This document discusses different perspectives on ideal financial systems and economic models. It argues that: 1) States have a duty to regulate financial competition and protect basic human rights, while economic growth must be balanced with sustainable social welfare programs. 2) Strong economies should serve human well-being, not be ends in themselves, and financial systems should protect ethics and human prosperity over financial figures. 3) Both communist and purely capitalist models have failed, so regulation and balanced public/private partnerships are needed, especially in essential sectors like energy, transport, education and healthcare.

1. The ideal financial system
The state has a duty to step in and regulate competition between
financial actors. Apart from that the state in order to protect social stability and
harmony needs to offer to its citizens and guests (e.g. foreign workers,
tourists, foreign students) a minimum protection of their basic human rights.
The development and the efficiency of the national health, educational and
social security system is essential for peace and prosperity of the society. The
latter is strongly connected with economical growth of individuals, enterprises
and the state itself. This goal can only be reached if social policy and welfare
meets boundaries linked to the tax income of the state. In plain words in the
case that a state in order to sustain the status quo of hospitals, schools,
pensions, social structures of any kind spends excessively in comparison to
its income, bankrumptcy is around the corner.
In parallel to the above, in my humble view, a strong economy is the
tool for the wellbeing of the people not the goal itself. This core perspective is
the ground for my thoughts on the ideal financial system which is inseperable
with the ideal political system. Freedom, Equality, Justice and of course
respect of Human Rights have been throughout the ages the incentive of the
struggle of nations, communities and individuals. Human beings and not
financial figures are to be protected. Ethics and ideology are notions that offer
the ground for economy to grow either to enhance or to attack the prosperity
of the majority of the people.
This holistic view on the economy and financial system gives birth to
challenges for the states and the other financial actors. The pioneers of
communism, socialism and capitalism share the idea of economical and
political intergration that will create greater markets for goods and services.
In Europe the two great wars created and sustained two main political
and economic models that divided the continent in two major poles. The
eastern part under the leadership of the USSR attempted to reach the goal of
intergration following the theories mainly developed by Marx and Lenin. On
the other hand the West attempted to achieve prosperity on the ground of
liberal political and economic theories that derived mainly from the French
Revolution and the period of Enlightement.

2. The Eastern model gave emphasis to the development of heavy
industry and the growth of the production. The State was the roughly the only
economic actor that ruled all financial activity. This was supposed to be only a
transitional period that aimed to lead to the establishment Socialism. This
development would , according to the” enlightened” leadership of the
communist states, lead to wealth and prosperity of the people that will enjoy
equal rights and be the co-owners of all productive sources and means.
Unfortunately, the history has shown that the road to this Utopia was tricky,
again in my humble view, due to both gaps and inconsistencies of the system,
but mainly because those who finally gained power did not stay in tune with
and did not offer good services to the vision of their theoretical leaders. That
is why not long after the Russian Revolution strong financial and social elites
were created in the USSR and its satellite States. These elites, high profile
party members and military people, athletes, artists, enjoyed a luxurius
lifestyle to the expense of the people. In contrast to the privileges that were
restricted to the few that took part in the game that was fully controlled by the
communist party, the vast majority of the people had no goal and turn to numb
and indifferent individuals. That is because the communist state in order to
protect its power against the (existing) internal and external enemies had
developed a complex and sophisticated system of control that provoked fear
and resignment to its people. The immense pressure and deep depression
this situation caused to the majority of the people gives a good explanation to
how in a very short period after the collapse of the regimes in eastern Europe
in the late 1980’s and early 1990’s these economies embrassed a pure and
harsh capitalistic approach. The people were eager to get into the financial
game, get rich fast and with any cost. For decades, the state was an enemy
that left no room for them to act as economical subjects, merchants,
entrepreneurs and exploit their potential to the benefit of themselves and
others.
Nevertheless, the unquestionable defeat of the communist model in the
way it was taken into force in Eastern Europe for around 70 years does not
mean that the model of capitalistic development that is followed by the
majority of states in Europe and worldwide has been successful. The idea that
the market can regulate itself on the basis of the rule of offer and demand has

