Finance at the Threshold: Rethinking the Real and Financial Economies

by Budd,Christopher Houghton

• ISBN13: 9780566092114
• ISBN10: 0566092115
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-02-28
• Publisher: Routledge

Summary

The standard explanation for the global financial crisis that ended the first decade of the 21st Century is that banks stopped lending to one another, causing a generalized contraction of credit precipitating the failure of substantial financial institutions. As a consequence, the non-financial economy was severely impacted and recession loomed large. In an endeavour 'to get the economy going again', governments provided huge tranches of capital to banks and to manufacturers such as the car makers. In Finance at the Threshold, Christopher Houghton Budd views the contemporary crisis from his perspective as an economic and monetary historian. For many, the present hope is that what are being seen as medium term measures will lead to a return to business as usual, with banks lending to one another again (albeit on less risky grounds) and real estate values returning to former levels, from whence the global economy can continue its 'upward-only' trajectory. In other words, the hiatus in inter-bank lending is thought to be but a blip - enormous in size and global in scope, but a blip nonetheless. The question asked in this book by an author who is a critical friend of the financial establishment, viewing events from a specifically English rather than a generally Western cultural perspective, however, is why did the banks stop lending to one another, and why at this moment in history? Is the problem merely a matter of over loose credit due to the relaxation of traditional prudence, or did global finance find itself at its limits, both technically and epistemologically? Have government bail-outs saved the day, therefore, or merely 'kicked the can down the street'? In this timely contribution to the Transformation and Innovation Series the global financial crisis is seen as something paradigmatic. The author argues that global finance has brought us to the limits of what mechanistic economic explanations can capture. New ideas and above all new instruments that might include a world currency and citizenized banking are needed so that innovation can shift from its dexterous exploitation of inefficiencies consequent upon the discrepant relationship between state and economy, and turn its attention instead to the capitalisation of fresh initiative. The book's analysis derives from two sources in the main - the work of Rudolf Steiner qua economist, and the author's own, albeit Steiner-related interpretation of recent economic history. The culminating focus on youth and the future has three grounds: that today's younger generation need the orientation of a clear financial paradigm; that they are less hide-bound and more able to grasp new thinking than their elders; and that adjusting to new circumstances will take a generation. "Finance at the Threshold" is essential reading for academics and practitioners concerned with financial and economic policy needing to develop a sense of the history and thus understand the forward prospects for global finance.