside the system. Communication about “to pay/not to pay” is the operation of the system. Continuing communication, this system produces the cycle of self-reference (Ibid. 52). The program of this system is “value.” If a price has been considered an appropriate value to pay, communication in which people pay that price will occur, and it will become the operation of the economic system (Ibid. 53). Through these operations, the economic system provides the guarantee of the distribution of economic goods as its function for the whole social system. The eigenvalue of it is “profitability.” The system needs actors which have abilities to pay and reproduce (Ibid. 56), and profitability secures those abilities for them, so that the profitability stabilizes the economic system.

The economic system is closed; events in the environment cannot influence the system directly. The restraint which comes into existence in the environment is translated into the fluctuation of the price in the economic system. For example, a government intervention to

2 A person is consisted by multi-layered personalities. For example, a person can be simultaneously “a student” in the educational system, “a consumer” in the economic system and “a creditor” in the legal system. 3 The autopoietic system theory faces criticism for its method for the analysis of International Studies. See Kawamura (2009, 203-209).

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regulate price is not the operation of the economic system but the communication of the political system which changes an economic event into a political event through resonance with the economic system (Ibid. 54). The economic system doesn’t care about any events in the environment so far as they do not concern its code “to pay/not to pay.” The intervention of the central bank to guarantee the credit of money is also one of data which helps in making the cycle of the self-reference of the system (Ibid. 57). “Every intervention acquires the character of an event, an impulse, a provocation, a stimulation or destimulation of change in the system itself” (Ibid. 55). However, the economic system still has a strong possibility to resonate with other systems, because a price always tries to meet needs which reflect events happening in the environment (Ibid. 53), and effects of these changes bring new changes. Though the economic system can resonate with other systems, there is a limit to the external observation of the system.

Inside the economic system, competition has been highly differentiated from the exchanges and the cooperation, so that actors can compete against rivals without communication between them. This is one of the ways in which complexity is reduced. Internal restraints of the system work to communicate about making unreasonable prices and pursuit of gain greedy. The economic system “can be called ‘capitalistic’ only to the extent that it connects payments with the reproduction of the capacity to make further payments, above all from the point of view of the profitability of investments,” and “a capitalistic self-control exists only as a possibility” (Ibid. 55).

Second is the political system. The code of the political system is “government/ non-government” and political principles and policies which are the programs whereby the system decides what comes into the system or not. The program of the political system is always a purpose-oriented norm. For the whole social system, the function of the political system is to make decisions which bind any groups, and, in producing these decisions by itself, the political system forms a self-referential circle. The validity of these decisions is the eigenvalue which has played an important role as stabilizer for the system. Since modern times, the democratic political system, meaning that a person who is bound by a decision participates in the making of that decision, has given validity to the decision. Therefore, communication as the operation of the political system does not only belong to the governmental authority but also to other actors. The principle of the division of powers has made the political system differentiated into three sub-systems; the system of politics which consists of the communication about decision-making by politicians, the administrational system, and the system of public. These sub-systems consider each other “the environment,” and make a hyper-cycle.

Because the political system is closed, the system cannot operate outside itself. However the system has the ability to resonate with the environment. The political system is very sensitive

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to events which happen in the environment and the demands of the environment which extend beyond the possibility of the political system. Actually, because the operation of the political system is the communication about making decisions which bind groups, the system cannot control the whole social system. However, the environment of the political system expects the system to start communication to solve problems of the other systems and the political system also pretends to operate beyond its ability.

The global political system is one of the sub-systems of the political system. The code of the global political system is not “government/non-government,” but “governance/ non-governance.” In the meaning of the code “governance,” the relation between the governor and governed is not fixed and sometimes an actor becomes not only the governor but also is governed at the same time. In this code, it tends to have discussions between actors when they make a decision and to achieve a consensus on the decision. There is no central decision-making system and there is no fixed relationship between governor and governed in global politics, so that the code of the global political system can be understood as “governance/non-governance.” Because of the sub-system of the political system, the global political system follows the program and the eigenvalue of the political system, and what’s more, it is differentiated into three sub-systems; the interstate system which started with the Westphalia Treaty, the international institutionalized system which has been differentiated from the interstate system since the First World War,4 and the global civil society system which consists of transnational communications by private actors who are becoming more and more important in the process of globalization. From the analysis of autopoietic system theory, global governance is understood as a condition of the hyper-cycle between these three sub-systems.

