The Complexity Theory and Financial Systems Regulation

Complexity theory provides a revolutionary point of view when dealing with classical legal problems and in understanding the intimate interconnections between law and other social sciences. Complexity theory understands the legal system as a complex adaptive system like the economy: these two systems complexly interact with each other, as well as with the other complex social and physical systems they are interconnected with. Furthermore, complexity theory shows us how there is no perfect form of regulation available. A complex version of the law would be flexible and adaptable without, however, being able to provide a “perfect and stable” solution to regulation. Such a system would only deliver a lower number of mistakes and more adapt reactions. Complexity theory is considered an important tool for better understanding, and therefore better regulating, global financial systems. Especially after the great crisis, there is a deep interest in using complex system models, with the aim of forecasting the long-lasting effects of the regulation system and to predict a potential collapse of the financial system. Complexity theory introduces in the debate ideas and concepts that are new for law scholars and also urges the institutions and the scholars themselves to analyze the reality in overall terms, involving at once legal skills, system modeling, economic skills and the knowledge of the technological tools.