This electronic thesis or dissertation has been downloaded from the King’s Research Portal at https://kclpure.kcl.ac.uk/portal/ Balancism: A new legal and economic model for just distribution wealth and systemic financial stability Imani Markid, Maghsoud Awarding institution: King's College London The copyright of this thesis rests with the author and no quotation from it or information derived from it may be published without proper acknowledgement. END USER LICENCE AGREEMENT Unless another licence is stated on the immediately following page this work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International licence. https://creativecommons.org/licenses/by-nc-nd/4.0/ You are free to copy, distribute and transmit the work Under the following conditions: Attribution: You must attribute the work in the manner specified by the author (but not in any way that suggests that they endorse you or your use of the work). Non Commercial: You may not use this work for commercial purposes. No Derivative Works - You may not alter, transform, or build upon this work. Any of these conditions can be waived if you receive permission from the author. Your fair dealings and other rights are in no way affected by the above. Take down policy If you believe that this document breaches copyright please contact [email protected] providing details, and we will remove access to the work immediately and investigate your claim. Download date: 30. Sep. 2021 BALANCISM: A NEW LEGAL AND ECONOMIC MODEL FOR JUST DISTRIBUTION OF WEALTH AND SYSTEMIC FINANCIAL STABILITY Thesis Submitted for the Degree of PhD in Law by Maghsoud Imani Markid London, May 2013 The Dickson Poon School of Law King’s College London 1 Abstract The modern economic and financial systems have not so far secured a just and fair system of distribution of wealth and have frequently been exposed as containing systemic instabilities. In response, some think that there is no choice but to follow the laws and claims of Capitalism. Others have argued that it is time to revive and implement Socialism. Still others have voiced their support that the Islamic model would be the best solution. This thesis, which is an interdisciplinary and a comparative work, aims to suggest a new solution. The alternative system introduced in this research project is a comprehensive paradigm and three-tier model. The first tier covers the ultimate objective (social justice), the new foundational theory (rights- and-duties balance/benefits-and-burdens balance “Balancism”) as well as fundamental principles and policies of the model (e.g., distribution of the proceeds of natural wealth resources according to the reasonable and legitimate needs of human beings, distribution of subordinate wealth on the basis of contribution, application of an unlimited proportionate liability standard instead of the current limited liability norm, implementation of sharing-in- income arrangement instead of modern labour employment structure, securing basic essential needs of humanity, preventing concentration of wealth, and minimizing risk rather than taking advantage of it). In the second tier, major tools, products, and facilities are suggested for distribution of the proceeds of primary wealth resources and also for for-profit, profit-free, philanthropic, microfinance, intermediary, and risk hedging activities. The third tier deals with the superstructure and political regime of the alternative system. It consists of a “House of Wealth” and a “House of Market Control”. The Houses have to follow and apply the rules of balance, the first in the system of distribution of primary wealth and the second in the circulation of subordinate wealth, in order to ensure that justice prevails. 2 Dedication To my Wife Zeinab Sobhanallahi & my Daughter Mobina 3 Acknowledgements It has been a long and hard, but also enjoyable journey from which I have learned a lot. I frequently had to travel from the UK to the US, where I also did my LLM programme at UC Berkeley, but never had a chance to go back to my motherland Iran to visit my family, country, and friends. This was indeed the toughest part! Many people have helped me intellectually, financially and emotionally to make the thesis possible and I am indebted to all of them. Space only permits to mention the name of some. First and foremost, I would like to express my deepest gratitude to my primary supervisor, Professor Jan Dalhuisen, for encouraging me in the first place to embark on doctoral research and for his continuous strong support. His insightful criticisms always pushed me further. I am also grateful to my secondary supervisor, Dr. Michael Schillig, who has always been generous with his time, inspiring me and providing his expertise to improve my work. I thank my Viva Voce examiners Professor George Walker (Professor of International Financial Law) and Dr Mehmet Asutay (Reader in Political Economy) for their constructive comments, which helped me to look at certain issues and to improve my thesis even further. I am extremely grateful to King’s College London, for all the help and the administrative support; and also UC Berkeley where I gained much of the knowledge that allowed me to tackle the economic and financial aspects of my research. I would like thank Professor Robert Cooter and Professor Eric Talley from UC Berkeley and Professor Ravi Tennekoon from King’s College London for their lectures given about Law & Economics, Law & Corporate Finance, and Law of International Finance which were very useful for my research purposes. I am grateful to my friends in LSE PhD Economics/Finance programme, M. K. Shahidi, M. Vesal and S. E. Seyedan, for the interesting discussions we have had and the insightful comments they have shared with me. I am also indebted to thank Mr. Ali Faraji, who helped me to settle down in London. On a personal level, I value and admire his fine personality and wish him a perfect health. Finally, and most importantly, I wish to thank my family and family-in-law. I cannot give enough thanks to my parents Bahram Imani Markid and Laya Yeghane and my brother Mohammad and my sisters Leylan, Raziyeh, Maryam, Robab and Fatemeh for their great supports, endless patience and absolute confidence in me. I will always remember my brother Ali who until his untimely death was a great inspiration to me. I thank my brothers-in-law Hossein Sobhanallahi and Abouzar Keikhosravi to whom I am indebted and I hope I can one day return their favour.Thanks to my mother-in-law Saeideh Chaichi for her patience and great supports when my beloved daughter Mobina was born in London in the very last and critical stage of my research programme and we desparately needed her help. A special thank you goes to my father-in-law Professor Mohammadali Sobhanallahi for his undivided intellectual, financial and emotional supports and for always being there for me when I needed it the most and for always pushing me in his own ways to achieving the highest goals. Last but certainly not least, I would like to express my eternal gratitude to my beloved wife Zeinab Sobhanallahi. Her understanding, endless patience, and invaluable help when it was most required, and also cheering me all the way from the beginning to the end, made this work possible. I hope I can provide Zeinab with the same invaluable support in order for her to successfully complete her PhD Management programme. 4 TABLE OF CONTENTS TITLE ABSTRACT DEDICATION ACKNOWLEDGEMENTS CHAPTER ONE: INTRODUCTION, BACKGROUND, METHODOLOGY AND THE FIRST TIER OF THE MODEL ............................................................................................... 10 1.1 General Introduction .................................................................................................................... 11 1.2 Problems, Questions, Necessity, Importance, and Aim of the Research Project ........................... 18 1.2.1 Problems .......................................................................................................................................... 18 1.2.2 Questions ......................................................................................................................................... 22 1.2.3 Necessity and Importance ............................................................................................................... 23 1.2.4 Aim ................................................................................................................................................... 24 1.3 Outline of the Thesis .................................................................................................................... 25 1.4 Background and Context .............................................................................................................. 26 1.5 The Research Methodology ......................................................................................................... 52 1.6 The First Tier of the Model (1): The Ultimate Aim (Social Justice/Social Balance) ........................ 56 1.7 The First Tier of the Model (2): The Foundational Theory (Rights-and-Duties Balance/Benefits- and-Burdens Balance “Balancism”) ...................................................................................................... 59 1.8 The First Tier of the Model (3): The Fundamental Principles and Policies ..................................... 74 CHAPTER TWO: KEY CONCEPTS AND THEIR IMPLICATIONS IN ISLAMIC LAW .......... 77 2.1 Introduction ................................................................................................................................