Financial change and European society

The selected works deal with the nature of the financial changes taking place in Europe over recent years and with their social consequences. The approach is critical of many of the financial developments which have taken place, in terms of the dangers they pose to employment relations, to both individual economic security and social security and to economic and employment stability. At the same time, however, it has been argued that many of the most important financial changes have been functionally necessary supports for ongoing developments in the world economy. It is not denied that there are special financial interests which have limited the effective performance of these functions and distorted patterns of economic development; nevertheless it is argued that it is necessary to regard finance primarily as a function and only secondarily as a group of interests. Otherwise the increased power and influence of the financial sector itself becomes hard to understand. Three particular arguments illustrate this general position. Firstly, it is argued that critical and mainstream economists have both failed to understand the relationship between the vast volume of financial transactions today and structural changes in the financial system | misunderstandings which have led to the notion of a \casino economy." In particular, it is incorrect to treat most foreign exchange transactions as speculative. Secondly, it is argued that the very positive assessments that are often made of West European financial systems are out of date, that these systems as historically developed were not well adapted to the emergence of a global economy. Thirdly, and in consequence of the first two assertions, a relatively positive view is taken of the EU's financial integration strategy, a central component of the Lisbon agenda, which is regarded as a necessary response to the emergence of a global financial system centred on the US. On the other hand, a simplistic drive to minimise transactions costs led to the neglect of public goods of great importance to the European social models. The work so described, like most work related to the financial sector, has to be reassessed in the context of the enormous crisis in global finance which broke out in 2007. Many specific assertions will no doubt have to be revised. Nevertheless, the general view adopted seems confirmed in two basic respects: the functionality of a globally integrated financial system has not been called into question in either the academic or the policy responses to the crisis; but the social costs in terms of instability, inequality and inefficiency arising from its domination by narrow interest groups have been brutally revealed.

PhD by public works