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How to guide the economy in a socially desirable direction ? Lessons from the 2007 financial turmoil

Listed author(s):
  • Faruk Ülgen


    (CREG - Centre de recherche en économie de Grenoble - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes)

This article maintains that capitalist market economies have a threefold composite characteristic: (i) the central role of money and financial relations; (ii) the crucial role of institutional patterns; and (iii) the macro-nature of stability and viability concerns. It makes social control a consistent way of designing an efficient macro environment. Institutional economics precisely relies on such a triptych, and reveals to be an appropriate theoretical and practical reference to deal with today's major economic issues, such as the 2007-2008 systemic crisis. The article suggests, therefore, an institutional analysis that points to the role of the institutional-regulatory framework, and the rationale of social control principles in the stabilization of the working of capitalist finance. It then advocates for an alternative organization of the banking and financial system to ensure systemic sustainability and to guide the economy in a socially desirable direction.

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Paper provided by HAL in its series Post-Print with number halshs-01089365.

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Date of creation: 2014
Publication status: Published in Journal of Economic Issues, Newfound Press, 2014, 48 (2), pp.575-584. 〈〉. 〈10.2753/JEI0021-3624480234〉
Handle: RePEc:hal:journl:halshs-01089365
DOI: 10.2753/JEI0021-3624480234
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