Briefly stated, financial instability is a consistent
feature of financial globalization. As markets are
more integrated, it would seem likely that there
are greater risks of system-wide contagion. If this
is correct, then there is a case for greater global
financial regulation—what has been referred to as
Bretton Woods 2.0—although what this might look
like is still to be defined. If technology continues to
drive financial integration, then this would represent
a basic tension within any deregulated, high
technology world.
The third point of pressure over the flow of capital
may come from those powerful economies that
may want to offer a more restrictive model generally,
that do not have the free market, Anglo-Saxon
model hardwired into their system. The expectation
is that in the next 30 years China may overtake the
US economy in size, that a highly regulated economy,
India, may rise up to the ranks of the top three
(as well as becoming the world’s most populous
country, overtaking China) and that the former superpower
of Russia may regain much of its influence,
while pursuing far from democratic free
market capitalism. It is not impossible that, as these
economies grow, they catch the religion of free
markets with all the passion of the newly converted,
but this is by no means guaranteed.
Thus, we could see the approach to the free flow
of capital being shifted by issues of control, concerns
over systemic regulation and by a new power
structure led by non-free market adherents. The
game has moved on from the late 20th century,
when debates over competing capitalisms were
primarily across the Atlantic and across the
English Channel, between Anglo-Saxon capitalism,
Rhenish capitalism and social capitalism,
and in banking, between universal and Anglo-
Saxon systems.
Briefly stated, financial instability is a consistent
feature of financial globalization. As markets are
more integrated, it would seem likely that there
are greater risks of system-wide contagion. If this
is correct, then there is a case for greater global
financial regulation—what has been referred to as
Bretton Woods 2.0—although what this might look
like is still to be defined. If technology continues to
drive financial integration, then this would represent
a basic tension within any deregulated, high
technology world.
The third point of pressure over the flow of capital
may come from those powerful economies that
may want to offer a more restrictive model generally,
that do not have the free market, Anglo-Saxon
model hardwired into their system. The expectation
is that in the next 30 years China may overtake the
US economy in size, that a highly regulated economy,
India, may rise up to the ranks of the top three
(as well as becoming the world’s most populous
country, overtaking China) and that the former superpower
of Russia may regain much of its influence,
while pursuing far from democratic free
market capitalism. It is not impossible that, as these
economies grow, they catch the religion of free
markets with all the passion of the newly converted,
but this is by no means guaranteed.
Thus, we could see the approach to the free flow
of capital being shifted by issues of control, concerns
over systemic regulation and by a new power
structure led by non-free market adherents. The
game has moved on from the late 20th century,
when debates over competing capitalisms were
primarily across the Atlantic and across the
English Channel, between Anglo-Saxon capitalism,
Rhenish capitalism and social capitalism,
and in banking, between universal and Anglo-
Saxon systems.
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