From the Crisis of Financialization to the Covid Crisis: in Search of a Collective Action Between Market and State

Faruk Ülgen

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Abstract: This article is an exploratory essay on the possibility of governance of financial systems beyond the opposition between market and state to improve financial stability. Financial system governance is a set of rules and practices that should allow sustainable organization and management of markets. It closely relies on financial regulation in force. This article assumes that the monetary/financial system is a core institutional framework whose stability is of utmost importance and requires specific collective action to face social dilemmas that result in systemic concerns. Two analytic perspectives are used to frame a relevant collective action model: polycentric governance à la Ostrom & Ostrom, that fits the cases of commonpool resources, and Minskian institutionalist perspective that fits the analysis of endogenous instabilities. A distinction criterion between these two perspectives is then suggested: if an issue has a global character (societal criticalness of public goods), it would fit well with a "power-over" coordination framework whereas more local elements (the commons) could be governed through polycentric "power-with" mechanisms. The rationale for macro-prudential regulation against systemic failures is then put forward under the supervision of extra-market public agencies in charge of global coordination over local regulatory institutions in order to increase the flexibility and the speed of responses to growing instabilities.

Keywords: Financial crises; financial regulation; polycentricity; public goods (search for similar items in EconPapers)
Date: 2022-01-07
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04547775v1
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Published in ASSA 2022 Annual Meeting, Allied social science associations; American economic association; Association for Evolutionary Economics, Jan 2022, Boston, United States. 14 p

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Journal Article: From the Crisis of Financialization to the COVID Crisis: In Search of a Collective Action Between Market and State (2022)
Working Paper: From the Crisis of Financialization to the COVID Crisis: In Search of a Collective Action Between Market and State (2022)
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