Brokers, Bureaucrats and the Emergence of Financial Markets

Managerial Finance, Vol. 30, No. 2, pp. 57-71, 2004

15 Pages Posted: 18 Jan 2010

See all articles by Edward Peter Stringham

Edward Peter Stringham

Trinity College; American Institute for Economic Research

Peter J. Boettke

George Mason University - Department of Economics

Date Written: 2004

Abstract

This article provides a critical analysis of Frye (2000) and existing theories of self-governance. Following up on the recent studies by Stringham (2003, 2003), we focus our attention on the emergence of financial markets for several reasons. The common perception is that complicated financial instruments require state sanction to emerge. It is widely argued that in the absence of state regulation of financial markets, cheating will be common. We maintain, in contrast, that the evidence does not support this pessimistic view. In fact, markets are capable of endogenously generating the rules that govern their operation and these rules discipline cheating severely. Finally, if we can persuasively make the case that self-governance in financial markets is effective - with the complicated nature of transactions that take place - then the argument for self-governance in economic life, we contend, is much stronger than even classical liberalism has led us to believe.

JEL Classification: B53

Suggested Citation

Stringham, Edward Peter and Boettke, Peter J., Brokers, Bureaucrats and the Emergence of Financial Markets (2004). Managerial Finance, Vol. 30, No. 2, pp. 57-71, 2004. Available at SSRN: https://ssrn.com/abstract=1538075

Edward Peter Stringham

Trinity College ( email )

Hartford, CT 06106
United States

American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States

Peter J. Boettke (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

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