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The Global Financial Crisis And After: A New Capitalism?

  • Pereira, Luiz Carlos Bresser

The 2008 global financial crisis was the consequence of the process of financialization, or the creation of massive fictitious financial wealth, that began in the 1980s, and of the hegemony of a reactionary ideology, namely, neoliberalism, based on selfregulated and efficient markets. Although capitalism is intrinsically unstable, the lessons from the stock-market crash of 1929 and the Great Depression of the 1930s were transformed into theories and institutions or regulations that led to the “30 glorious years of capitalism” (1948–77) and that could have avoided a financial crisis as profound as the present one. It did not because a coalition of rentiers and “financists” achieved hegemony and, while deregulating the existing financial operations, refused to regulate the financial innovations that made these markets even more risky. Neoclassical economics played the role of a meta-ideology as it legitimized, mathematically and “scientifically”, neoliberal ideology and deregulation. From this crisis a new capitalism will emerge, though its character is difficult to predict. It will not be financialized but the tendencies present in the 30 glorious years toward global and knowledge-based capitalism, where professionals will have more say than rentier capitalists, as well as the tendency to improve democracy by making it more social and participative, will be resumed.

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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. N. Gregory Mankiw, 2006. "The Macroeconomist as Scientist and Engineer," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 29-46, Fall.
  2. 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, April.
  3. 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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  5. 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).
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  7. 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).
  8. Carmen M. Reinhart & Kenneth S. Rogoff, 2008. "Banking Crises: An Equal Opportunity Menace," NBER Working Papers 14587, National Bureau of Economic Research, Inc.
  9. Robert H. Frank & Thomas D. Gilovich & Dennis T. Regan, 1996. "Do Economists Make Bad Citizens?," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 187-192, Winter.
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  11. 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.
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  13. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Preface," MPRA Paper 17451, University Library of Munich, Germany.
  14. . . & Willem Buiter, 2008. "Central banks and financial crises," FMG Discussion Papers dp619, Financial Markets Group.
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