Today's global financial and economic crisis may not have been foreseen by financiers and economists, but others who watched how markets were developing were more than worried. If those worries are to be allayed, the new financial architecture that many are calling for, and which, it is now apparent, is urgently necessary, must be supported by an ethical framework.
TUBINGEN – Many say that the world financial crisis could not have been foreseen. Perhaps not by financiers and economists, but others who were watching how markets were developing – often with dismay – were more than worried.
As early as 1997, I warned about a repeat of the collapsed economic order of 1929-1933 in my book A Global Ethic for Global Politics and Global Economics : “The slightest remark, for example by the President of the American Federal Bank, Alan Greenspan, at the beginning of December 1996, that an “irrational exuberance” had led to an overvaluation of the financial markets was enough to drive the nervous investors on the high-flying stock markets of Asia, Europe and America into a spin, and panic selling. This also shows that crises in globalization do not a priori balance out, but perhaps get progressively worse.”
Back then, I was already venturing what is, for economists, a heretical presumption: that chaos theory should be applied to the economy; that devastating effects can follow from the smallest causes. One could by no means rule out “a return of the world economic crisis and the collapse of the world economic order of 1929-1933.”
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The Chinese government is very good at covering up small problems, but these often pile up into much bigger ones that can no longer be ignored. The current real-estate bubble is a case in point, casting serious doubts not just on the wisdom of past policies but also on China's long-term economic future.
traces the long roots of the country's mounting economic and financial problems.
From semiconductors to electric vehicles, governments are identifying the strategic industries of the future and intervening to support them – abandoning decades of neoliberal orthodoxy in the process. Are industrial policies the key to tackling twenty-first-century economic challenges or a recipe for market distortions and lower efficiency?
From breakthroughs in behavioral economics to mounting evidence in the real world, there is good reason to think that the economic orthodoxy of the past 50 years now has one foot in the grave. The question is whether the mainstream economics profession has gotten the memo.
looks back on 50 years of neoclassical economic orthodoxy and the damage it has wrought.
TUBINGEN – Many say that the world financial crisis could not have been foreseen. Perhaps not by financiers and economists, but others who were watching how markets were developing – often with dismay – were more than worried.
As early as 1997, I warned about a repeat of the collapsed economic order of 1929-1933 in my book A Global Ethic for Global Politics and Global Economics : “The slightest remark, for example by the President of the American Federal Bank, Alan Greenspan, at the beginning of December 1996, that an “irrational exuberance” had led to an overvaluation of the financial markets was enough to drive the nervous investors on the high-flying stock markets of Asia, Europe and America into a spin, and panic selling. This also shows that crises in globalization do not a priori balance out, but perhaps get progressively worse.”
Back then, I was already venturing what is, for economists, a heretical presumption: that chaos theory should be applied to the economy; that devastating effects can follow from the smallest causes. One could by no means rule out “a return of the world economic crisis and the collapse of the world economic order of 1929-1933.”
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