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Markets, metaphors, and mania

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  • Elton McGoun
  • Jason Makansi

Abstract

Financial markets have sufficient power over the real economy to enable them to expand their profitable activities and extract compensation for their services from the real economy -- not necessarily commensurate with the economic value of those services -- without the real economy being aware of it being done. Given that markets have this ability to manipulate the economy to their advantage, there is no guarantee that the equilibrium size of the market -- meaning that there is no incentive for firms to either enter or exit -- is the equilibrium size of the market for the most efficient operation of the real economy. Financial markets are quite literally parasites in every biological sense of the word, and more widespread recognition of this apt metaphor might lead to more effective public policy decision-making. Market insiders are not selfless public servants but are looking out for their own self-interest. There is a market for financial services that itself has few, if any, characteristics of a free market.

Suggested Citation

  • Elton McGoun & Jason Makansi, 2013. "Markets, metaphors, and mania," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 3(4), pages 303-313, October.
    • Handle: RePEc:taf:jsustf:v:3:y:2013:i:4:p:303-313
    DOI: 10.1080/20430795.2013.770647
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    Cited by:

    1. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.

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