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The Global Financial Crisis And After: A New Capitalism?

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  • Pereira, Luiz Carlos Bresser

Abstract

The 2008 global financial crisis was the consequence of the process offinancialization, or the creation of massive fictitious financial wealth, that began in the1980s, and of the hegemony of a reactionary ideology, namely, neoliberalism, based on selfregulatedand efficient markets. Although capitalism is intrinsically unstable, the lessonsfrom the stock-market crash of 1929 and the Great Depression of the 1930s weretransformed into theories and institutions or regulations that led to the “30 glorious years ofcapitalism” (1948–77) and that could have avoided a financial crisis as profound as thepresent one. It did not because a coalition of rentiers and “financists” achieved hegemonyand, while deregulating the existing financial operations, refused to regulate the financialinnovations that made these markets even more risky. Neoclassical economics played therole of a meta-ideology as it legitimized, mathematically and “scientifically”, neoliberalideology and deregulation. From this crisis a new capitalism will emerge, though itscharacter is difficult to predict. It will not be financialized but the tendencies present in the30 glorious years toward global and knowledge-based capitalism, where professionals willhave more say than rentier capitalists, as well as the tendency to improve democracy bymaking it more social and participative, will be resumed.

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Bibliographic Info

Paper provided by Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 240.

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Date of creation: 04 Dec 2009
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Handle: RePEc:fgv:eesptd:240

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  1. Gala, Paulo Sérgio de Oliveira Simões & Pereira, Luiz Carlos Bresser, 2008. "Why foreign savings fail to cause growth," Textos para discussão 159, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  2. Willem H. Buiter, 2008. "Central banks and financial crises," LSE Research Online Documents on Economics 24438, London School of Economics and Political Science, LSE Library.
  3. Bresser Pereira, Luiz Carlos, 1993. "Economic reforms and cycles of state intervention," World Development, Elsevier, vol. 21(8), pages 1337-1353, August.
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  5. Pereira, Luiz Carlos Bresser & Nakano, Yoshiaki, 2002. "Economic Growth With Foreign Saving?," Textos para discussão 118, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  6. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Preface," MPRA Paper 17451, University Library of Munich, Germany.
  7. Reinhart, Carmen & Rogoff, Kenneth, 2009. "Banking Crises: An Equal Opportunity Menace," CEPR Discussion Papers 7131, C.E.P.R. Discussion Papers.
  8. Robert H. Frank & Thomas Gilovich & Dennis T. Regan, 1993. "Does Studying Economics Inhibit Cooperation?," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 159-171, Spring.
  9. Palma, J.G., 2009. "The Revenge of the Market on the Rentiers: Why neo-liberal Reports of the end of history turned out to be premature (Updated 19 December 2011)," Cambridge Working Papers in Economics 0927, Faculty of Economics, University of Cambridge.
  10. Michael Bordo & Barry Eichengreen & Daniela Klingebiel & Maria Soledad Martinez-Peria, 2001. "Is the crisis problem growing more severe?," Economic Policy, CEPR & CES & MSH, vol. 16(32), pages 51-82, 04.
  11. Bresser Pereira,Luiz Carlos, 2010. "Globalization and Competition," Cambridge Books, Cambridge University Press, number 9780521144537, October.
  12. Roger E. A. Farmer, 2009. "Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 357-358, 09.
  13. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
  14. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
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