The law,financial subordination and the empire of capital: On Shaina Potts’ Judicial Territory

Abstract

Judicial Territory offers an eye-opening account of the transnational expansion of the judicial reach of domestic American laws and courts. In this essay, I read the book through the prism of three areas of social scientific inquiry. First, I argue that the book makes a major conceptual and methodological contribution to debates on international financial subordination. More precisely, the book shows that the twin operations of money and the law act as a potent mechanism in the continuous financial subjugation of developing countries in the world market. Second, I critically engage with Judicial Territory’s conceptual arguments on the articulations of law and empire, by bringing them into conversation with historical materialist thought on the constitutive role of law in capitalism. Third, I submit that the book gives us powerful tools to understand our turbulent present, insofar as it demonstrates that attempts to reconfigure state power and to redefine the rules of economic globalisation often take place on the negotiated terrain of the law.

Judicial Territory is a compelling demonstration of the analytical power of legal geography, and particularly of the kind of legal geography that takes finance and political economy seriously. It offers an eye-opening account of the transnational expansion of the judicial reach of domestic American laws and courts. Potts shows that this assertion of American judicial authority over the economic decisions of foreign sovereign governments within and beyond official US borders, or what she calls ‘judicial territory’, ‘has been a crucial, yet hitherto unacknowledged, pillar of post–World War II American empire and the liberal international order so closely connected to it’ (Potts, 2024a: 3). This modality of imperial power has promoted private property and the rights of foreign investors and financiers over all other considerations. It has therefore directly benefitted American capital primarily (and global capital as a whole) and has ‘helped to forge the particular form of (neo)liberal globalization that became dominant in the late twentieth century’ (Potts, 2024a: 171).

While there has been a welcome interest in the law as of late, including within historical materialism and within thriving scholarly movements such as ‘law and political economy’ and ‘law and geoeconomics’, the book is distinct in several respects: its programmatic ambition (which is to develop a unified understanding of law, capital and empire with a distinct geographical twist); its historical approach (the book traverses multiple periods of capitalist development and modalities of American empire); its interdisciplinarity (the book draws from legal history, critical finance, and geographical political economy); and its engagement with a range of methods, from case-law analysis to doctrinal research.

The book is both theoretically sophisticated and technical (the law can be a complicated thing!), yet it is also highly readable, didactic, and politically engaged. Potts pierces the veil of legalese, arcane judicial doctrines and esoteric legal debates, to uncover shifting articulations of corporate and imperial power. The reader will learn a ton, even where the book covers relatively familiar material, such as projects of a New International Economic Order in the 1960s and 1970s or the Third World debt crisis of the 1980s.

In what follows, I read Judicial Territory through the prism of three debates and areas of inquiry within and beyond economic geography: (1) international financial subordination, (2) the place and role of the law in capitalism, (3) the present shape and future of globalisation.

I flesh out Judicial Territory’s contribution to these debates, critically engage with some of the key claims made in the book and I draw out further conceptual and methodological reflections for economic geographers and political economists.

Legal geographies of international financial subordination

The book opens with a vignette: the infamous case of Wall Street vulture funds holding Argentina for ransom by blocking debt restructuring after Argentina defaulted on $93 billions of its debt in 2001. This group of holdout creditors led by a hedge fund called NML Capital had purchased bonds at a steep discount after the sovereign default and sued Argentina at a federal New York court for full payment (i.e. the full value of the bonds plus interest). Two courts ruled in favour of the holdout investors. In 2014, the US Supreme Court refused to hear Argentina’s appeal, leaving the ruling in force, and forced Argentina to pay back the American hedge funds or default again on its external debt. It also affirmed a ruling that forced Argentina to reveal to holdout creditors where it owned assets and property around the world. In 2016, after a 15-year long dispute, Argentina settled and paid the holdout creditors approximately $9.3 billion.

In Chapter 5 of the book, one of my personal favourites, Potts returns to this scandalous case of extortion and provides the reader with the tools to understand how such an outcome could be possible. She situates the case within a long history of judicial expansion which has ‘altered the [US] judiciary’s expectations for its own authority’ and enabled ‘the rise of a new class of specialized distressed debt investors with legal expertise’ (Potts, 2024a: 147, 167). Potts also underlines the consequences of the case, beyond the immediate extorsion of funds from Argentina: the sequence of events, from the default to the various court decisions, played a central role in the shift from Kirchner’s ‘postneoliberal’ approach back to a form of vulgar neoliberalism, as promoted by Macri (Potts, 2024a: 165). This episode, and the general deterioration of political economic conditions, also had a direct responsibility in the historical sequence that would lead to the election of far-right libertarian Javier Milei in late 2023.

