Heterodox Analysis Of Financial Crisis And Reform

‘The editors of this book have put together a compelling compendium of explanations and consequences of the global financial crisis. The essays are fairly homogeneous despite their apparent diversity, all providing a useful historical background. There is an obvious Institutionalist twist, with authors examining the changes in organizations and regulations that have accompanied the move towards financialization and money-manager capitalism. This analysis is often informed by the work of Hyman Minsky, pointing towards the inherent destabilizing forces of competition, as well as the dangers of deregulation, self-regulation, securitization, excess leverage, global imbalances, and the illusion of liquidity-enhancing and risk-reducing financial innovations.’
– Marc Lavoie, University of Ottawa, Canada

‘This valuable collection offers a stimulating range of heterodox views on the global financial crisis and proposals for reform of the financial system, nationally and internationally. The perspective of the authors is broadly Post Keynesian, sometimes with a radical or an institutionalist twist. Vigorously argued, clearly presented and largely non-technical, these essays provide a great deal of food for thought.’
– John King, La Trobe University, Australia

Though the worst of the financial crisis of 2008 has, with hope, ebbed, it has forever changed the economy in the United States and throughout the rest of the world. Using the financial and economic crisis as a catalyst, this volume examines how to better regulate the financial system and what to expect in the future if no steps are made toward reform. This book lays the foundation for those steps by providing concrete ideas that will push policy in the direction of jobs growth and widespread prosperity.

Paired with a history of financial market problems, Heterodox Analysis of Financial Crisis and Reform analyzes complacency regarding the state of the economy, its lack of jobs, growing income disparity, poverty and the consequences of the false but widely shared belief that the economy is self-regulating. This book suggests ways to account for the inherent instability of financial markets and how to make asset values less precarious. Examining both the macro and micro sides of financial instability, the authors argue that existing rules and regulations are either not applied or that they are not effective enough to prevent market fluctuations of the magnitude experienced in 2008. This volume also sheds new light on just how inextricably linked success on Wall Street and welfare on Main Street have become.

Students and scholars of heterodox economics, historians, political scientists, policymakers and all those with an interest in an economic renaissance will find this thought-provoking analysis of significant interest.

Contents:

Foreword
Robert Pollin

Introduction
Joëlle J. Leclaire, Tae-Hee Jo and Jane E. Knodell

PART I: FINANCIAL CRISIS AND REFORM
1. Difficulties in Reregulation of the Financial System After the Crisis
Jan Kregel

2. Public Policy to Support Retirement: An Alternative to Financialization
Yeva Nersisyan and L. Randall Wray

PART II: HISTORY AND POLITICAL ECONOMY OF FINANCIAL CRISIS
3. Those Who Forget the Past are Condemned to Repeat it: Lessons Learned from Past Financial Crises that were Ignored by the Deregulators of the Past 15 Years
Robert W. Dimand and Robert H. Koehn

4. Panics and Depressions: A Historical Analysis of 1907, 1929 and 2008
William T. Ganley

5. The Instability of Financial Markets: A Critique of Efficient Markets Theory
Robert E. Prasch

6. Sismondi, Marx and Veblen: Precursors of Keynes
John F. Henry

PART III: THEORETICAL ANALYSES OF FINANCIAL CRISIS
7. Money Manager Capitalism, Financialization and Structural Forces
Yan Liang

8. Engineering Pyramid Ponzi Finance: The Evolution of Private Finance from 1970 to 2008 and Implications for Regulation
Eric Tymoigne

9. A Heterodox Microfoundation of Business Cycles
Tae-Hee Jo

10. Business Competition and the 2007–08 Financial Crisis: A Post Keynesian Approach
Tuna Baskoy

11. The Global Crisis and the Future of the Dollar: Toward Bretton Woods 3?
Jörg Bibow

12. Exchange Rate Regimes and the Impact of the Global Crisis on Emerging Economies
Alfredo Castillo Polanco and Ted P. Schmidt

Index