Towards a Sustainable World Power System

Abstract

Finally, we look at some of the tools available to address the issue of climate change in the present World Power System. We must find the way to reengineer multinational enterprises in a way that they address climate change issues in their day-to-day operations. A flawed agency theory has led to improper firm governance, the maximization of shareholder short-term interests leading to a massive production of negative externalities. We need to move to true cost accounting by integrating into the accounts of reporting entities the replacement cost of the CO2 used in their value chains. Using the notion of replacement cost prevents any attempt at pricing environmental services. Pricing would be subjective and/or artificial. The move allows to go beyond the financial sustainability of firms, which is a prerequisite but is insufficient. Firms also need to show that they are compatible with the preservation of natural resources. It is the only way to ensure the sustainability of our kind of society, with strong rights of autonomy, including property rights.

The changing spatial arrangements of global finance: Financial, social and legal infrastructures

“…A third concern in this theme issue is the importance of legal treatments as a form of infrastructure, not only within singular jurisdictions but also transnationally. It is well established that law underpins the ‘codes of capital’ (Pistor 2019) and that transnational financial management is supported by laws that allow firms to create elaborate corporate structures to protect themselves (Robé 2020). Legal treatments are linked both to financial institutions and to social networks that underpin a dominant interpretation of what is permissible.…”

“…Financial arbitrage based on legal provisioning is a crucial element in the article from Palan, Petersen and Phillips (2021). Drawing inspiration from Jean-Philippe Robé's work (2011, 2020), Palan and co-authors explore how firms, abetted by networks of accounting and law experts, have re-engineered their corporate structures to create ‘opportunity spaces’ in accommodative offshore sites, in which they realize and control a significant proportion of group profits. Using a process of equity mapping based on firm-level data, the article isolates particular types of corporate entities that use legal provisions to act as ‘standalones’, ‘inbetweeners’ and ‘fuses’ within the corporate network.…”

“…Social networks stabilize how actors in the market read one another, as well as create enduring relations and power asymmetries which shape markets. International legal structures provide avenues for arbitrage, ambiguity and absences (Grasten et al 2021), as well as the design of corporate structures to protect the interests – not of stakeholders – but the social unit of the firm (Robé 2020; Palan et al 2021). Below we extend this discussion of financial institutions, social networks and legal management as infrastructures that help us to understand the changes and continuities in the spatial organization of finance.…”

Arbitrage spaces in the offshore world: Layering, ‘fuses’ and partitioning of the legal structure of modern firms

“…Much of the recent research seems to validate this assumption (Alstadsæter et al, 2018; Clark et al, 2015; Clausing, 2016; Cobham and Janský, 2018; Dowd et al, 2017; Garcia-Bernardo et al, 2017; Gordon, 2016; Gumpert et al, 2016; Hines and Rice, 1994; Kaye, 2014; Phillips et al, 2017; Zucman, 2015). OFCs are considered niche players in the global economy, exploiting their size and the right to write laws in their developmental strategies (Roberts, 1995). However, despite how small and insignificant they may appear individually, they have encouraged a phenomenal rise in international tax competition and downward pressure on tax rates (Andersson and Forslid, 2003; Bretschger and Hettich, 2002; Engel, 2000; Keen and Konrad, 2013; Mendoza and Tesar, 2005).…”

“…Why would non-resident clientele seek far-flung financial services, often located in jurisdictions they have little to do with? The literature has tended to assume that the primary attraction of OFCs is low taxation facilitating tax avoidance (Fichtner, 2016; Gumpert et al, 2016; Hines and Rice, 1994; Palan, 2002; Roberts, 1995; TJN, 2019). This might be correct up to a point, but OFCs play other important, albeit neglected, roles in corporate organizations (Boise and Morriss, 2009; Sigler et al, 2020; Zoromé, 2007).…”