Reversing the Null: Regulation, Deregulation, and the Power of Ideas
AbstractIt has been said that deregulation was an important source of the recent financial crisis. It may be more accurate, however, to say that a deregulatory mindset was an important source of the crisis - a mindset that, to a very significant extent, grew out of profound changes in academic thinking about the role of government. As scholars of political economy quietly shifted their focus from market failure to government failure over the second half of the twentieth century, they set the stage for a revolution in both government and markets, the full ramifications of which are still only beginning to be understood. This intellectual sea-change generated some positive effects, but also some negative ones, including (it seems) an excessively negative impression of the capacity of government to address problems in the marketplace. Today, as we consider the need for new regulation, particularly in the wake of the financial crisis, another fundamental shift in academic thinking about the role of government may be required - involving nothing less than a reversal of the prevailing null hypothesis in the study of political economy.
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Bibliographic InfoPaper provided by Harvard Business School in its series Harvard Business School Working Papers with number 10-080.
Length: 16 pages
Date of creation: Oct 2010
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-20 (All new papers)
- NEP-HIS-2010-11-20 (Business, Economic & Financial History)
- NEP-HPE-2010-11-20 (History & Philosophy of Economics)
- NEP-REG-2010-11-20 (Regulation)
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