What is it about?
The analysis of the endogenous instabilities of finance-led capitalism point out the crucial role of regulatory structures for macro-stability. The paper argues that the financial stability calls for fundamental modifications of the institutional structure of markets and for new policy principles. Macro-prudential regulation must replace market-oriented supervisory approaches to prevent short-sighted speculative activities and to direct financial markets toward funding productive activities in ways other than though neoclassical market-based incentives.
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Why is it important?
In light of the (still ongoing) 2007-2008 crisis, institutional modifications in financial regulation are more than necessary to reduce the negative and society-wide consequences of recurrent liberalized-finance crises. The subsequent financialization of economies is one of the major consequences of such an evolution that threatens the viability of our societies.
Perspectives
This article is one of the first essays that seek a comprehensive analysis of the monetary characteristics of capitalism and its endogenously generated instabilities. The issue is beyond the simple academic debates in Economics profession since it is related to our way of thinking of, organizing and managing our society and its basic institutions (including monetary and financial system). This is also related to how we would like to live together and to frame the future of our children.
Faruk Ulgen
Universite Grenoble Alpes
Read the Original
This page is a summary of: Institutions and Liberalized Finance: Is Financial Stability of Capitalism a Pipedream?, Journal of Economic Issues, June 2013, Taylor & Francis,
DOI: 10.2753/jei0021-3624470223.
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