The Theory of Capital Settlement Blind Spots: Endogenous Cost Externalisation, Three-Stratum Lock-In and Systemic Crisis Under Capital Pricing Rules

This monograph constructs a systematic axiomatic framework for analysing structural blind spots in capital settlement systems. Grounded in three core axioms — the axiom of cutting, the axiom of lock-in, and the axiom of self-reference — it moves beyond conventional moral and individual-level explanations to demonstrate that blind spots and systemic crises are endogenous, inevitable outcomes of the capital system’s own pricing and settlement rules, rather than failures of supervision, decision-making or ethics. The work identifies four canonical forms of cost externalisation (off-balance-sheet, temporal, boundary and reputational), maps a three-stratum progression of lock-in from physical asset fixation to discursive legitimation, and unpacks the self-referential loop formed by narrative backlash and embedded third-party evaluators. It concludes that settlement blind spots cannot be eliminated once and for all, but can be effectively buffered through cognitive adjustment, countercyclical institutional design, and deliberate preservation of path redundancy.