Financial markets have become acknowledged as a source of crisis, and discussion of them has shifted from economics, through legal and regulatory studies, to politics. Events from 2008 onwards raise important, cross-disciplinary questions: must financial markets drive states into political and existential crisis, must public finances take over private losses, must citizens endure austerity? This book argues that there is an alternative. If the financial system were less 'connected', contagion within the market would be reduced and crises would become more localised and intermittent, less global and pervasive. The question then becomes how to reduce connectedness within financial markets.
This book argues that the democratic direction of financial market policies can deliver this. Politicising financial market policies – taking discussion of these issues out of the sphere of the 'technical' and putting it into the same democratically contested space as, for example, health and welfare policies – would encourage differing policies to emerge in different countries. Diversity of regulatory regimes would result in some business models being attracted to some jurisdictions, others to others. The resulting heterogeneity, when viewed from a global perspective, would be a reversal of recent and current tendencies towards one single/global 'level playing field', within which all financial firms and sectors have become closely connected and across which contagion inevitably reigns.
No doubt the democratisation of financial market policy would be opposed by big firms – their interests being served by regulatory convergence – and considered macabre by some financial regulators and central bankers, who are coalescing into an elite community. However, everyone else, Nicholas Dorn argues here, would be better off in a financial world characterised by greater diversity.
Table of Contents
Preface, Part I. Historical Legacies Chapter 1. From Clubs To Herds: Private Regulation, Public Façade, Chapter 2. Bailouts As Policy: Constructing ‘Too Connected To Fail’ Part II. Regulatory Hubris Chapter 3. Two Readings: Regulatory Insufficiency Or De-Politicisation, Chapter 4. Europe: From Single Market To Multiple Mechanisms Part III. Ways Forward Chapter 5. Limits And Distractions Of Transparency, Chapter 6. Democracy As Driver Of Global Diversity Bibliography Index
Nicholas Dorn, a sociologist, has also published on transnational governance, the European Union, public and private regulation and economic crime.
'A timely challenge to technocratic group think and an important argument for more democratic and diverse regulation'
Karel Williams, CRESC and Manchester Business School, UK
'Dorn places financial markets in historical, cultural and political context, returning us to questions about the purpose of finance, all the more pressing in today's Europe'
Matjaž Jager, Faculty of Law, Ljubljana, Slovenia
'Dorn pulls off that rare feat of presenting an argument capable of eliciting the interest of interdisciplinary researchers while also being grounded in an appreciation for the intricacies of the regulatory sphere.'
Nathan Coombs, University of Edinburgh, UK