To What Extent Can the Global Financial Crisis 2007–09 Be Characterised as a Serious Crisis of Capitalism?

Abstract

The endless pursuit of profit at the expense of rational thought was a cornerstone of the various causes of the Global Financial Crisis that erupted from 2007-2009. Following an examination of the historical development of capitalism into the dominant economic and political system we are accustomed to today, I highlight certain causes of the Global Financial Crisis which reflect a strong indictment of capitalism and the crisis that was allowed to unfold. These causes include an in depth examination of the unregulated role Collateralized Debt Obligations, Credit Default Swaps, the repeal of the Glass Steagall Act in 1932 as well as Credit Rating Agencies played prior to the calamity that was the Global Financial Crisis. Subsequent to a brief case study of the collapse of Lehman Brothers, I conclude that the Global Financial Crisis was indeed a crisis of capitalism and present the assertion that the crisis itself could have been avoided.

Keywords: financial crisis, capitalism, bank regulation, causes, Lehman Brothers

JEL Classification: K20