Third is the legal system. The code of this system is “legal/illegal.” Inside this system, the code judges that a case is legal or illegal (Luhmann 1989, 64). When it is judged legal, it means the case is not illegal. The code guarantees the legal justification for the case. Only the legal system can make a decision which is legal or not in the legal system itself. Even if it is true that the decision of the system can influence other systems through resonance, it may happen only within the legal system. Programs of the legal system are legal norms; viz., laws, ordinances, statutes, procedural rules, judicial rulings and contractual agreements, judicial precedents (Ibid. 64). These programs decide the content of the communication as the operation of the system. The system only communicates about legal norms which are regarded as valid. The validity of legal norms is also given by legal norms. To put it shortly, superior legal norms are applied by the inferior ones. It doesn’t mean that norms produce

4 This system contains not only the communication of interstate organizations, but also the communication of private actors which as subsidiary actors in the system. Communications of the interstates system are in a haphazard way, on the other hand, communications of the international institutionalized system are persistent and stable.

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other norms, because norms are produced from the operation of the political system (that is legislative communication). So that the communication of the legal system is how to apply norms to a case, the validity of the norms is the eigenvalue that stabilizes the legal system. In continuing communication within the system, the legal system is closed. The court is an apparatus that makes sure that conditions continue making such communication which produces another communication for self-reference inside the legal system (Idem). The function of the legal system for the whole social system is to make it possible for people to predict their action in the society, especially to predict what happens when a legal dispute occurs, and to keep society in order. The communication of the legal system has formed “a social desire for order,” and the legal communications of order are related to freedom which can be protected or restricted by legal norms (Ibid. 65). The legal system “can be developed only as a social regulative” (Ibid. 67).

The legal system easily resonates with the political system, so that the system needs decisions which bind any groups made by the political system. The legal system requests the political system to do much more than it can provide (Ibid. 63). The legal system is closed, however the system has to observe the environment to apply an appropriate norm to a case or to check the appropriateness of norms or to judge the necessity to change the norms, and it causes the resonance with the environment. In this meaning, the legal system is open (Ibid. 65). Only in this way, can the legal system understand events of the environment. When a legal dispute occurs, the legal system tries to resonate with the environment by transforming an economic event or a political event into a legal event. Any communication which is excluded from the legal system, for example the estimation of risks, is always regarded as communication of the political system. Although the expectations of the political system give the illusion that that system can control matters for the whole social system, the legal system has in fact more occasions to decide arbitrarily on environmental matters (Ibid. 68). 2. Formation of Global Law and its Possibility

2.1. Legal sources of global economic law on the basis of the autopoietic system The arguments for legal sources of global law (Teubner 1997, 11) refer to the customary law theory (Khan 1982, 97-107; Loquin 1986, 67-122), institutionalist theory (Fouchard 1983, 81-114), and contract theory (Cremades and Plehn 1984, 317-348). In any way, one cannot explain the phenomena of the legal sources of global law by a sole theory. According to the customary law theory, the formation of legal conviction between traders through the establishment of worldwide commercial practices leads to the elaboration of customary law. In this case, the contract which establishes the rights and obligations between the parties in each case becomes standardized and contributes in such a way to encouraging the establishment of such practices. The institutionalist theory presupposes a sort of institutionalized world community of merchants (a societas mercatorum) which has the

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natural inclination of establishing its order by producing internal legal rules framing themselves so as to avoid chaos or the imposition of authoritative order by others. Such rules have the effect of a disciplinary code of a closed club and “organizational sanctions such as blacklisting and exclusion from membership” are imposed against a violator. As for the contract theory, there are two sorts of explanation. One is the self-regulatory contract theory and the other, the autopoietic self-referential contract theory. The former explains that, on the basis of the freedom of contract as a general principle of law, private parties can freely establish self-regulatory law rules between them without any basis in national or international law. According to Teubner, “National Laws are supposed to grant freedom of contract in the form of the choice of non-national global law” (Teubner 1997, 9; Schmitthoff 1964, 47).

