Template-Type: ReDIF-Article 1.0
Author-Name: Gerald Epstein
Author-Workplace-Name: University of Massachusetts.
Author-Name: Dominique Plihon
Author-Workplace-Name: Nord University, París.
Author-Name: Adriano Giannola
Author-Workplace-Name: Università di Napoli Federico II, Italy.
Author-Name: Christian Weller
Author-Workplace-Name: University of Massachusetts, Boston.
Title: Finance without financiers
Abstract: In response to the financial crisis of 2007 – 2009, governments in the United States, Europe and elsewhere have invested billions of dollars in 
	financial institutions to prevent them from going bankrupt and from further disrupting the global economy. Despite these massive public bail-outs, a 
	government and "elite" consensus has emerged that these nationalized or quasi-nationalized financial institutions should be privatized as soon as 
	possible, and that, apart from modest changes in financial regulation, our economies should return to the status quo ante financial structure as 
	soon as possible. In short, despite a massively disruptive economic crisis caused by financiers, our best option as a society is to return to a 
	financial system run by these financiers. We disagree. As the crisis reveals, financier dominated finance has a number of crucial flaws: it creates 
	major externalities that contribute to financial and real economic instability; it promotes short-term investment strategies; it contributes to 
	inequality; and it undermines economic efficiency and the achievement of social goals in the real economy. We argue that a better strategy for 
	achieving economic recovery, restructuring and widely shared, sustainable prosperity is to use public investments in the financial sector to build 
	on the successful Post-World War II experiences of publicly oriented financial institutions in Europe and the US to create a stronger presence of 
	"finance without financiers". We provide case studies of the positive and negative experiences with publicly owned and controlled financial 
	institutions in the United States, France, Germany and Italy, and draw lessons for successfully creating more publicly oriented financial 
	institutions moving forward. We emphasize local differences, policy space and "social management" of these financial institutions to ensure that 
	publicly owned financial institutions is, at the same time, genuinely publicly oriented institutions that fit local conditions.
Classification-JEL: G01, G18, G28, H82.
Keywords: Financial crisis; Financial regulation; Social management; Financial institutions; Nationalization.
Journal: Papeles de Europa
Pages: 140-178
Volume: 19
Year: 2009
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/padeur09-19(140-178).txt
File-URL: https://eprints.ucm.es/id/eprint/68223/1/2009-19(140-178).pdf
File-Format: Application/pdf
Handle: RePEc:ucm:padeur:v:19:y:2009:p:140-178