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Laissez–Faire or Intervention: A Reflection on Maintaining System Sustainability

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  • Jian Zhong Chen

Abstract

Recent literatures about complex systems indicate that the economy self‐organizes under control mechanisms. By applying the theory of control mechanism to capitalism, this paper analyzes why the ongoing world financial crisis is a credit crisis and the epistemological root of credit crisis—information asymmetry. Furthermore, this paper argues that neo‐liberalism economic system and the defective credit management system, which lead to the deficient government supervision and consistent lack of effective government supervision, caused the world financial crisis. This paper also argues that rescue measures taken by many countries cannot resolve the financial crisis fundamentally. Some measures are proposed at the end of this paper to strengthen the negative feedbacks, aiming at defusing or avoiding crises fundamentally. Copyright © 2013 John Wiley & Sons, Ltd.

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  • Jian Zhong Chen, 2013. "Laissez–Faire or Intervention: A Reflection on Maintaining System Sustainability," Systems Research and Behavioral Science, Wiley Blackwell, vol. 30(3), pages 260-271, May.
    • Handle: RePEc:bla:srbeha:v:30:y:2013:i:3:p:260-271
    DOI: 10.1002/sres.2180
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    References listed on IDEAS

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    1. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring.
    2. Guohua Bai & Lawrence Henesey, 2012. "Coping with System Sustainability: A Sociocybernetics Model for Social‐Economic System Architecture," Systems Research and Behavioral Science, Wiley Blackwell, vol. 29(3), pages 263-273, May.
    3. Zhou, Wei-Xing & Sornette, Didier, 2003. "2000–2003 real estate bubble in the UK but not in the USA," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 329(1), pages 249-263.
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    Cited by:

    1. Li Da Xu, 2013. "Introduction: Systems Science in Industrial Sectors," Systems Research and Behavioral Science, Wiley Blackwell, vol. 30(3), pages 211-213, May.

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