New Economics Papers
on Law and Economics
Issue of 2011‒08‒02
two papers chosen by
Jeong-Joon Lee, Towson University

  1. Pluralism and deformalisation as mechanisms in the achievement of more equitable and just outcomes – the move from „Classical Formalism“ to deformalisation. By Ojo, Marianne
  2. Addressing risk challenges in a changing financial environment: the need for greater accountability in financial regulation and risk management By Ojo, Marianne

  1. By: Ojo, Marianne
    Abstract: By tracing the development and evolvement of certain legal theories over the centuries, as well as consequences emanating from such developments, this paper highlights how and why a shift from the model of „classical formalism“ towards more deformalised models has arisen. The paper also illustrates how deformalisation and „a corresponding loss of certainty“ could be harnessed in order to provide for greater „realism“ and externalities, whilst still attaining a respectable level of consistency. Developments and efforts aimed at exploring the applicability of classical formalism and deformalised models should be regarded as „an endeavour to establish a consistency of terms, as well as a probing into how far principles, notions, and rules for decision making can be generalised, and rectification when generalisations have gone too far.“ Unity, as well as „a common law of mankind“ are goals which are still capable of being achieved even where fragmentation, diversification and pluralisation of the law occur. Such processes of specialisation, where correspondingly countered by the appropriate level of generality as well as the ability to apply rules – such that they are consistently applied in similar situations, are capable of achieving more equitable, just and unifying goals as opposed to a model which merely strives for the achievement of legal certainty. Looking beyond the borders of legal theory may indeed provide the much needed redress in situations where generalisations exceed the required limits.
    Keywords: pluralism; ethics; fragmentation; formalisation; rules; legal certainty; legal theory; plausible constitutionalism; realism; regulation; accountability
    JEL: K2 K33 G18 D8 G3
    Date: 2011–07–21
  2. By: Ojo, Marianne
    Abstract: The need for continuous monitoring and regulation is particularly attributed to, and justified by, the inevitable presence of risks and uncertainty – both in terms of certain externalities and indeterminacies which are capable of being reasonably quantified and those which are not. Amongst other goals, this paper aims to address complexities and challenges faced by regulators in identifying and assessing risk, problems arising from different perceptions of risk, and solutions aimed at countering problems of risk regulation. It will approach these issues through an assessment of explanations put forward to justify the growing importance of risks, well known risk theories such as cultural theory, risk society theory and governmentality theory. “Socio cultural” explanations which relate to how risk is increasingly becoming embedded in organisations and institutions will also be considered as part of those factors attributable to why the financial environment has become transformed to the state in which it currently exists. A consideration of regulatory developments which have contributed to a change in the way financial regulation is carried out, as well as developments which have contributed to the de formalisation of rules and a corresponding “loss of certainty”, will also constitute focal points of the paper. To what extent are risks capable of being quantified? Who is able to assist with such quantification –and why has it become necessary to introduce other regulatory actors and greater measures aimed at fostering corporate governance and accountability into the regulatory process? These questions constitute some of the issues which this paper aims to address.
    Keywords: risk; financial; regulation; audit; governmentality theory; risk society; cultural theory; hedge funds; uncertainty; legal theory; accountability
    JEL: K2 D8 G3
    Date: 2011–07–24

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