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The Global System of Finance

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  • Alexandra Hessling
  • Hanno Pahl

Abstract

. In the last decades, revolutionary changes in financial markets, instruments, and institutions have stimulated empirical and theoretical investigations into the interaction of the financial and the “real” side of economic systems. While a considerable body of empirical investigations seems to provide evidence of positive correlations between stock market development and economic growth, there is no consensus in other social sciences as to whether there are two‐way linkages, and if so, how to conceive a possible mechanism of interaction. Particularly, the hypergrowth and ubiquity of financial markets has triggered controversial debates on how to understand today's economic landscape. With the objective of clarifying the relationship between finance and economy, this article restructures the present debate through the lenses of Talcott Parsons's and Niklas Luhmann's theories of social systems. Basic system‐theoretical ideas on social aspects of finance and economy as well as on uncertainty and risk hint at new insights into the global system of finance that might go far beyond explanatory models of causality.

Suggested Citation

  • Alexandra Hessling & Hanno Pahl, 2006. "The Global System of Finance," American Journal of Economics and Sociology, Wiley Blackwell, vol. 65(1), pages 189-218, January.
    • Handle: RePEc:bla:ajecsc:v:65:y:2006:i:1:p:189-218
    DOI: 10.1111/j.1536-7150.2006.00447.x
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    References listed on IDEAS

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    1. Black, Julia, 2002. "Critical reflections on regulation," LSE Research Online Documents on Economics 35985, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Théret, Bruno, 2011. "Du keynésianisme au libertarianisme.La place de la monnaie dans les transformations du savoir économique autorisé," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 10.
    2. repec:dau:papers:123456789/7629 is not listed on IDEAS
    3. Power, Michael, 2021. "The financial reporting system - what is it?," LSE Research Online Documents on Economics 110220, London School of Economics and Political Science, LSE Library.
    4. repec:dau:papers:123456789/7642 is not listed on IDEAS

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