3. as well proven to be unsuccessful. To defeat that shortfall the financial
leadership of Western Europe soon realized that there is a strong need of
regulation and broadening of the market. The early attempts of collaboration
in a union basis were made in a pure financial basis and in certain fields of
commerce. Again soon it became obvious that this model had too many
restrictions. The first step was to broad the basis of the states involved in
parallel with the broadening of the fields of economic activities regulated
inside the Union. The Rome Conventions in 1957 provided the ground for the
EU as we know it today, with its indisputable achievements and (regrettably)
its major failures of the past decade. The most important among many
problems caused by the failure to reach political, financial and social
intergration (despite the monetary union and the lack of borders) are
unemployment and the broadening of the inequality between the wealthy
North and the poor South which leads to the creation of conflicted interests
inside the EU.
In conclusion, the past has taught us much and these lessons should
not be overlooked. Great markets have advantages that are obvious. They
allow the establishment of grand enterprises that offer jobs and rise in
productivity. They key question is if these enterprises should be owned by
states, individuals or both according to the kind of their financial activity. In my
view the state should be deeply involved and strongly regulate the sectors of
economy that are linked to basic human rights and the sustainability of the
state itself. These are indicatively but not only energy, ports, airports, banks
education and last but not least health. The involvement of the state does not
mean necessarily full state ownership to the exclusion of private actors, but
the state needs to be one of them. These areas , apart from the fact that they
service basic human needs the are also lucrative sources of income for the
state. This income in addition to taxation can help the state to build and
sustain a welfare system for all people. With their basic needs covered
through state help, people are encouraged to work to achieve more, be
productive, creative and happy. The wellbeing of the people apart from the
humanitarian benefits, has also financial benefits for the state. Social Justice
and Equality guaranteed by the State creates a healthy relationship between
the people and the State, which is considered aid not enemy. The

4. establishment of this perception could lead to rise of productivity and
employment, decline of the cost of health services for physical and mental
problems related to stress and disappointment, decline of the use of drugs
and alcohol and criminality. All these add up to less expenses for the state
and that money spent in the development of social/welfare state are money
well spent.
In a financial and political environment of that kind the role of the
banking system is very important to enhance economy and individual
iniciatives. Private Banks with the help and support of the state should finance
with favorable terms and conditions real economy. People that are planning to
return to agricultural business and repopulate the villages should a priority. In
addition to that start up companies as well as already running businesses
need the help of the banking system to launch, survive and flourish. Last but
not least banks need to promote healtlhy consumer habits and not encourage
poor people to buy luxurius cars, homes and gadgets that they cannot afford.
In connection to that the State needs to regulate and protect the
operation of the financial markets, the derivative markets from
Over the last decades, the rapidly evolving and constantly altering
complex reality of international commerce has intensified the old demand of
the parties involved (merchants, companies, states, national and international
trade organizations and fora) to operate on stable legal ground. According to
a very popular, yet not undisputable, view, “Harmonisation” of Commercial
Law is the key means of promoting and facilitating cross-border business
transactions. This broad term refers to a wide range of activities aiming to
overcome difficulties deriving from the diversity or even contradiction between
relevant national legal rules. 1
1
Twigg-Flesner, C. (2011) Some Thoughts on the Harmonisantion of Commercial Law and the Impact
on Cross-border Transactions in Boundaries of Commercial and Trade Law, Villalta Puig, G.
(editor),Sellier European Law publishers GmbH, Munich.

