2006 WAR VS.LEGAL ORIGIN 467 law's open-ended fiduciary duties have ex post strengths,civil law struct res can and do they're just not labeled as fidu open-ended,ex post in quires as well duties Common law systems just use them more. And much stockholder protection in common law na tions comes from ex ante regulation(think of the American Securities and Exchange Commission and the massive codification of the securi- ties rules through which the SEC works),which is not at the core of common law's institutional I advanta Again,the idea isn't that law is unimportant but that once the e firs order condition of politi al sup port for capital markets is reached,either origin can create the legal institutions that financial markets need. In Part II,I describe the twentieth-century shift in institutions around the world.Regulation is everywhere;the legislature is su- preme. The c law judge's import in economic faded relative t that of the e regulato It's not United States use both securities regulators and fiduciary duties bu that we regulate financial markets more intensely than our civil law cousins do,as measured by regulatory budgets,personnel,and so on And we often build up market-protecting devices via regulation:the American securities code is dense specific,and detailed. The function sought prot cting outside investo thus multiple means,n K g the question not prima ly one o】 but of political will.The small legal structural differences that persist could readily be overcome by a determined polity. In Part III,I examine data.While legal origin predicts securities merke ength a simple emblematic legislative policy docs so just as ne should be skep otical of many nati on-by-nation re sion because here aren't enough relevan countri s to run a sophist cated statistical analysis,I nevertheless first examine the same set of twenty-seven nations whose financial differences proponents have said are driven by legal origin (and I then examine a larger set of coun tries).I show that the financial contrasts can be just as well explained by the relative destruction of the richer eco omies in the first half of the twentieth centur re de oye S0 ne survived A few prospered Those that suffered the most had weaker financia markets than the others in the ensuing decades,even after they had otherwise recovered economically from the earlier destruction. This correlation could be the basis for more compelling theories than distant legal origin,theories tied to modern political economy. rt IV,I mine alternative the ting fror odern politics. The pol approach looks at how political tions interact with preferences to create policy outcomes. In the wealthy West,some legislatures haven't wanted vibrant securities markets because their polities just would not support pro-market poli- cies.Post-World War II political issues -left-right labor politics trade barriers, the median voter in nations whose capital stock had WAR VS. LEGAL ORIGIN law's open-ended fiduciary duties have ex post strengths, civil law structures can, and do, use open-ended, ex post inquires as well; they're just not labeled as fiduciary duties. Common law systems just use them more. And much stockholder protection in common law na￾tions comes from ex ante regulation (think of the American Securities and Exchange Commission and the massive codification of the securi￾ties rules through which the SEC works), which is not at the core of common law's institutional advantage. Again, the idea isn't that law is unimportant but that once the first-order condition of political sup￾port for capital markets is reached, either origin can create the legal institutions that financial markets need. In Part II, I describe the twentieth-century shift in institutions around the world. Regulation is everywhere; the legislature is su￾preme. The common law judge's import in economic policymaking has faded relative to that of the regulator. It's not just that we in the United States use both securities regulators and fiduciary duties but that we regulate financial markets more intensely than our civil law cousins do, as measured by regulatory budgets, personnel, and so on. And we often build up market-protecting devices via regulation: the American securities code is dense, specific, and detailed. The function sought - protecting outside investors - thus can be achieved through multiple means, making the question not primarily one of legal tools but of political will. The small legal structural differences that persist could readily be overcome by a determined polity. In Part III, I examine data. While legal origin predicts securities market strength, a simple emblematic legislative policy does so just as well. While one should be skeptical of many nation-by-nation regres￾sions because there aren't enough relevant countries to run a sophisti￾cated statistical analysis, I nevertheless first examine the same set of twenty-seven nations whose financial differences proponents have said are driven by legal origin (and I then examine a larger set of coun￾tries). I show that the financial contrasts can be just as well explained by the relative destruction of the richer economies in the first half of the twentieth century. Some nations were destroyed; some survived. A few prospered. Those that suffered the most had weaker financial markets than the others in the ensuing decades, even after they had otherwise recovered economically from the earlier destruction. This correlation could be the basis for more compelling theories than distant legal origin, theories tied to modern political economy. In Part IV, I examine alternative theories emanating from modern politics. The political economy approach looks at how political institu￾tions interact with preferences to create policy outcomes. In the wealthy West, some legislatures haven't wanted vibrant securities markets because their polities just would not support pro-market poli￾cies. Post-World War II political issues - left-right labor politics, trade barriers, the median voter in nations whose capital stock had 2oo6]