As this example makes clear, the act of judicial territory is highly consequential for countries in the global South. It subjects them to brutal forms of capitalist discipline, it erodes economic sovereignty, undermines self-determination and ‘perpetuates the continued extraction of money and resources from South to North’ (Potts, 2024a: 171). The book, then, offers key insights into the phenomenon of international financial subordination (IFS). This refers to the relations of domination, inferiority and subjugation, expressed in and through money and finance, which penalise developing countries disproportionately (Alami et al., 2023). Recent scholarship has shown that IFS is the product of multiple geographies, including the structures of the global financial system; the hierarchies of the global monetary system; regional and international divisions of labour; the distribution and control of advanced manufacturing capacities, technology and intellectual property; the geographical organisation of global value production; the global tax architecture; ecological hierarchies; and of course (post)imperial geographies. Complex forms of overlap and interaction between these multiscalar geographies reproduce the continuous financial subordination of developing countries, albeit under changing modalities. IFS severely constrains development pathways, restricts policy choices and exposes developing countries to various forms of financial vulnerability.

Now, as Brett Christophers astutely noted in a recent review of the book for The Nation, ‘[w]hat Potts has brought to light with Judicial Territory is the crucial role of the law in fashioning and enforcing such subordination – that is, in demanding and securing the obedience of sovereign states’. ¹ The book is indeed a landmark contribution to what can be called the legal geographies of IFS. The book tells us at least four things on the matter.

First, it draws attention to a range of actors, practices, institutions and forms of reasoning that have not been traditionally understood to contribute to IFS. In studies of IFS, the usual suspects are banks, asset managers, institutional investors, development finance institutions, governments, central banks and credit rating agencies. Potts tells us that legal actors (ranging from judges to legislators, treaty negotiators, lawyers, law firms, litigants, legal think tanks and international judges and arbitrators), legal institutions (courts and tribunals, treatises, statutes and case laws), and legal forms of reasoning (rules, customs, principles) crucially matter too. Reading Judicial Territory will give students of IFS a novel understanding of the actors, practices and forms of authority through which IFS is structured and enforced, whether deliberately or unintentionally. Potts thus gives us a richer and expanded sense of agency in the reproduction of IFS.

Second, and relatedly, the book can be read as a methodological intervention in studies of IFS. Specifically, Judicial Territory yields lessons on how to remain attentive to both agency and structure. A productive way to do that, Potts convincingly shows, is to focus on the law. By engaging with its actors and institutions, and by tracing changing practices, rules, norms and forms of reasoning, we can connect structure and agency in a unified understanding of IFS and how it gets reproduced over time. Potts demonstrates that we can find a delicate balance between underlining the enduring role of law in reproducing structures and patterns of imperial power while accounting for its contingent, contested and open-ended character.

Third, a challenge for IFS scholars is to unpack how different forms of power and governance, including imperial, monetary and financial power, work together (if not always in complete alignment) in reproducing IFS. Judicial Territory teaches us that the law plays a crucial, mediating role in this respect. This is because mechanisms and channels of IFS, such as creditor rights or sovereign debt restructuring, are structured and made enforceable through law. Moreover, and reciprocally, the power of the law is at times upheld by that of money. Indeed, as Potts makes clear, the reason why foreign governments abide by US transnational law, even when ‘it is not backed directly by the enforcement power of the police the way domestic law is’ (Potts, 2024a: 8), is because they simply cannot afford to be denied access to international financial markets. In other words, in this case, the disciplinary power of money is precisely the material basis for that of the law. These insights open promising avenues for future research on IFS, notably on the extent to which IFS is a legally coded phenomenon. This will involve further research into the spatialities of the law and where legal power is geographically concentrated.

