From the Crisis of Financialization to the COVID Crisis: In Search of a Collective Action Between Market and State

This article is an exploratory essay on the possibility of governance of financial systems beyond the opposition between market and state to improve financial stability. Financial system governance is a set of rules and practices that should allow sustainable organization and management of markets. It closely relies on financial regulation in force. This article assumes that the monetary/financial system is a core institutional framework whose stability is of utmost importance and requires specific collective action to face social dilemmas that result in systemic concerns. Two analytic perspectives are used to frame a relevant collective action model: polycentric governance à la Ostrom and Ostrom, that fits the cases of common-pool resources, and Minskian institutionalist perspective that fits the analysis of endogenous instabilities. A distinction criterion between these two perspectives is then suggested: If an issue has a global character (societal criticalness of public goods), it would fit well with a "power-over" coordination framework whereas more local elements (the commons) could be governed through polycentric "power-with" mechanisms. The rationale for macro-prudential regulation against systemic failures is then put forward under the supervision of extra-market public agencies in charge of global coordination over local regulatory institutions in order to increase the flexibility and the speed of responses to growing instabilities.