Default Invariance: Naïve Category of Law and Finance

Default invariance is the idea that default does not change at any scale of law and finance. Default is a conserved quantity in a universe where fundamental principles of law and finance operate. It exists at the micro-level as part of the fundamental structure of every financial transaction, and at the macro- level, as a fixed critical point within the relatively stable phases of the law and finance cycle. A key point is that default is equivalent to maximizing uncertainty at the micro-level and at the macro-level, is equivalent to the phase transition where unbearable fluctuations occur in all forms of risk transformation, including maturity, liquidity and credit. As such, default invariance is the glue that links the micro and macro structures of law and finance. In this essay, we apply naïve category theory (NCT), a type of mapping logic, to these types of phenomena. The purpose of using NCT is to introduce a rigorous (but simple) mathematical methodology to law and finance discourse and to show that these types of structural considerations are of prime practical importance and significance to law and finance practitioners. These mappings imply a number of novel areas of investigation. From the micro- structure, three macro-approximations are implied. These approximations form the core analytical framework which we will use to examine the phenomena and hypothesize rules governing law and finance. Our observations from these approximations are grouped into five findings. While the entirety of the five findings can be encapsulated by the three approximations, since the intended audience of this paper is the non-specialist in law, finance and category theory, for ease of access we will illustrate the use of the mappings with relatively common concepts drawn from law and finance, focusing especially on financial contracts, derivatives, Shadow Banking, credit rating agencies and credit crises.

Policy mixes for resource efficiency – conceptual issues, design and assessment challenges

Since the 1950s the global consumption of natural resources has skyrocketed, both in magnitude and in the range of resources used. Closely coupled with emissions of greenhouse gases, land consumption, pollution of environmental media, and degradation of ecosystems, as well as with economic development, increasing resource use is a key issue to be addressed in order to keep the planet Earth in a safe and just operating space. This requires thinking about absolute reductions in resource use and associated environmental impacts, and, when put in the context of current re-focusing on economic growth at the European level, absolute decoupling, i.e., maintaining economic development while absolutely reducing resource use and associated environmental impacts. Changing behavioural, institutional and organisational structures that lock-in unsustainable resource use is, thus, a formidable challenge as existing world views, social practices, infrastructures, as well as power structures, make initiating change difficult. Hence, policy mixes are needed that will target different drivers in a systematic way. When designing policy mixes for decoupling, the effect of individual instruments on other drivers and on other instruments in a mix should be considered and potential negative effects be mitigated. This requires smart and time-dynamic policy packaging. This Special Issue investigates the following research questions: What is decoupling and how does it relate to resource efficiency and environmental policy? How can we develop and realize policy mixes for decoupling economic development from resource use and associated environmental impacts? And how can we do this in a systemic way, so that all relevant dimensions and linkages—including across economic and social issues, such as production, consumption, transport, growth and wellbeing­—are taken into account? In addressing these questions, the overarching goals of this Special Issue are to: address the challenges related to more sustainable resource-use; contribute to the development of successful policy tools and practices for sustainable development and resource efficiency (particularly through the exploration of socio-economic, scientific, and integrated aspects of sustainable development); and inform policy debates and policy-making. The Special Issue draws on findings from the EU and other countries to offer lessons of international relevance for policy mixes for more sustainable resource-use, with findings of interest to policy makers in central and local government and NGOs, decision makers in business, academics, researchers, and scientists.