The 2008 financial crisis has severely shaken confidence in liberal economic theory and policy. However, the sharply divergent experiences of the six Anglo-Saxon ‘liberal market economies’ (LMEs) suggest that the reality is not so simple. This book traces the evolution of liberal capitalism, from its rebirth amidst the challenges of the 1970s to its role in the genesis of the 2008 crisis – and debates the assumptions underpinning the liberal capitalist paradigm.
Close examination reveals variety within liberal capitalism. Not only was there the familiar, "hands off" libertarian approach adopted by the US, UK and Ireland, but more bounded, better regulated and apparently more stable varieties of economic liberalism also emerged, through the more pragmatic approach taken by Canada, Australia and New Zealand.
The evidence is compelling. Whereas the American, British and Irish financial systems were severely damaged by the crisis, those of Canada, Australia and New Zealand proved more robust. This volume explores the degree to which these divergent experiences were a result of better and more intensive supervision, differences in business or political culture, broader commitment to social norms, and the pace of liberalisation.
Detailed comparative case studies reveal fundamental differences in the economic and political environments in which economic liberalisation took place, in approaches to finance and in the degree to which it was seen to be an engine for growth. The book concludes that this had a major influence on the evolving economic and financial systems, and consequently, their relative resilience when confronted with the challenges of the 2008 crisis.
Preface 1. The ‘Not So Global’ Crisis Sue Konzelmann, Marc Fovargue-Davies and Olivier Butzbach 2. The Return of ‘Financialized’ Liberal Capitalism Sue Konzelmann, Marc Fovargue-Davies and Frank Wilkinson 3. The United States: ‘With freedom and liberty for all’ Saule Omarova, Cynthia Williams, Lissa Lamkin Broome and John Conley 4. The United Kingdom: Thatcherism – A heavy hand and a ‘light touch’ Sue Konzelmann, Marc Fovargue-Davies and Frank Wilkinson 5. Ireland: Hubris and nemesis Blanaid Clarke and Niamh Hardiman 6. New Zealand: Staying in the black James Lockhart 7. Canada: ‘Bank bashing’ is a popular sport Poonam Puri 8. Australia: Economic liberalization and financialization – An introduction Sue Konzelmann and Marc Fovargue-Davies 9. Australia Versus the US and UK: The kangaroo economy Steve Keen 10. Institutional Foundations of the Anglo Saxon Banking Systems: Some are more liberal than others Olivier Butzbach, Sue Konzelmann and Marc Fovargue-Davies 11. The ‘Ordoliberal’ Variety of Neo-liberalism Gerhard Schnyder and Mathias Siems 12. Conclusions Sue Konzelmann and Marc Fovargue-Davies
The 2007-8 Banking Crash has induced a major and wide-ranging discussion on the subject of financial (in)stability and a need to revaluate theory and policy. The response of policy-makers to the crisis has been to refocus fiscal and monetary policy on financial stabilisation and reconstruction. However, this has been done with only vague ideas of bank recapitalisation and ‘Keynesian’ reflation aroused by the exigencies of the crisis, rather than the application of any systematic theory or theories of financial instability.
Routledge Critical Studies in Finance and Stability, edited by Jan Toporowski from SOAS, University of London covers a range of issues in the area of finance including instability, systemic failure, financial macroeconomics in the vein of Hyman P. Minsky, Ben Bernanke and Mark Gertler, central bank operations, financial regulation, developing countries and financial crises, new portfolio theory and New International Monetary and Financial Architecture.