As for the autopoietic self-referential theory, we should understand first of all that the contracts we deal with are international contracts, viz., moving goods and values beyond frontiers, having plural links (for example, installation of services, the territory of the provision of services, the provider of services, the client of services, etc.) in plural countries, and concerning the international trade interest, and, hence, that these contracts are placed in the global context. The contracts themselves are the primary sources of law like legislations or judicial precedents and provide the primary basis for quasi-judgment and legislation. The fact is that a contract producing a legal norm governing the contract itself is a paradox. Therefore, the autopoietic contract theory must make a deparadoxification. According to G. Teubner, there are three ways of deparadoxification; internal hierarchy of contractual rules, temporalization of the paradox, and externalization of contractual self-validation (Teubner 1997, 16). Teubner wrote that these ways “mutually support each other and make it possible, without help of the state, for a global law of the economic periphery to create its own legal centre” (Idem). First, by the internal hierarchical organization of contractual rules into primary rules which regulate the behaviour of the parties and into secondary rules which regulate the recognition of primary rules in the sense established by H. L. A. Hart, “the paradox of self-validation still exists, but it is concealed in the separation of hierarchical levels, the levels of rules, and Meta rules” (Idem). “The hierarchy is tangled, but this does not hinder” the higher rules from regulating the lower ones. Second, a contract temporarizes “the paradox and transforms the circularity of contractual self-validation into an iterative process of legal acts, into a sequence of the recursive mutual constitution of legal acts and legal structures” (Idem). A contract refers to “pre-existing standardization of rules” and to “the future of conflict regulation” (Idem). Therefore, it becomes an element of “an on-going self-production process in which the network of elements creates the very elements of the system” (Idem). Third, a self-referential contract uses the technique of externalization for deparadoxification. The validity of a contract and the future conflicts are submitted to the judgment of the external non-contractual institutions which are nevertheless contractual because they themselves are

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the internal product of the contract, and hence, the self-validation of a contract is externalized. The typical action of such institutions is arbitration which has the task of judging the dispute concerning the contract. The fact that the validity of the arbitration is based on the contract of which the arbitration itself judges the validity is still a paradox. “Hence, the vicious circle of contractual self-validation is transformed into the virtuous circle of two legal processescontracting and arbitration. An internal circular relationship is transformed into an external one” (Ibid. 17). Rules spontaneously created by a contract can be self-referential by combining the organized production of rules by arbitration. In my opinion, this autopoietic self-referential contract theory seems to be the most persuasive one for understanding why the rules established by a contract can be the sources of global law. 2.2. The characteristics of global economic law viewed from the autopoietic system Global laws are regarded as self-regulations which are made by private actors. Essentially, the activities of private actors have been regulated by laws of each state. But, in certain fields, states or interstate organizations have some difficulty in regulating transnational activities caused by or involving private actors which are becoming more and more important in the global society. In such fields as economics, activities are essentially transnational. For example, trade is impossible without transnational activities of persons, goods, services and capital. The private legislation is made by private international associations which carry out structural coupling with the economic system so as to keep order in their mutual activities. They try to regulate by themselves without relying on the public process of making rules. These self-regulations are regarded as global economic law (Tatsuzawa 2009, 115-119).5 They are regarded as operations of the political system, because communication about regulations or making rules is primarily communication belonging to such personalities as “citizens”6 or “politicians.” In the case of global law, the associations of such as “consumers,” “producers,” “business agents” and “multinational corporations” who are primarily personalities belonging to the economic system, participate in the governance and act in order to make regulations. These communications can be regarded as communications of the global civil society system. These communications generate global economic laws.

For example, the Internet Society is a private association which makes rules and regulates the evolution of Internet protocol of all over the world (Ibid. 124). eBay supplies an online market for people to use. eBay decides detailed and formalized rules for users and has established a mechanism to resolve disputes among users. It also made a system which

5 The global economic law as the self-regulation of private actors is not the modern phenomenon. For example, “jus mercatorum” which was made by merchants in Europe and had been observed as same as rules which were regulated by governors in medieval time (Lévy-Bruhl 1961). 6 Here citizens means active political actors.