Fourth, Potts’ conceptualisation of the abstract rule of law as a force that does not homogenise economic conditions, but one that fosters ‘unequal, hierarchical incorporation’ (Potts, 2024a: 36) is particularly suggestive here. It bears striking similarities with the argument, well known to economic geographers and IFS researchers alike, that money and finance operate as abstract, general forms of social regulation that subject all economic units to their rationalities, norms and expectations, albeit differently. Indeed, capitalists and workers are subordinated to the disciplinary power of money, but not in the same way. All firms, from Amazon, Tencent and other tech giants, to the average ‘mom-and-pop’ store, must face financial and monetary constraints, though these of course do not manifest evenly. Germany, Mexico and Mali are subject to the imperatives and structural pressures of money and finance, yet they are not equally equipped or positioned to face them. In short, under capitalism, there is a dialectical tension between on the one hand, the abstract, universal and impersonal character of the rule of law and money, and on the other, their concrete manifestations as unequal treatment and differential constraint. The contribution of Potts’ book here is that it brings into view this dialectical tension, by focussing on its implications for the continuous subjugation of developing countries in the world market. Future research may therefore further examine how the twin operations of money and the law act as a potent mechanism in the reproduction of IFS.

Situating law in the empire of capital

The book positions its key analytical contribution in relation to broader conceptualisations of capitalism and imperialism. Chapter 1 does the heavy lifting on the matter. This is an excellent chapter, which mobilises and productively combines theory and history and proceeds in two steps. It starts by fleshing out the central argument that the law is constitutive of capitalism. The chapter then goes on to consider the relationship between law and imperial formations. Here, Potts’ key contention is that the law acts as a ‘structuring link’ between capitalism and empire (Potts, 2024a: 31). I find both lines of argumentation incredibly suggestive, although I also think that they prompt thorny conceptual questions which are only partly addressed in the book. As Potts herself wrote in the pages of EPA: Economy & Space, ‘attending to the nexus of law, geography and political economy has important methodological implications for economic geographers’ (Potts, 2024b: 1585). It is in the spirit of drawing theoretical and methodological implications for economic geographers that I critically engage in this section with some of the book’s conceptual claims on the law, and particularly those are articulated at a high level of generality.

Let me start with Potts’ argument on the constitutive powers of the law. My read of the book is that it oscillates between two versions of this argument. One that can be referred to as a strong claim on the relation between the law and capitalism, and the other as a softer claim. Both claims acknowledge and draw attention to the causal force of the law in capitalism, but they disagree on the precise nature and character of its constitutive powers. The softer claim is one that I, and I suspect, many economic geographers and political economists, can be on board with. It contends that the law is ‘central to the production of economic geographies’ (Potts, 2024a: 35), and that the ‘law’s own distinctive spatial dynamics shape capitalist geographies’ (Potts, 2024b: 1586). Saying this, however, is not quite the same as saying that capitalism is the definite product of the law. The latter is a much stronger claim, which also features prominently in the book. Indeed, Potts cites approvingly influential scholars who subscribe to this view, such as Katharina Pistor, and law and political economy scholar David Singh Grewal, who writes that ‘capitalism is fundamentally a legal ordering: the bargains at the heart of capitalism are products of law’ (Grewal, 2014, cited in Potts, 2024a: 35). My contention is that the book upholds both positions (the stronger and the softer claim on the law) and is perhaps a little too quick in reconciling them.

The problem with the strong claim is that it is simply untenable, on logical, historical, and empirical grounds. While this is not the place to get into the nitty-gritty of this debate, suffice it to say here that we know from the origins, history and present of capitalism that it is not uniquely produced and constituted by the law, but also by extra-legal violence and coercion (cf. Ince, 2018). Furthermore, historical materialist legal scholars such as Tzouvala (2022) and McHugh-Russell (2018) have compellingly shown that the law must not be given ontological precedence in its relation to capital. Simply put, the law cannot be the ‘thing’ that constitutes capitalism. At best, we can say, in McHugh-Russell’s words, that ‘law helps to constitute and materialise [social] relations [but does not determine those in the first place]. It is part of the fabric by which those relations are understood, circulated, and maintained. As history lurches forward, law is one place where the rubber meets the road’ (McHugh-Russell, 2018, para 3). Law does not precede the capitalist social relations that it contributes to materialise and codify. If anything, it is the other way around: the social relations that constitute capitalism as a totality hold analytical precedence over the particular economic, political, juridical and ideological forms of expression of such relations.

This may seem a pedantic distinction, yet it is an important one. It has implications for how economic geographers define their research objects, design research strategies and contribute to theory-building. Another valuable lesson for economic geographers is that acknowledging and remaining attentive to the causal force of the law in shaping economies must not lead us to accept too readily much stronger (and, in my view, far less convincing) claims as to its relation to capital and capitalism. In short, we must take the law seriously without succumbing to legal fetishism. To be clear, Judicial Territory does not fall into this trap. In fact, I would venture to say that Potts’ substantive analysis throughout the book, and her overall argument, are much more consistent with the softer conceptual claim on the law/capital relation (i.e. the ‘historical materialist’ one) than it is with the stronger claim (i.e. the ‘law and political economy’ one).

