بخش مالی و آینده سرمایه داری

Financial sector innovation and development since the 1970s contributed to global prosperity, but increased the probability of bank failures. The post-2007 financial crisis was one of many crises with idiosyncratic catalysts but common underlying causes. Public policies, such as deposit insurance, with moral hazard implications increased the likelihood of crises, and cheap money exacerbated the situation by encouraging highly leveraged investments. The policy challenge is to address moral hazard without repressing the financial sector. This is not the end of capitalism, but a reminder of the difficulty in policing the financial sector which is at the heart of capitalist economies.

The 2007–2008 financial crisis evinced a chorus of lessons from history, mostly drawn from 1929 and with advice that governments needed to act decisively. The depression of the 1930s is a poor source because almost any lessons can be drawn and because the economy of eighty years ago was vastly different from today's economy. So many mistakes were made after 1929 in the USA and Europe in monetary policy, fiscal policy, banking policy, trade policy. The list seems endless, and with so many policy errors it is difficult to know which were critical and what policy changes would have been sufficient to reduce the severity of the depression. Moreover, today's economy is both more complex, in large part because of financial innovations, and has more institutional diversity than that of 1929, when central banks were instinctively opposed to interventionist measures and international institutions such as the International Monetary Fund did not yet exist.1 More relevant lessons from history can be taken from the three decades before 2007–2008 when financial market liberalization was accompanied by economic prosperity punctuated by frequent crises.2 Financial liberalization was part of the reform package that underlay the 1986–1993 prosperity of Mexico and the 1982–1996 boom in Thailand (during this period the fastest growing economy in the world). Despite signs that capital inflows were decelerating, neither government was willing to take action before their economies suffered a hard landing in the 1994 Tequila Crisis and the 1997 Asian Crisis. These, as well as the many other crises of the 1990s, were considered country-specific (e.g. due to the dollar-indexed nature of Mexican debt, unregulated financial institutions in Thailand or the special form of Russian government liabilities in 1998) rather than a concomitant of liberalization. In the high-income countries, the Japanese experience and Scandinavian banking crises were dismissed as special cases, perhaps exacerbated by macroeconomic mismanagement,3 while in the USA the S&L Crisis was dismissed as a special case of poor management and greed and neither the 1987 stock market crash nor the dot-com bubble bursting in 2000 caused sufficient concern to worry about systemic instability. In this paper I argue that increased vulnerability to financial crises is a consequence of financial development that has been exacerbated by easy monetary policy. Although nobody welcomes crises, it is important to place them in a longer term context of financial reform generally delivering greater prosperity.4 Financial innovation has accentuated these benefits, whether in Renaissance Florence, eighteenth century England or in many countries in the last quarter of the twentieth century. Today's short-attention-span media coverage focuses on dramatic events (the crises) and not on the longer term context, such as Mexico's economic development over the two decades after 1986.5 Japan has not lost the fruits of its post-1945 rapid economic growth; despite the magnitude of the asset bubble that burst in the late 1980s and the ‘lost decade’ of the 1990s, Japan remains the world's second-largest economy. Financially more developed economies grow faster, but are exposed to sources of instability unknown in less developed economies. The policy dilemma—how to balance the demands of long-term growth and short-term stability—is a typical financial trade-off between return and risk. The business cycles of the last two centuries and Keynesian macroeconomics are consequences of financial intermediation that opens up the possibility of a mismatch between desired saving and desired investment.6 Governments since 1945 have responded to the challenge with discretionary macroeconomic policy and by financial regulation. As macropolicy has succeeded in dampening business cycles and fears of unemployment approaching 1930s levels had receded, governments became more willing to loosen financial regulations or permit innovations which undermined the scope of regulations.7 In a market-based economy in which prices largely capture social costs and benefits, any impediment to financial intermediaries directing funds to those borrowers willing to pay the most will have economic costs, and because these costs are largely in the form of a suboptimal capital stock they will result in reduced long-term growth. Nevertheless, governments intervene everywhere in the financial sector. Governments protect small depositors with asymmetric information about banks and during financial crises governments intervene to prevent systemic failure. These motives are interconnected; the degree of risk-taking and risk of failure are endogenous to a deposit-insured system unless the government can devise policies to offset the moral hazard impact of deposit insurance.8 Inevitably, this balance is hard to attain, and financial crises are a concomitant of financial reform; crises are something to be minimized but not eliminated, because financial liberalization is desirable in order to enable financial intermediation to work as well as possible.9 In practice, it is difficult to separate out the fundamental relations between financial reform and financial crises from other recent events. There is always a catalyst that converts risky loans into non-performing loans, but the common features of so many post-1970s crises suggest that short-term catalysts need to be distinguished from deeper determinants of the risk-taking that led to recurring crises. The post-2007 crisis is often characterized as a US-originating sub-prime crisis, but it was also driven by poor loans for construction projects in countries other than the USA and by poor risk management unrelated to real estate loans. However, it was not a global financial crisis; Canada, Australia and most Asian, Latin American and African countries did not experience a financial crisis. The post-2007 crisis in the USA was one (albeit severe) of a sequence of crises across the globe since the 1970s, and this paper seeks to identify common roots.10 The second section briefly reviews the evidence for a positive relationship between financial development and long-run economic growth, emphasising that more regulated financial sectors are prone to adverse selection in their lending decisions and that less regulated financial intermediaries are more likely to make lending decisions and to promote financial innovations conducive to increased economic well-being. The third section analyses the need for financial regulations to prevent the system from becoming too unstable, the political imperative of protecting individual depositors, and the moral hazard implications of such policies. In a period of rapid innovation, financial regulators inevitably find difficulty in striking an appropriate regulatory balance, and in the final decades of the twentieth century this played out against a background of easy credit, which exacerbated the moral hazard problem by making leveraging and risk-taking less costly. Section 4 analyses the credit-driven boom, and Section 5 deals with the global crisis which began to emerge in 2007. The final section draws conclusions in the context of discussing whether financial crises signal that capitalism is failing.

