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How to guide the economy towards socially desirable directions ? Some institutional lessons from the 2007 financial turmoil

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  • Faruk Ülgen

    (CREG - Centre de recherche en économie de Grenoble - UPMF - Université Pierre Mendès France - Grenoble 2)

Abstract

This article maintains that capitalist market economies have a threefold composite characteristic (the central role of money and financial relations, the crucial role of institutional patterns, and the macro nature of stability and viability concerns) that makes social control a consistent way of designing an efficient macro environment. Institutional economics precisely relies on such a triptych and reveals to be an appropriate theoretical and practical reference to deal with today's major economic issues such as the 2007-08 systemic crisis. Therefore the article suggests an institutional analysis that points to the role of institutional-regulatory framework and the rationale of social control principles in the stabilization of the working of capitalist finance. It then advocates for an alternative organization of the banking and financial system in order to ensure systemic sustainability and to guide the economy towards socially efficient directions.

Suggested Citation

  • Faruk Ülgen, 2014. "How to guide the economy towards socially desirable directions ? Some institutional lessons from the 2007 financial turmoil," Post-Print halshs-00957598, HAL.
    • Handle: RePEc:hal:journl:halshs-00957598
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00957598
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    References listed on IDEAS

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    1. Michael Kosfeld & Akira Okada & Arno Riedl, 2009. "Institution Formation in Public Goods Games," American Economic Review, American Economic Association, vol. 99(4), pages 1335-1355, September.
    2. Rutherford,Malcolm, 2013. "The Institutionalist Movement in American Economics, 1918–1947," Cambridge Books, Cambridge University Press, number 9781107626089, January.
    3. G. Hodgson, 2007. "What Are Institutions?," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 8.
    4. Carl Wennerlind, 2001. "Money Talks, but What Is It Saying? Semiotics of Money and Social Control," Journal of Economic Issues, Taylor & Francis Journals, vol. 35(3), pages 557-574, September.
    5. Georgios Papadopoulos, 2009. "Between Rules and Power: Money as an Institution Sanctioned by Political Authority," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(4), pages 951-969.
    6. Commons, John R., 1931. "Institutional Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 21, pages 648-657.
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    Cited by:

    1. Faruk Ülgen, 2014. "Financialized capitalism and the irrelevance of self-regulation : a Minskyian analysis of systemic viability," Post-Print halshs-01111162, HAL.

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    Keywords

    capitalist market economy; financial instability; institutions; money; regulation; social control;
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