Ewald Engelen, Ismail Ertürk, Julie Froud, Sukhdev Johal, Adam Leaver, Michael Moran, Adriana Nilsson, and Karel Williams
- Published in print:
- 2011
- Published Online:
- January 2012
- ISBN:
- 9780199589081
- eISBN:
- 9780191731150
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199589081.003.0002
- Subject:
- Business and Management, Finance, Accounting, and Banking, Political Economy
The chapter makes the case for framing the crisis as an elite debacle. The first section focuses on the informal pre-2007 elite story about the benefits of financial innovation, told in the period of ...
More
The chapter makes the case for framing the crisis as an elite debacle. The first section focuses on the informal pre-2007 elite story about the benefits of financial innovation, told in the period of what we call the Great Complacence when central bankers, regulators, and senior economists repeated the same reassuring but ill-founded stories about the benefits of financial innovation and the ‘Great Moderation’. The second section justifies the term debacle by presenting some political arithmetic about the form and nature of the catastrophe after 2008 and the wider consequences of the crisis and bail out. The chapter argues that we need a new and different politico-cultural approach to present-day capitalism if we are to understand the origins of the debacle in the operations of unregulated finance and the subsequent frustration of reform.Less
The chapter makes the case for framing the crisis as an elite debacle. The first section focuses on the informal pre-2007 elite story about the benefits of financial innovation, told in the period of what we call the Great Complacence when central bankers, regulators, and senior economists repeated the same reassuring but ill-founded stories about the benefits of financial innovation and the ‘Great Moderation’. The second section justifies the term debacle by presenting some political arithmetic about the form and nature of the catastrophe after 2008 and the wider consequences of the crisis and bail out. The chapter argues that we need a new and different politico-cultural approach to present-day capitalism if we are to understand the origins of the debacle in the operations of unregulated finance and the subsequent frustration of reform.
Ewald Engelen, Ismail Ertürk, Julie Froud, Sukhdev Johal, Adam Leaver, Mick Moran, Adriana Nilsson, and Karel Williams
- Published in print:
- 2011
- Published Online:
- January 2012
- ISBN:
- 9780199589081
- eISBN:
- 9780191731150
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199589081.001.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking, Political Economy
This book addresses two important questions: first, why did financial innovation lead to the crisis in the banking sector that developed in 2007–8; and, second, why the political reform of finance ...
More
This book addresses two important questions: first, why did financial innovation lead to the crisis in the banking sector that developed in 2007–8; and, second, why the political reform of finance has apparently proved so difficult across a variety of political jurisdictions? This ambitious book draws on a team of researchers from different disciplines to develop an innovation and distinctive argument in response to these two critical issues. In the first half of this book our question is about how crisis was generated. Chapters 2, 3, and 4 develop our answer, which is that innovation in and around the financial markets took the form of bricolage which did not consider the risks, uncertainty, and unintended consequences of volume-based business models and complex circuits. The direct implication is that finance needs to be simplified, rather than regulation made more sophisticated. In the second half of the book, our question is about why democratic political control both before and after the crisis has proved so difficult? Chapters 5, 6, and 7 develop our answer, which is that self-serving financial elites are not easily controlled by technocratic elites who are themselves recovering from knowledge failure, or by the rest of the governing classes concerned with political positioning for electoral advantage on issues which are technical, opaque, and illegible to the electorate at large. In Chapter 8, we discuss some of the implications of this analysis for how reform of both banking regulation and democracy is required.Less
This book addresses two important questions: first, why did financial innovation lead to the crisis in the banking sector that developed in 2007–8; and, second, why the political reform of finance has apparently proved so difficult across a variety of political jurisdictions? This ambitious book draws on a team of researchers from different disciplines to develop an innovation and distinctive argument in response to these two critical issues. In the first half of this book our question is about how crisis was generated. Chapters 2, 3, and 4 develop our answer, which is that innovation in and around the financial markets took the form of bricolage which did not consider the risks, uncertainty, and unintended consequences of volume-based business models and complex circuits. The direct implication is that finance needs to be simplified, rather than regulation made more sophisticated. In the second half of the book, our question is about why democratic political control both before and after the crisis has proved so difficult? Chapters 5, 6, and 7 develop our answer, which is that self-serving financial elites are not easily controlled by technocratic elites who are themselves recovering from knowledge failure, or by the rest of the governing classes concerned with political positioning for electoral advantage on issues which are technical, opaque, and illegible to the electorate at large. In Chapter 8, we discuss some of the implications of this analysis for how reform of both banking regulation and democracy is required.