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evaluates performance of buyers and sellers on the online market. The systems and the rules of eBay became a model of other online markets. The assignments of domain names and IP addresses are regulated by rules made by Uniform Domain Name Dispute Resolution Policy (UDRP) which is an private non-profit organization built on the Internet Corporation for Assigned Names and Numbers (ICANN). ICANN is an American private association.7

Another model is the International Air Transport Association, which consists of airlines and conveys 94 percent of the world’s air passengers, travel agents, and freight shippers. It decides rules for the transportation of passengers. It can affect the decision-making of the International Civil Aviation Organization (ICAO) (Koppell 2010, 254-255).

The International Accounting Standards Board (IASB) is a private non-profit association. It was founded for the harmonization or uniformication of international rules of accounting. The standards of IASB have influenced the accounting rules of almost every state. It has contributed to the development of world accounting standards (Ibid. 62-63). The International Organization of Standardization consists of 161 national standards bodies, that manage processes that “generate standards in a wide range of areas from screw threads to petroleum products to corporate social responsibility” (Ibid. 7).

The International Chamber of Commerce (ICC) was founded after the First World War to help reconstruct European economies and industries and establish free trade. The purposes of the ICC are to promote international trade and investment, develop the economic system based on the principle of free and fair trade, and to propose suggestions for the world economy. It makes common rules for international trade and provides an international court system for arbitration (International Chamber of Commerce 2010).

When global economic law is formed, the subjects of global economic law, viz., private associations, have to observe the rule. Once legal disputes arise, it gives them a chance to refer to commercial arbitration. Although it is quite difficult to have systems which indemnify them against violation of global economic law or help to solve legal disputes, it appears to be such an adjudicative body.

It is indicated that global law is useful for the governance of transnational economic activities, because the global economic law is not formed by government intervention but by self-regulation of private actors. The global economic law has some problems. The first problem is that it is lacking the democratic elements in the process of making the global economic law. The function of the political system is to make decisions which bind groups.

7 About eBay and ICANN, see Schultz (2007, 157-163; 2010, 1-19).

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Making norms are one of outcomes of this function.8 Global economic law is also a manifestation of the function of the global civil society system. The validity of these decisions is the eigenvalue which plays an important role as stabilizer of the global political system. Since modern times, the democratic political system that people who are bound by political decisions participate in the decision-making process, has given validity to the decision. For example, a national law obtains validity through the system in which people’s representatives who win seats in an election participate in the decision-making process. International laws or decisions are made by communications of the interstate system or the international institutionalized system. They also get their validity from the system that the governments of states representing peoples join in their decision-making. However, the global economic law is not made by democratically-elected people’s representatives. Therefore we can say that there is democratic deficit in the validity of the global law (Nölke 2006, 139). This is essentially tied to the question of legitimacy of global law, if we consider law as “l’expression de la volonté générale du peuple” (De Malberg 1920/1962, 330).

Then new types of democratic mechanism for the legislative process of global economic law have occurred in the communications of the global civil society system. For example, Participatory democracy; this is a political theory that tries to maximize the participation of people in decision-making by means of developed information technology. Deliberative democracy; it regards “deliberation” as necessary condition of decision making and of getting its’ validity. Functional democracy; it is the theory which ensures the system of the freedom of information, of accountability and of contestation giving the validity to decisions (Cunningham 2001, 123-141, 142-161, 163-183). However, the global civil society system has difficulty in having a democratic decision making process (Dahl 1999, 19-36). Even the interstate system and the international institutionalized system which have indirect democratic processes of decision-making hold such problems as “Democratic deficit” (Zweifel 2002, 12) and the lack of accountability (Bono 2004, 175-177). In this situation, republicanism has the possibility to complement democratic processes in the global civil society, and gives validity and legitimacy to the global economic law. Republicanism is a political philosophy based on the following elements; the principle of freedom from arbitrary domination, citizens as the common denominator of various people, and the realization of the common good in a community. Under the republicanism, arbitrary powers are not allowed. Reference to experts in each field to restore law and order is needed in a decision-making process in the global civil society. Even if it is not a democratic 8 Making norms is performances of the political system. Once norms are formed, communications about norms are regarded as operations of the legal system. The political system and the legal system form the structural coupling through norms.

