Lex Mercatoria, once known as the "law merchant," began in medieval Europe as a practical, custom-based system to support trade across borders. Back then, with fragmented political systems and unreliable national courts, it gave merchants a flexible way to settle disputes. Rooted in the shared traditions and Christian values of the time, it was a conservative framework, built organically from the ground up:
https://trans-lex.org/the-lex-mercatoria-and-the-translex-principles_ID8#I.1
But that was centuries ago. Today's Lex Mercatoria is a different beast, if not monster. It's a sprawling transnational legal system governing global trade and investment through international contracts, arbitration rulings, trade customs, and standardised rules like the UNIDROIT Principles and INCOTERMS. Its advocates claim it brings consistency and predictability to global business. Yet, from a nationalist conservative viewpoint, this system is a direct threat to national sovereignty, democratic accountability, and cultural identity. Unlike its historical predecessor, which grew from shared values, the modern version is a top-down creation of international institutions, corporations, and unelected experts who often see national borders as barriers to progress rather than expressions of a people's will.
The Rebirth of Merchant Law
In the 1960s, scholars like Berthold Goldman and Clive Schmitthoff "rediscovered" Lex Mercatoria amid a push for global economic integration. Goldman saw it as a standalone legal system, free from national laws, a "third legal order" that operated above state authority. Schmitthoff, while more grounded in British legal traditions, viewed it as rooted in the autonomy of contracting parties but still tied to domestic systems. Both recognised a growing set of global legal principles shaped by business practices and organisations like UNCITRAL.
This "living law" evolves quickly to meet the demands of global trade, often bypassing national legislatures entirely. Its flexibility is praised, but for conservative nationalists, this is a flaw. It's a system built without the consent of citizens, shaped by elite consensus rather than democratic debate, severing the link between law and the values or traditions of a free society.
Undermining National Authority
Lex Mercatoria operates outside national legal systems, shifting judicial power from accountable courts to private arbitration panels. These panels, staffed by unelected experts, apply global norms that can override domestic laws. This process erodes what legal scholar Martin Loughlin (The Idea of Public Law (2003)), calls the state's "constitutional authority" to govern its economic life.
For example, when a foreign company contracts with a local entity and includes an arbitration clause, disputes bypass national courts. The company can challenge local labour, environmental, or cultural regulations using transnational norms that prioritise trade and efficiency. Arbitration panels, assuming these are supreme values, may rule against national policies meant to protect citizens.
The investor-state dispute settlement (ISDS) system shows this in action. In Philip Morris v. Uruguay (2016), the tobacco giant challenged Uruguay's anti-smoking laws, claiming they violated international treaties. Uruguay won, but only after spending millions in legal fees, a warning to smaller nations. Similarly, when Germany moved to phase out nuclear power after Fukushima, Vattenfall, a Swedish energy company, sued for billions through ISDS. These cases show how Lex Mercatoria can limit a nation's ability to make democratic choices.
Lex Mercatoria's Philosophical Rejection of Sovereignty
At its core, Lex Mercatoria dismisses the Westphalian idea of national sovereignty. It treats borders and democratic governance as hurdles to economic efficiency, clashing with conservative values that see the nation-state as the guardian of cultural identity and self-governance. This mindset chooses global markets over the will of the people.
Elite Control and Technocratic Rule
Lex Mercatoria's norms are crafted by a small circle of legal scholars, law firm partners, arbitrators, and officials at bodies like UNIDROIT. These groups, often based in global commercial hubs, create rules governing massive trade flows without democratic input. For instance, UNIDROIT's model contracts are developed by experts with no public mandate, yet they shape global commerce through arbitration and international agreements.
This breaks from Western legal traditions, where laws come from elected legislatures or constitutional frameworks. From a conservative perspective, this technocratic approach lacks legitimacy. Complexity doesn't justify bypassing democracy, especially for laws with such far-reaching impacts.
Cultural Erosion and Moral Decline
Lex Mercatoria reduces economic life to transactions optimised for profit, ignoring conservative principles that tie economics to culture, morality, and community. Thinkers like Edmund Burke and Russell Kirk argued that economic activity should serve higher goals, like preserving family and tradition. Yet, Lex Mercatoria treats these as "externalities" to be ignored. When a corporation challenges laws protecting cultural practices, like Sunday rest or traditional crafts, this system provides the tools to opt for efficiency over heritage.