This leads me to the second and related conceptual claim advanced by Potts in the book, which is that the law is the bind that ties capitalism and empire together. She writes: ‘law has long acted as a structuring link between capitalism and imperialism, with a particularly important role in defining the geographies of each . . . law facilitated processes of expansion, dispossession, and extraction that connected imperial and capitalist development’ (Potts, 2024a: 31, 36, original emphasis). This strikes me as another extremely suggestive, and original, formulation. It is also elegant in its simplicity and Potts illustrates its analytical salience in chapter 1 by unpacking the role of the law in aligning and bringing together a series of capitalist and imperial strategies, pre- and post-World War II. The argument is also valuable in that it emphasises that the law, capital and empire are irreducible to each other.

It is, however, not unproblematic. For one, it posits a relation of exteriority between the pre-constituted categories law, empire, and capital. At the risk of simplifying, according to this view, capital is a thing of its own, with its own logics and compulsions. Empire is another, separate thing, characterised by its idiosyncratic rationalities and motivations. And the two are connected, or mediated, by yet another thing, the law, thanks to the distinct work that the latter does. There are a couple of problems here. First, it is unclear where the law comes from in the first place. Without a theoretical account of the social constitution of the law, we are left with the idea that the law appears ex nihilo, only to bind capitalism and empire together.

Second, and more importantly, Potts’ own argumentation in the book, in fact gestures towards a different understanding of the law, capital, and empire. Indeed, her careful study of shifting legal forms and modalities of imperial power against the backdrop of the historical development and geographical remaking of capitalism suggests that we should grasp the categories law, capital, and empire as dialectically entangled and part of an overarching totality. Importantly, this conceptualisation can accommodate the crucial argument that the law, capital, and empire are irreducible to each other, yet it does not conceive of these categories as externally related. Rather, and to reiterate a point made earlier, the categories law, capital, and empire are seen as differentiated forms of expression or ‘moments’, of capitalist social relations (Gunn, 1992). These categories are operative: they shape each other as well as the determinate dialectical totality that constitutes them. In my own reading, Judicial Territory gives flesh (in the form of granular and illuminating historical details) to the (abstract-theoretical) bones of this argument.

Hence my modest critique of the (otherwise brilliant) conceptual contribution of Judicial Territory: surprisingly, it does not engage much with the ‘the thick body of theory on the relationship between historical materialism, class conflict, and the operation of the state – including law’ (McHugh-Russell, 2018, para 2; my emphasis). This rich body of scholarship would have been a productive interlocutor for the book. And I wager that a deeper engagement with it would have helped address the conceptual riddles raised in this section, namely, slightly ambiguous claims as to the constitutive powers of the law in capitalism and on the interaction between the law, capitalism, and empire. My sense is that these conceptual difficulties emanate from the fact that the book posits law directly in its relation to capital and imperial formations, without theorising the mediating role of the state. Of course, the state, particularly the US imperial state, is a central actor of the story told in the book. But the fundamental place of the state is not fleshed out at an abstract-theoretical level in relation to law, with implications for how Judicial Territory frames its general conceptual claims.

On the present shape and future of capitalist globalisation

Judicial Territory’s argument and approach give us powerful tools to understand the present shape and future of capitalist globalisation. Potts shows that the particular form of (neo)liberal globalisation as we know it was importantly a product of the transnational application of US domestic law and the authority of US courts. The book demonstrates that there were key historical junctures in this process of expansion of judicial territory, and that by analysing these critical junctures, we can better understand what drove and motivated the expansion of judicial territory. Those included large scale nationalisations in the Soviet Union, decolonisation, the postcolonial assertion of control over natural resources, Cuban nationalisations, attempts to construct a New International Economic Order and the 1980s Third World debt crisis. As Potts underlines, what is common across these historical episodes is that they were marked by geopolitical realignments, struggles over the relationship between political and economic sovereignty, conflicts over the ‘proper’ relationship between states and markets, including conflicts over foreign state-owned entities and nationalisations in state socialist and Third World economies.