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decision-making process, it is better than no law and order (Pettit 1997, 265-266). It is very important for republicanism to restrict arbitrary power rather than the holder of power. “Virtuous experts” who have advanced knowledge, who have the ability to understand the common good and its duty for the society, and take moderate actions (Ibid. 290-292), can be regarded as valid representatives of the people even if they are not elected by the people. They are required to make rules for order. The principle of republicanism has the possibility to compensate for the lack of democratic decision-making process in the global civil society (Ibid. 261-262, 267-270). In the interstate system and international institutionalized system, the personalities who can join in communications thereof still have been limited to “politicians” and to “officials.” Individuals have been limitedly involved in these communications.9 In the global civil society system, more personalities can join in these communications because of the system which is forming coupling with other systems. In the case of the global economic law, the representatives of “employers,” “employees,” “producers” and “consumers” who are essentially actors of the economic system communicate about making norms for themselves to keep order in their activities. If a person does not join directly in the decision for norms, he could take part in the communications of the decision-making. For example, saying something about food security as a consumer to a company is included in these “participations.” Thus, there is possibility to obtain the validity of global economic law through the challenge of the above-mentioned three new democracies and application of republicanism principles (Cutler et al. 1999, 19).

The second problem is that global economic law tends to be purpose-built because, it is established to stabilize communications of actors in the economic system. Even if the global economic law is made by “virtuous experts,” it may have arbitrariness. It is self-regulation which is made by private actors. It has more risk of corruption (Nölke 2006, 135-140). This is a reason why global law has difficulty in being valid law.

To solve this problem, it is necessary for legislators (private actors) of global economic law to make “secondary rules” in the global economic law in the sense established by Hart. Secondary rules are regulations of the recognition of primary rules. They have the characteristic of fundamental norms or constitutional rules which decide the enforcement, abolition, procedures, and alteration of primary rules (Tsagourias 2007, 1-2; Sciulli 1992). They also decide how to deal with protest against primary rules (Hart 1997, 79-123; Bobbio 1971, 113-115, 119). In fact, some global economic laws have already had secondary rules as fundamental norms. For example, ICANN, eBay and ISO established secondary rules (Nölke 2006, 137; Haufler 2002, 6-9). In fact, ICC has already set up an adjudicative institution

9 An example of this is the representatives of workers having their seats in the ILO.

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which deals with commercial disputes among members. The ICC International Court of Arbitration is a permanent organ of international commercial arbitration which was founded to solve business disputes of an international character. Most business contracts refer to the ICC rules of Arbitration and ICC Rules of Conciliation recently (International Chamber of Commerce 1997a, 1997b). Conclusion

The aim of this paper is to clarify the formation process of global economic law and to suggest some theories which support its validity as legal norms by using the autopoietic system theory. The autopoietic system which I deal with in this paper is a closed system which produces its own components by self-reference. In addition, inside the system, there are some closed sub-systems which form a hyper-cycle. According to the theory, society is analyzed as a self-referential system of communications. The social system has many sub-systems which have been differentiated by their functions. There are three systems concerning global economic law; the economic system, the political system, and the legal system.

The global law is an amalgamation of self-regulations which are made by private international actors. Private international actors include “consumers,” “producers,” “business agents” and “multinational corporations” carrying out transnational activities which states or interstate organizations have difficulty in regulating. Especially in the economic field, these actors try to self-regulate without relying on the public rule-making process. This self-regulation generates global economic law. The former means communication in the global civil society system. As such, global economic law is formed by personalities primarily belonging to the economic system.

The global economic law has two problems to its validity, first is the lack of the democratic legislative process, and second is its arbitrariness. This paper suggests some solutions for these problems. As for the first problem, it suggested adopting the principle of republicanism to complement democratic legislative process. As for the second problem, it suggested that private international actors have to make not only primary rules but also secondary rules and institutions like the court of arbitration, which deals with disputes of global economic law.

From now on, it will be very important for the success of global economic law that the interstate system and the international institutionalized system involve global economic law in their communications. In other words, the resonance among the global civil society system, the interstate system, and the international institutionalized system to form a hyper-cycle is a key for the success of global economic law (Teubner 2004, 27).

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