Rethinking financial markets

Posted: 28 January 2010 in Uncategorized
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Giorgio de Chirico, "The Uncertainty of the Poet"

Nick Krafft has written a superb review of David A. Westbrook’s new book, Out of Crisis: Rethinking Financial Markets (as well as commenting on reviews written by others, here and here).

Here are excerpts from Krafft’s review:

It is at this point that Westbrook makes one of his most important contributions, urging a reshaping of our metaphors and grammar for markets, so that they don’t replicate the false dichotomy between government and markets. His most useful metaphor, I think, is “tensegrity”: a structure in which elements pull against each other, but the structure remains as long as the link are tight- the structure is “integrated by tension.” The tension, in this metaphor, is credit, underscoring the notion that credit is the lifeblood of the modern financial system. He also uses ecology as a metaphor, and says that we should think about markets not as a jungle but as a garden, a place “of both planning and necessity.” . . .

Where does these intellectual move lead us? First of all, we shift our focus to systemic risk, as Westbrook argues, acknowledging that diversification is pretty much meaningless for our situation. His hope is that systemic risk “become a concept…that broadly organizes thought.” . . .

We also must carefully consider the risk of constructing what Westbrook calls a “courtier economy,” in which the powerful use their money and influence to capture the (de)regulatory process. He sees the construction of this class as one of the first steps toward a protectionist and militarized world, as a courtier class inevitably will push national policies that engender international tension. . .

Understanding this book requires that we make the leap in accepting the constitutive role that discourse has.

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