IDEAS home Printed from https://ideas.repec.org/h/spr/spshcp/978-3-030-86753-9_9.html
   My bibliography  Save this book chapter

Desperation by Consent: Inequality and Financial Crises

In: Financial Markets in Perspective

Author

Listed:
  • Amos Witztum

    (London School of Economics)

Abstract

The recent financial crises were preceded by a prolonged and sharp increase in inequality. This brought to the fore the possible relationships which may exist between the distribution of income and instability. As financial crises are typified by excessive risk-taking behaviour, we will argue that for a crisis to ensue, this excessive risk-taking should be done by those who are more likely to default: the poor. The obvious remedy to this would simply be a redistribution of income. However, for modern economics, there are two difficulties in both aspects of the argument. Firstly, excessive risk-taking, which is a departure from rationality, is not something for which the theory accounts for, or associates with, income distribution. Secondly, the system of competitive decentralization has lost its freedom with regard to income distributions since the problems of incompleteness in uncertainty have limited ownership structures and, hence, income distributions which are consistent with efficiency. Therefore, correcting income distribution for the sake of stability may contradict the inequality required for efficiency.

Suggested Citation

  • Amos Witztum, 2022. "Desperation by Consent: Inequality and Financial Crises," Springer Studies in the History of Economic Thought, in: Arie Arnon & Maria Cristina Marcuzzo & Annalisa Rosselli (ed.), Financial Markets in Perspective, pages 159-176, Springer.
    • Handle: RePEc:spr:spshcp:978-3-030-86753-9_9
    DOI: 10.1007/978-3-030-86753-9_9
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:spshcp:978-3-030-86753-9_9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.