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Hopes and Prospects

Book by Noam Chomsky · 2 quotes · Capitalism, Free Market Capitalism, Free Market Ideology

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Hopes and Prospects Quotes

“In general, markets have well-known inefficiencies. One is that transactions do not take into account the effect on others who are not party to them. These so-called externalities can be huge. That is particularly so in the case of financial institutions. Their task is to take risks, and if well managed, to ensure that potential losses to themselves will be covered. To themselves. Under capitalist rules, it is not their business to consider the cost to others. Risk is underpriced, because systemic risk is not priced into decisions. That leads to repeated crisis, naturally. This inherent deficiency of markets is well known.”

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Book:Hopes and Prospects
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“After the predicted disaster occurred, an “emerging consensus” developed among economists “on the need for macroprudential supervision” of financial markets, that is, “paying attention to the stability of the financial system as a whole and not just its individual parts.” Two prominent international economists added that “there is growing recognition that our financial system is running a doomsday cycle. Whenever it fails, we rely on lax money and fiscal policies to bail it out. This response teaches the financial sector: take large gambles to get paid handsomely, and don’t worry about the costs—they will be paid by taxpayers” through bailouts and lost jobs, and the financial system “is thus resurrected to gamble again—and to fail again.” The system is a “doom loop,” in the words of the official of the Bank of England responsible for financial stability.”

CapitalismEconomicsBankingFinancial CrisisBanking SystemEconomics PhilosophyFree Market CapitalismFree MarketsFree Market Ideology
Book:Hopes and Prospects
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