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.

Atmospheres of law: senses, affects, lawscapes

In this article, I deal with airs and sounds and scents, while keeping an eye on the law. My field of enquiry is the interstitial area between sensory and affective occurrences, namely sensory experiences that are traditionally thought to be a causal result of external stimuli, and affective experiences that are mostly associated with emotional changes and generally allude to something internal. I am arguing that there is no constructive difference between internal and external origin of occurrences. In its stead, I suggest the concept of atmosphere, namely an attempt at understanding affective occurrences as excessive, collective, spatial and elemental. However, it quickly becomes apparent that an atmosphere is legally determined. The law controls affective occurrences by regulating property of sensory stimulation. At the same time, the law guides bodies into corridors of sensory compulsion – an aspect of which is consumerism in capitalist societies. The law achieves this by allowing certain sensory options to come forth while suppressing others, something which is particularly obvious in cases of intellectual property protection that capture the sensorial. I deal with the law in its material, spatial manifestation and in particular through what I have called the ‘lawscape’, namely the fusion of space and normativity. I employ a broadly Deleuzian methodology with insights from radical geography, affective studies, and urban and critical legal theory in order to develop and link the various parts of the text.