It also promotes a secular, materialist anti-Christian worldview, sidelining values like just pricing or the dignity of labour. By treating all places as interchangeable and cultural practices as trade barriers, it undermines the "rootedness" that philosopher Roger Scruton saw as vital to healthy societies: Conservatism: An Invitation to the Great Tradition (2017).
Corporate Power and a New Feudalism
Lex Mercatoria empowers corporations to act like sovereign entities. Through ISDS, they can challenge national policies with costly arbitration, creating a chilling effect on governance. Elected officials hesitate to pass laws that might trigger corporate lawsuits, inverting the proper balance where businesses operate under democratic rules, not above them.
This system also favours large corporations over local businesses. The complexity of transnational law demands resources only multinationals can afford, sidelining small enterprises and contradicting conservative ideals of distributed ownership and economic democracy championed by thinkers like G.K. Chesterton: The Napoleon of Notting Hill (1904).
A Social Credit Alternative
C.H. Douglas's Social Credit theory offers a way to counter Lex Mercatoria's corporate dominance. Douglas argued that economies should serve human needs, not financial elites. He identified a gap between production and purchasing power, caused by a financial system that creates money as debt, forcing reliance on global markets: Economic Democracy (1919). Here are some very basic ideas as an introduction and counterpoint:
The National Dividend
Social Credit proposes a National Dividend, a regular payment to all citizens based on the nation's productive capacity, not welfare or taxation to reduce dependence on corporate jobs, boost local purchasing power, and support domestic businesses over global supply chains. It also frees citizens to engage in democratic and cultural life without economic coercion.
Monetary Sovereignty
Douglas advocated for nations to issue their own credit based on production, not borrowing from private banks. This debt-free money could fund infrastructure, education, or cultural preservation, breaking the cycle of debt that ties nations to global finance and Lex Mercatoria.
Local Economies
Social Credit supports local production through national credit and policies like local banking or regional currencies. This strengthens communities against global corporate pressure, aligning with conservative values of subsidiarity and local control.
Cultural Renewal
By securing basic needs, Social Credit allows communities to focus on tradition, family, and moral values. It counters Lex Mercatoria's view of humans as mere economic units, valuing dignity and cultural heritage.
Addressing the Efficiency Argument
Supporters of Lex Mercatoria claim it reduces costs and boosts trade. But this assumes efficiency trumps democracy, culture, and cohesion, a materialist view conservatives and Christians should reject. The system's complexity often burdens smaller businesses with high legal costs, and its "efficiency" ignores social and environmental harms. Most critically, even if it were efficient, it lacks legitimacy without democratic consent.
Globalisation is Not Inevitable
Lex Mercatoria's backers call globalisation unstoppable, but this hides the political choices behind it. The system was built to favour corporations over nations, technocrats over citizens. These choices can be undone through democratic will and policies that choose sovereignty over the forces of globalisation.
Reclaiming Control
To combat Lex Mercatoria, nations must:
Strengthen Courts: Reassert domestic judicial authority over commercial disputes, limiting private arbitration in public-interest cases.
Limit Arbitration Clauses: Restrict their use in contracts affecting essential services or cultural heritage.
Reform Trade Agreements: Re-value national interests, protecting workers and heritage from corporate challenges.
Ensure Democratic Oversight: Involve citizens in adopting global norms, ending technocratic rule.
Social Credit policies like the National Dividend, national credit creation, and local development banks would further empower nations to resist corporate globalisation while supporting local economies and cultural values.
Resistance to Globalism
Lex Mercatoria isn't just a legal system, it's a challenge to sovereignty, democracy, and cultural identity. It hands power to corporations and technocrats, sidelining the common good. Social Credit offers a way to reclaim economic and cultural sovereignty, ensuring economies serve people, not profits.
The choice is stark: accept the erosion of national control for a hollow promise of efficiency, or rebuild systems rooted in tradition, community, and democratic legitimacy, and economic freedom and democracy. By embracing conservative principles and Social Credit policies (described by Douglas as "practical Christianity"), we can protect our societies and ensure future generations inherit nations that reflect their values, not a homogenised global market.