5. States have actively served the needs and practices of the increasingly
globalized business community exercising their authority as national
legislators and as contracting parties in bilateral and multinational treaties.
Their determination to support and facilitate international commercial
relationships has been depicted in national legislation through the wide
adoption of legal texts developed by international organizations and
committees to promote harmonization of law governing international business
transactions, e.g. UNCITRAL model law on International Commercial
Arbitration. In addition to that, states ,acting as members of the international
community, have negotiated and concluded binding uniform legal
instruments concerning disputes arising out of international commercial
contracts, aiming at (a) increasing predictability and certainty in private
international law matters, jurisdiction, determination of applicable law,
recognition and enforcement of foreign judgements and international arbitral
awards, e.g. the Hague Convention and (b) developing uniform substantive
law, e.g. the CISG.
Furthermore, the European Union, an institution originally established
to elaborate and strengthen the economic cooperation and commercial
relationships within Europe, in the last decades has served the same goals
through its legislative processes, “harmonization” of the laws of member
states through Directives and “uniformity” of law through Regulations.
In parallel with the above complex legislative process and the
consequent progress in relevant commercial court litigation and international
commercial arbitration, independent scholars and international organizations
are working on defining and analyzing the legal frame of International
Commerce. Their work has resulted in various divisions of the law of
international business transactions. Not surprisingly, much ambiguity and
controversy exists in matters of terminology and definition of exact scope and
perspective of each division.
Transnational Commercial Law (TCL) is a modern term adopted to
describe the legal framework of business transactions with an international
element. The central aim of TCL is to facilitate a smaller community of

6. specialized entities, who deals in global markets and govern their
transactions2.
As specified by R. Goode, one of the main objectives of
Transnational Commercial Law is “namely to clarify and improve rules which
in national systems are non- existent , undeveloped, unclear or unsuited to
international transactions, and thereby remove impediments to crossborder
trading which parties cannot resolve by agreement under national law”3
. The
scope of TCL is by default commercial law, but not in its entirety. This field of
law focuses on cross-border transactions. It includes rules deriving from
national private law, international law (mainly international treaties governing
cross-border transactions), as well as a-national sources. TCL is broad in the
sense that includes substantive law governing cross border commercial
transactions, as well as the mechanism that determines jurisdiction,
applicable law, recognition and enforcement of judgments and international
arbitral awards concerning disputes within its scope.
Drawing specific lines between TCL and other more traditional
divisions of the law of international business transactions proves to be a
rather challenging task with highly disputable results. The author's attempt is
limited to the legitimacy of the term Transnational Commercial Law in
comparison with other more traditional divisions of law of international
business transactions.
'International' is a term traditionally and broadly used in legal theory.
Not surprisingly, the etymological analysis provides useful information with
regard to the meaning of the term in legal context. The preposition “inter”
which in latin means 'between' is combined, as prefix, with the noun “nation”,
which in legal terms equals to “State”. This results to a rather safe conclusion
that in legal context the adjective “international” refers stricto sensu to legal
situations and relationships between States. In accordance with that,
International Law applies to States (with no limitation), public entities
(exercising public authority), international organizations (within their mandate
2
Baasch Andersen C.,(2009) The Interrelation of the CSIG and Other Uniform Sources, CISG
Methodology pp 216-217
3
Goode R., (2005) Rule, Practice and Pragmatism in Transnational Commercial Law, International &
Comparative Law Quarterly, pp 556

