Law and Finance in the Context of Crisis: The Imperative of Structural Vision
Columbia University - Center for Law and Economic Studies
September 27, 2012
Columbia Law and Economics Working Paper No. 433
This piece explores the worldwide response to the recent financial and economic crisis through a comparative analysis of financial crisis, regulation and reform in the US and in several emerging market countries.
Two main ideas inform my argument.
The first idea is the inadequacy of ways of dealing with the crisis that fail to enlist finance more effectively in the service of the real economy, rather than allowing it to serve itself, and that misunderstand globalization as an unyielding constraint on institutional experimentation at home. A wide range of historical and contemporary examples helps make the point.
The second idea is the imperative of structural vision: the understanding of the consequences of different paths of institutional change as well as the imagination of new institutional alternatives. A deficiency in such vision is one of the chief flaws in the major currents of contemporary economics.
A reformed practice of legal analysis can help redress this defect. The reform of finance and of its relation to production, viewed through the lens of structural vision, can serve as a point of departure for innovations useful to growth, inclusion and democracy.
Number of Pages in PDF File: 42
Keywords: financial crisis, financial regulatory reform, instability, inequality, political reform, law and finance, democracy and finance, globalization, global governance, international monetary and financial reform, comparative law, institutional analysis
JEL Classification: G1, G2, G24, G20, G24, K22, K23, L14, M16, N20, 016, P16
Date posted: September 29, 2012 ; Last revised: January 29, 2013