Chimamanda Adichie is an exceptional Nigerian author. In a speech at the TED conferences in 2009 she said:
“Power is the ability not just to tell the story of another person, but to make it the definitive story of that person.
( – – – )
“The ‘single story’ creates stereotypes, and the problem with stereotypes is not that they are untrue but that they are incomplete. They make one story become the only story.”
The ‘story’ of the financial and economic crisis of 2007-2008 still holds us in thrall. The information pack for this seminar states that economists, political scientists, sociologists, psychologists, philosophers, anthropologists and biochemists have studied the causes of the crisis.
It derides lawyers for being remarkably quiet on this subject.
The question is whether legal rules are lacking, whether they have not been properly applied, or even whether they have helped to trigger or exacerbate the crisis.
Perhaps the lawyers have been quiet because they still do not have a full picture of the multiplicity of factors which contributed to the crisis. In this introduction I would like to explain my view of these circumstances, which is based on my own experience in a supervisory capacity, though it only reflects my personal conviction.
1. The origin of the financial crisis
In the past five years numerous experts in a number of countries have conducted many technical studies. In Britain, Lord Adair Turner produced a particularly clear report known as the Turner Review.
Our system is based on the concept of a ‘free market economy’, with companies subject to rules laid down primarily in competition law, but subsequently also in financial law.
Over the past twenty years, the following theory – the story – regarding the financial markets has been unchallenged:
“But the predominant tendency of financial markets theory of the last 20 to 30 years has been to assert that:
(i) efficient and liquid financial markets deliver major allocative efficiency benefits by making possible a full range of contracts, thus enabling providers and users of funds more effectively to meet their preferences for risk, return and liquidity;
(ii) markets are sufficiently rational as to justify a strong presumption in favour of market deregulation; and
(iii) that even if markets are theoretically capable of irrational behaviour, policymakers will never be able to judge when and how far they are irrational with sufficient confidence to justify market intervention.”
In the face of these principles, this ‘story’, the regulators developed a system which they believed would generate a deep, liquid capital market, accompanied by a legal framework which only needed to organise sufficient adherence to commitments and respect for property, a framework that only needed to counteract fraud. In line with these ideas, the regulators had a role to play specifically in organising the exchange of information, where the aim is to ensure that all investors gain access to comparable information simultaneously.
The Turner Review finds that these three fundamental principles proved erroneous.
So the question is: how have we reached this point? Does it demonstrate the failure of capitalism as a system?
Lees de complete tekst in PDF: 130624 – N503 – Inleiding M. Flamée – Studiedag Recht op Recht 29.03
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