In 2008 the overwhelming view in the USA and western Europe was that governments needed to do something, but there was confusion over whether the “something” was necessary (a) to prop up financial institutions (or major non-financial corporations) whose failure would have economy-wide negative effects, (b) as a Keynesian stimulus to aggregate demand or (c) to regulate financial sectors in order to prevent further crises. The first two in particular were blurred, as many economists advocated fiscal stimuli through, say, spending on infrastructure or education (especially if they were teachers), while policymakers more often responded to demands to bail-out individual firms (especially if they were in politically sensitive locations). In the USA in 2008 the latter approach led to inconsistent polices in terms of who should lose: at AIG only common shareholders suffered, at Fannie Mae and Freddie Mac both common and preferred shareholders lost, and at Washington Mutual all shareholders and senior debt holders lost. This is unfair, and also wrong. Rethinking financial regulation may (or may not) be a justified long-term response and a Keynesian fiscal stimulus may be an appropriate short-term response, but selective bail-outs of banks and other firms in trouble reward those who took unjustified risks or keep in business firms that need to die. For all of the talk of “meltdown”—a cataclysmic but never defined term41—closure of banks is not a disaster. Lessons from events of the 1990s, such as the Asian Crisis, are relevant. Financial institutions that did not manage risk well were the ones that failed. Better-managed (or luckier) banks do not have toxic asset portfolios. In any other industry this would be seen as a violent shake-up, unpleasant for those working in the firms that close down, but with winners as well as losers in the industry, and all part of the reorganizations that make for a dynamic market economy. When Lehman Brothers shut down, other institutions bought the good assets at discounted prices, Lehman shareholders paid for their bank having assumed excessive bad debts, and shareholders in those banks which bought wisely in the firesale should reap returns. Increased interest rates on inter-bank loans reduce the intermediation taking place, but are an appropriate signal of the scarcity of credit and of doubt about the quality of loan portfolios. The real economy will contract—as happened in Mexico in 1994–1996 and in Thailand in 1997–1999—but it will emerge stronger as poor banks disappear and good banks are reminded of the need for careful risk management.42 Bank bail-outs are not just a dubious use of taxpayers’ money to support inefficient firms. Moral hazard matters. Financial institutions cannot be shown that big profits and bonuses in a boom do not have to be balanced by loss of income when they get things wrong. The business of financial intermediation is to assess loan quality and when financial institutions fail to do that correctly (and complexity is no excuse for taking on bad debts), their owners and professional staff should pay for it.43 Nationalization of loss-making banks (the Gordon Brown Plan) is a desperate measure which is likely only to soften the blow to bank owners and managers. State-owned banks have a poor record worldwide; too often they become wards of the state, requiring taxpayer support. What then is the role for the state? Deposit insurance is essential to maintain the trust of small depositors in deposit-taking institutions and to avoid old-fashioned (or not so old-fashioned in the case of Northern Rock) bank runs. Inevitably, deposit insurance introduces moral hazard, and the counterpart has to be prudential regulation to ensure that financial institutions do not take excessive risks with depositors money, secure in the knowledge that if things go sour they can walk away. In a world of complex financial instruments and fast-changing asset portfolios, detailed external oversight of the loan portfolio even by the best-trained regulators is increasingly difficult. Capital adequacy ratios are a way of ensuring that banks’ owners have something to lose, but these can be evaded and in a crisis require detailed real-time oversight to ensure that the capital is not withdrawn on the basis of insider information about an imminent collapse. If a bank goes under, the senior management should be liable and bear a cost (or, at least, not receive a reward); rules to govern permissible incentive structures for employees and caps on golden parachutes or other claims by managers who use depositors’ money poorly are more appropriate than crude salary limits. As it stands, with depositor insurance and institutions on the verge of collapse ensuring that any liquid assets are used to recompense owners and employees, creditors and the taxpayer bear most of the cost of a financial institution's failure.44 The messages of this paper are positive. The economies of the major capitalist nations are more resilient than in the past, and the post-2007 crisis will not approach that of the 1930s in its impact on the real economy. However, the psychological message may be hard for policymakers and consumers to accept: a credit-fuelled boom has to end, and cushioning the end by cheap money only sets the scene for the next crisis. Just as the prosperity with security of the 1950s and 1960s ultimately had to be corrected by admitting that fiscal policy biased towards budget deficits was not a long-term option, governments in the 2000s must accept that growth based on easy credit is not a long-term option. The moral hazard behind the crises of recent decades was facilitated by cheap money that encouraged excessive leveraging all across the economy, and with global financial markets this could result in a crisis in any part of the world. The severity of these crises can be reduced through better financial market regulation to reduce moral hazard and better macroeconomic policies to underpin a sustainable price of credit. This is part of capitalism's evolution, not the end of capitalism.