Abstract
The 2008 financial meltdown was the result of underregulated markets built on an ideology of free market capitalism and unlimited economic growth. The fundamental problem is that the underlying assumptions of this ideology are not consistent with what we now know about the real state of the world. The financial world is, in essence, a set of markers for goods, services and risks in the real world, and when those markers are allowed to deviate too far from reality, ‘adjustments’ must ultimately follow and crisis and panic can ensue. This problem was identified as far back as the work of Frederick Soddy in the 1930s (Soddy, 1933). To solve this and future financial crises requires that we reconnect the markers with reality. What are our real assets and how valuable are they? To do this requires both a new vision of what the economy is and what it is for, proper and comprehensive accounting of real assets, and new institutions that use the market in its proper role of servant rather than as master.
| Original language | English |
|---|---|
| Title of host publication | Macroeconomic Theory and its Failings |
| Subtitle of host publication | Alternative Perspectives on the Global Financial Crisis |
| Publisher | Edward Elgar Publishing Ltd. |
| Pages | 40-50 |
| Number of pages | 11 |
| ISBN (Electronic) | 9781849803397 |
| ISBN (Print) | 9781848448193 |
| DOIs | |
| Publication status | Published - 1 Jan 2010 |
| Externally published | Yes |