PhD thesis defence by Ian Murray
The term regulatory arbitrage gained currency in the financial regulatory literature of the 1980s to describe clever strategies firms used to avoid or mitigate regulatory burdens. It captured broader attention after the financial crisis, when banks came under scrutiny for structuring their assets and affairs deliberately to avoid regulations. Since then, commentators have seized on it to describe a broad array of practices across diverse economic sectors. Despite the term’s prevalence, there is scant agreement on the scope of activities it describes. For some, it is merely a catch-all for legal avoidance from time immemorial. Answering calls for work placing this concept in a richer context, this project retraces regulatory arbitrage’s expansion not only as a real-world phenomenon, but equally as a unit of discourse. Regulatory arbitrage is a conceptual metaphor, based on the audacious assumption that every legal principle has its price. It is also a grammatical metaphor: a noun used to describe a process (in lieu of a verb). As such, it naturalises the behavior it describes as eternal and inevitable, fostering a dangerous conventional wisdom that all regulation is futile. It also obscures the identities of its beneficiaries, curtailing conversations about how uneven access to sophisticated legal advice exacerbates wealth inequality. Through this lens, the concept appears inextricably linked with the ascendancy of financialised business models across the contemporary economy, especially legal practice. It reflects the paramount value contemporary capitalism, fuelled by advances in technology epitomised by artificial intelligence, places on quantitative measures of value. It encourages an instrumental perspective on law, reinforced by law and economics thinking and declining faith in the law’s capacity to vindicate countervailing non-economic values. In this way, it turns what might otherwise be seen as a brazen attempt to undermine the rule of law into an innocent effort to improve the efficiency of the law.