Financial Markets as Financial Systems: A Philosophical Dialogue between Offshore Tax Haven Islands and Systemic Failures
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Daniele D’Alvia
Daniele D’Alvia is Associate Research Fellow at the Institute of Advanced Legal Studies where he is leading a research project on Special Purpose Acquisition Companies (SPACs). He is Assistant Professor in Financial Regulation and Business Law at the Cyprus International Institute of Management (CIIM) in Nicosia, and he is the Module Convenor in Comparative Law at Birkbeck College. Since 2019 he has been Teaching Fellow in Banking and Financial Law at Queen Mary University of London – CCLS.
Abstract
This paper deals with financial markets as forms of financial systems. For the first time theorised under a Luhmannian paradigm, markets are conceptualised as financial systems informed by four main structures: risk, uncertainty, competition, and financial innovation. According to Frank Knight, risk is a measurable entity and can always be calculated, but uncertainty is unmeasurable. Nonetheless, uncertainty constitutes the main catalyst for money creation processes in modern economies. In other words, it underpins profit rather than undermining it. For this reason, the modern financial actor is destined to fail. It must deal with uncertainty if it wants to make a profit, but at the same time it can experience only uncertainty, due to its unmeasurable nature. This has caused a profound dilemma between ‘uncertainty-aversion’ paradigms and self-regulation approaches. The paper argues for a mixed system of hybrid regulation, on the one hand to save the environments of tax haven islands via more transparent policies to tax those same offshore companies, and on the other to promote a system of co-operation between financial operators and the state. This is the only way to promote auto-regeneration processes for the whole financial system, because the system itself has already been programmed to fail, and systemic failures produce contagious effects, showing a deeper interconnection of financial systems tout court as well suggesting a cure via a spontaneous mechanism of auto-regeneration, or autopoiesis.
About the author
Daniele D’Alvia is Associate Research Fellow at the Institute of Advanced Legal Studies where he is leading a research project on Special Purpose Acquisition Companies (SPACs). He is Assistant Professor in Financial Regulation and Business Law at the Cyprus International Institute of Management (CIIM) in Nicosia, and he is the Module Convenor in Comparative Law at Birkbeck College. Since 2019 he has been Teaching Fellow in Banking and Financial Law at Queen Mary University of London – CCLS.
© 2020 Walter de Gruyter GmbH, Berlin/Boston
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Artikel in diesem Heft
- Frontmatter
- Focus: Islands and Insularity: Between Law, Geography, and Fiction
- Islands and Insularity: Between Law, Geography, and Fiction
- The Island Metaphor in Literature and Law
- Between Islands: Colonial Legacies and Cultural Imaginaries
- Insularity, Identity, and Alterity in Patrick White’s A Fringe of Leaves
- Micro Remote Islands: Lands of Freedom or Lands of Despotism?
- Financial Markets as Financial Systems: A Philosophical Dialogue between Offshore Tax Haven Islands and Systemic Failures
- Interdisciplinarity 3.0: The Hub of the Universe or Fantasy Island?
- Research
- On (not) Watching The Lady in Number 6: Digital Holocaust Film, Copyright Infringement and the Obligation to Remember
- Along the Path Towards E-Democracy: The Digital Age and Its ‘Models’
- Law, Narrative and Critique in Contemporary Verbatim Theatre
- Book Reviews
- James Harrington: an Intellectual Biography
- Towards a Theatrical Jurisprudence
