Global Contentions – East and West
Edited by Geoffrey M. Hodgson, Makoto Itoh and Nobuharu Yokokawa
Geoffrey M. Hodgson, Makoto Itoh and Nobuharu Yokokawa THE PRECARIOUSNESS OF WORLD MARKETS The chapters in this volume are written in the context of vigorous but potentially unstable developments in the world capitalist system. Especially in the second half of the twentieth century, capitalism has achieved spectacular rates of innovation and growth. But the system is still menaced by ﬁnancial crises and economic recessions. There is widespread uncertainty about the future. The crash of 1929 is a distant memory. But there was also more recently the collapse of the Bretton Woods agreement in 1971 and the massive and disruptive East Asian and Russian devaluations of 1997. Arguably, furthermore, if the US Federal Reserve Bank had not baled out the Merton–Scholes, Long Term Capital Management hedge fund in 1998, there could have been a world ﬁnancial collapse. Today, world ﬁnancial institutions are vulnerable and insufﬁciently developed to cope with the huge volume of global ﬁnancial speculation. Many less-developed countries are still burdened by debts that they have little chance of repaying to their rich lenders. Huge trade deﬁcits have piled up in even the richest of nations, defying the dogma of the selfregulating market. At the same time, the doctrinal reliance on unregulated markets inhibits attempts to regulate and stabilize the world ﬁnancial system. The spread of world markets has put all national economies in a precarious position. The less-developed economies are particularly vulnerable. The World Bank and the International Monetary Fund have obliged them to enter the...