7. which is defined in the treaty that has established them) and derives mostly
from treaties concluded by States and international customary law.
International Economic Law is a very broad law division of public
international law adressing cross- border economic relationships and
activities between states, international organizations and private actors4
. Its
material scope includes ,inter alia, dealings between states and resolution of
disputes between states by organs of the World Trade Center5
. In this term
the adjective “International” accurately reffers to and defines the content of
this “Law” and provides information about its subjects.
Furthermore, the use of the term “International” in the equally well-
established law division “International Trade Law” is succesfull and consistent
with its meaning, when the term encopasses States' relevant activities. The
scope or International Trade Law is narrower than that of International
Economic Law. The former provides only the legal framework for international
trade relationships, not for the entirety of international economic relationships.
The term “International Trade Law” has been formally adopted by major
international organisations. Most significantly, in 1966, “United Nations
Comission on International Trade Law” (UNCITRAL) was established to
“further the progressive harmonization and modernization of the law of
international trade by preparing and promoting the use and adoption of
legislative and non-legislative instruments in a number of key areas of
commercial law.” 6
, including dispute resolution, international contract
practices, transport, insolvency, electronic commerce, international
payments, secured transactions, procurement and sale of goods. The
term “International Trade Law'' has been also adopted and tradionally used in
connection with the functions of World Trade Organizaton (WTO) and its
4
Herdegen, M., (2013) Principles of International Economic Law, Oxford University Press, UK, p 3
5
Twigg-Flesner, C. (2011) Some Thoughts on the Harmonisantion of Commercial Law and the Impact
on Cross-border Transactions in Boundaries of Commercial and Trade Law, Twigg-Flesner, C.
,Villalta Puig, G. (eds),Sellier European Law Publishers GmbH, Munich.
6
UNICITRAL, (2014) A Guide to UNCITRAL, Basic facts about the United Nations Commission on
International Trade Law,2013,http://www.uncitral.org/pdf/english/texts/general/12-57491-
Guide-to-UNCITRAL-e.pdf

8. predecessor General Agreement on Tariffs and Trade (GATT)7
. In the context
illustrated above, ”International Trade Law” is indeed “International” linked
with state activities within international organisations.
The term “International” is also found in the law division “International
Commercial Law” which describes a considerably broad and open-ended field
of law. It encompasses mostly private law rules governing issues such as
international sales and trade, money-laundering, international privacy laws
and consumer protection, international bribery, intellectual property and
copyright law, international and government contracts8
. From the point of view
priorly stated, this term lacks in legal accuracy and could be characterized as
rather misleading with regard to its scope ratione personae. Private parties,
not States negotiate, conclude and operate in the vast majority of situations
and relationships within its scope.
“Transnational” is the key word that strengthens the legitimacy of the
most recently introduced term “Transnational Commercial Law” in comparison
to the terms “International Trade Law” and “International Commercial Law”,
when used to define more or less the same field of law as TCL. Again,
etymology offers a great support to this view on legal accuracy. The latin
preposition “trans” means “beyond” and also illustrates movement and
change. In a legal context the term “Transnational” defines an area of law
beyond state functions and relationships. This term is highly suitable for a law
that governs international business transactions, which are the main object of
TCL ratione materiae. The subjects of this legal universe are mostly
companies, merchants and other individuals involved in cross-border
transactions and rarely states, when acting as contracting parties in
international business dealings. In TCL “Transnational” defines “Commercial”
not “Law”. The sources of TCL, as will be presented in detail below under ii)
are open-ended. Although much progress has been made over the last
decades towards “harmonization” and “unification” in this field of law, until
now in legal practice its main source remains national law.
The choice of the term “Commercial” is successful in the term
“International Commercial Law” because it depicts its broad scope. On the
7
Herdegen, M., (2013) Principles of International Economic Law, Oxford University Press, UK, p 8
8
Journal of International Commercial Law (2014), http://www.georgemasonjicl.org

9. contrary, with regard to the actual scope of TCL, the term “Commercial”
leaves room for some scepticism. That is because “Commercial” is a familiar,
broad legal term that embraces a wide variety of branches of law, that are
excluded from TCL. As stated above, the scope of TCL is narrower and could
be defined more legitimately as “Law of Transnational Commercial Dealings“
or “Transnational Commercial Contract Law”.
The distinction between “international business transactions”,
“international trade law”, and “international economic law” is an issue of great
controversy ,which is not restricted to semantics9
. Greatly interesting, but far
beyond the theme of this essay, is the exploration of the subjective political,
social and economic views from which the diversity in terminology and in
definition of the scope of the law divisions mentioned above originate from.
9
Brand, R.( 1996) Introduction: Semantic Distinctions in an Age of Legal Convergence, University of
Pennsylvania Journal of International Economic Law., pg 3