The Shifts and the Shocks: What we’ve learned – and have still to learn – from the financial crisis by Martin Wolf

Author:Martin Wolf [Wolf, Martin]
Language: eng
Format: epub
Publisher: Penguin Books Ltd
Published: 0101-01-01T00:00:00+00:00

CONCLUSION

The people who have developed the critical perspectives outlined above differ on political values and so on whether the aim should be less state and more private or less private and more state intervention. They differ on whether policy should be guided by rules or discretion. They differ on whether the state should have an active role in managing the economy. They differ on whether money and credit are the sole source of instability in the economy. But, on one point, they agree: the balance between the role of the state as ultimate supplier of money, and that of the private sector as actual creator of almost all of the credit and money we use, is highly destabilizing. We have made a pact with the devil. It is not a new bargain. On the contrary, it goes back many centuries. But we have recently been reminded that the dangers are huge. Moreover, the liberalization of finance seems to lead to crises almost automatically. Surely this strongly suggests a need for a new kind of system.

Let us now turn to the twin challenges the authorities are attempting to address: getting out of the present malaise; and restoring a stable and dynamic world economy. What, precisely, are they trying to do? Does it have a chance of working? What else might be needed? These are the questions to which we turn.

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