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Financialized capitalism and the irrelevance of self-regulation : a Minskyian analysis of systemic viability

Listed author(s):
  • Faruk Ülgen

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

Approaches that support the process of financial liberalization usually assume that free markets can ensure systemic adjustment in case of disequilibria without structural public interventions, and self-regulation mechanisms are more efficient than any collective regulatory mechanism. This article seeks to assess the irrelevance of these critical assumptions with regard to systemic viability in capitalist economies. These assumptions and related (de)regulatory (de)structural reforms implemented in the last decades reveal to be inconsistent with the characteristics of capitalist economies in light of the 2007-08 crisis. In the footsteps of Hyman Minsky, it maintains that financial instability and crises are endogenous phenomena in a capitalist economy and imply tight state intervention. It then argues that financial stability is a public matter and in order to reach societal efficiency and systemic viability, it is necessary to carry out a public organization of markets according to social/collective objectives beyond macroprudential regulatory mechanisms.

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File URL: https://halshs.archives-ouvertes.fr/halshs-01111162/document
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Paper provided by HAL in its series Post-Print with number halshs-01111162.

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Date of creation: 25 Sep 2014
Publication status: Published in 12th international Post Keynesian conference, Sep 2014, Kansas City, United States. 2 th international Post Keynesian conference 24 p
Handle: RePEc:hal:journl:halshs-01111162
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01111162
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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  1. Faruk Ülgen, 2011. "Régulation monétaire et financière et viabilité des économies de marché," Post-Print halshs-00844357, HAL.
  2. James Crotty, 2008. "Structural Causes of the Global Financial Crisis: A Critical Assessment of the ‘New Financial Architecture’," UMASS Amherst Economics Working Papers 2008-14, University of Massachusetts Amherst, Department of Economics.
  3. Ülgen, Faruk, 2014. "Schumpeterian economic development and financial innovations: a conflicting evolution," Journal of Institutional Economics, Cambridge University Press, vol. 10(02), pages 257-277, June.
  4. Amadou N Sy, 2009. "The Systemic Regulation of Credit Rating Agencies and Rated Markets," IMF Working Papers 09/129, .
  5. Faruk Ülgen, 2014. "How to Guide the Economy in a Socially Desirable Direction: Lessons from the 2007 Financial Turmoil," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 48(2), pages 575-584, June.
  6. Barth,James R. & Caprio,Gerard & Levine,Ross, 2008. "Rethinking Bank Regulation," Cambridge Books, Cambridge University Press, number 9780521709309, December.
  7. Philip Arestis, 2009. "New Consensus Macroeconomics: A Critical Appraisal," Economics Working Paper Archive wp_564, Levy Economics Institute.
  8. Faruk Ülgen, 2014. "How to guide the economy towards socially desirable directions ? Some institutional lessons from the 2007 financial turmoil," Post-Print halshs-00957598, HAL.
  9. Jan Kregel, 2010. "Is This the Minsky Moment for Reform of Financial Regulation?," Economics Working Paper Archive wp_586, Levy Economics Institute.
  10. Faruk Ülgen, 2013. "Institutions and Liberalized Finance: Is Financial Stability of Capitalism a Pipedream?," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 47(2), pages 495-504, June.
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