The expansion of judicial territory was a direct response to this. More precisely, it ‘spread first and foremost in response to and through targeting the anti- or more-than-capitalist economic practices of Third World states, in ways that have shifted as both the form of US empire, and the geopolitical economic context of North-South relations have changed’ (Potts, 2024a: 172). While it is well known that the particular form of neoliberal globalisation that developed in the 1980s, 1990s and 2000s was the historical product of attempts at curtailing economic sovereignty in the Third World, disciplining policy choices, and constraining collective efforts at transforming the world economy, Potts shows that the role of the law, and in particular, US domestic law, has been largely overlooked (Potts, 2024a: 118). US domestic law worked by constructing and reconstructing dichotomous legal binaries, such as the ‘foreign’ versus ‘domestic’ divide or the ‘public/political’ versus ‘private/commercial’ distinctions. Newly reconstructed legal binaries in turn reconfigured the spatial operations of the law. For instance, specific legal definitions of the ‘foreign/domestic’ divide have important implications for ‘what counts as outside or inside the United States for the purposes of claiming judicial authority’ (Potts, 2024a: 176).

This argument is crucial not only for better understanding recent political economic history, but also because it gives us tools for understanding the present. It will be of particular relevance to economic geographers studying the current transformations animating the world economy, and those interested in critically analysing where capitalist globalisation is presently heading. Consider this. States are currently reinventing their roles as economic actors, against the backdrop of multiple crises and turbulent realignments in the imperialist hierarchy of global capitalism. A range of state and corporate actors are also explicitly engaged in various attempts at reconstructing globalisation. Moreover, we are witnessing the emergence of new hybrids of state and capital (cf. Alami and Dixon, 2024). In that context, commonly understood boundaries between states and markets are destabilised, if not collapsing altogether before our eyes.

Needless to say, this strongly resonates with the critical historical junctures analysed in Judicial Territory. It is therefore reasonable to expect that the law will be mobilised again to assist state and imperial power (as already evident, for instance, in the US weaponisation of law to neutralise Chinese tech giants such as Huawei and ZTE, or the deliberate sabotaging of WTO law), but also as a tool to reconstruct categories such as ‘economics’ and ‘politics’, ‘public’ and ‘commercial’, as separate domains. As I have argued elsewhere, drawing on Potts’ previous work, an area where this is particularly visible is investment law: technologically advanced states and large emerging economies are increasingly deploying foreign investment screening mechanisms (Alami, 2025). These legal devices reclassify vast swathes of investment transactions previously considered to be within the ambit of the private/commercial sphere of market activity, as matters of ‘national security’ and ‘public order’, specifically for the purpose of subjecting them to state power and authority. States are therefore extending their legal space to intervene in cross-border investment transactions for geoeconomic or geopolitical purposes.

The law here acts as a negotiated terrain to reconfigure state power and to redefine the rules of economic globalisation, in ways that are similar to what Potts analyses in Judicial Territory. What is different, however, is that foreign investment screening mechanisms legally empower the executive branch to screen and block investment transactions, not the judiciary, which seems to go against the historical trend documented in Judicial Territory. What may this mean for the next phase of capitalist globalisation, and for the power and salience of the law as a cornerstone of these processes of state restructuring? A productive hypothesis, formulated by Potts elsewhere, is that ‘in a world in which the international economic order is essentially uncontested, powerful states and their corporations benefit more from the type of regularization offered by a judicial modality of law, while increased discretionary power becomes more appealing in times of geopolitical economic uncertainty’ (Potts, 2025: 3). In my view, there is great potential for economic geographers to further explore this hypothesis.

Finally, Potts suggests in the concluding chapter of the book that pushing back against judicial territory, which she sees as central to restoring effective forms of sovereignty and control over economic decisions in the global South and elsewhere, would require ‘repoliticising’ questions such as what activities are ‘subordinated to an anemic if powerful ideology of contract rights above all else’ (Potts, 2024a: 177). While I wholeheartedly agree with this, it is worth noting that we are in fact already seeing a form of repoliticisation happening, albeit one that dangerously centres matters of national security and portrays economic competitors as threats to the sovereignty and integrity of the nation. This should prompt us to reflect on the exact parameters according to which we would want to repoliticise questions of economic activities and political sovereignty. This is a politically urgent question for progressive social forces and broadly anyone concerned with a liveable future for all on this planet.

To conclude, there is much to admire in this landmark intervention. Judicial Territory deserves to be read and discussed widely, and I look forward to reading what economic geographers, political economists and other social scientists make of it!