The global derivatives market as social innovation

Sean Geobey

The Evolution of Social Innovation

Building Resilience Through Transitions

Edited by Frances Westley, Katherine McGowan and Ola Tjörnbo

In a time where governments and civil society organizations are putting ever-greater stock in social innovation as a route to transformation, understanding what characterizes social innovation with transformative potential is important. Exciting and promising ideas seem to die out as often as they take flight, and market mechanisms, which go a long way towards contributing to successful technical innovations, play an insignificant role in social innovations. The cases in this book explore the evolution of successful social innovation through time, from the ideas which catalysed social and system entrepreneurs to create new processes, platforms, projects and programs to fundamental social shifts in culture, economics, laws and policies which occurred as a result. In doing so, the authors shed light on how to recognize transformative potential in the early stage innovations we see today.

Monograph Book

Published in print:: 29 Dec 2017

ISBN:: 9781786431141

eISBN:: 9781786431158

DOI:: https://doi.org/10.4337/9781786431158

Pages:: c 288

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Chapter 9: The global derivatives market as social innovation

Sean Geobey

Monograph Chapter

Published:: 29 December 2017

DOI:: https://doi.org/10.4337/9781786431158.00014

Pages:: 146–175 (30 total)

Collection: Social and Political Science 2017

Abstract

The growth of the international market in financial derivatives over the past 40 years has radically changed the governance of the global economy, and this growth can be drawn directly from the development of the Black–Scholes options pricing model. The global derivatives market is an example of a social innovation with a global impact, raising a number of conceptual issues for theories of cross-scale interaction and elective affinity. The derivatives market demonstrated an ideological elective affinity with the deregulatory movement as it grew, was enabled by and provided funding to advances in computing, and was reinforced by the profitability of derivative trading. Governments shifted from being the key players in domestic financial regulation to competing with each other to attract actors in the derivatives industry, a change that raises questions about the nature of cross-scale interactions.

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