Edited by Susan Rose-Ackerman and Peter L. Lindseth
Chapter 33: The Role of the State in (and after) the Financial Crisis: New Challenges for Administrative Law
Giulio Napolitano 1. The economic institutions of the crisis and the two sides of administrative law Any major financial and economic crisis will have a profound impact on the role of the State and on administrative law rules and institutions. Certainly this was the case at the time of Wall Street crash in 1929. All over the world, the Great Depression precipitated a dramatic expansion in administrative power – perhaps the greatest that history to that point had ever experienced. In the United States, the New Deal represented an extraordinary chance for the expansion of the Regulatory State, both in its economic and social dimensions. In European countries, the government response to the crisis was the nationalization of banks and utilities, as well as the establishment of planning in many economic sectors. The Great Depression of the 1930s had a deep and long-lasting impact on what could be called the ‘two sides’ of administrative law. The first concerns the role of the State and its prerogatives, giving legitimacy to a wide command and control system and to the direct public provision of goods and services. The second concerns the codes of conduct of administrative agencies and efforts to offer guarantees to citizens. Even after the Great Depression had passed, the economic institutions to which it gave rise were not dismantled, because they were now deeply embedded in political and social life. At the same time, the expanded role of the State generated a new administrative law framework, both institutional and procedural,...
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