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The David Gordon Memorial Lecture: Finance without Financiers: Prospects for Radical Change In Financial Governance

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  • Gerald Epstein

    () (University of Massachusetts, Amherst)

Abstract

In response to the financial crisis of 2007-20I0, governments in the United States, Europe, and elsewhere have invested billions of dollars in financial institutions to prevent them from going bankrupt and from further disrupting the global economy. Despite these massive public bail-outs, a government and "elite" consensus has emerged that these nationalized or quasi- nationalized financial institutions should be privatized as soon as possible, and that, apart from modest changes in financial regulation, our economies should return to the status quo ante financial structure. I disagree. As the crisis reveals, "financier" dominated finance has a number of devastating flaws: it creates major externalities that contribute to financial and real economic instability; it promotes short-term investment strategies; it contributes to inequality; and it undermines economic efficiency and the achievement of social goals in the real economy. I argue that a better strategy for achieving economic recovery, restructuring, and widely shared, sustainable prosperity is to use public investments in the financial sector to build on the successful post-World War II experiences of publicly oriented financial institutions to create a stronger presence of "finance without financiers."

Suggested Citation

  • Gerald Epstein, 2010. "The David Gordon Memorial Lecture: Finance without Financiers: Prospects for Radical Change In Financial Governance," Review of Radical Political Economics, Union for Radical Political Economics, vol. 42(3), pages 293-306, September.
  • Handle: RePEc:sae:reorpe:v:42:y:2010:i:3:p:293-306
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    Citations

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    Cited by:

    1. Cibils, Alan & Allami, Cecilia, 2013. "Financialisation vs. Development Finance: the Case of the Post-Crisis Argentine Banking System," Revue de la RĂ©gulation - Capitalisme, institutions, pouvoirs, Association Recherche et RĂ©gulation, vol. 13.
    2. Hale Balseven, 2016. "The Political Economy of Financial Regulation Policies Following the Global Crisis," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 607-616.
    3. Gerald Epstein, 2014. "Restructuring finance to promote productive employment," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(2), pages 161-170, September.

    More about this item

    Keywords

    finance; financial restructuring; David Gordon;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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