Recent history and the art of the possible – Rethinking Financial Markets

What does a global financial market based on custodial relations look like? A critical appraisal of Islamic finance as a case study of social capitalism

weaadmin — Thu, 01 Nov 2012 00:07:51 +0000

This paper argues that the existing market in Islamic finance closely resembles Westbrook’s (2012) vision of social capitalism based on custodial regulation. However it also argues that the social benefits of presently existing Islamic finance appears rather slight, in large part because three social forces push Islamic finance to closely resemble conventional finance. The paper therefore concludes that on one hand, the dangers of embarking on such a social capitalist project appear minimal, but on the other hand, the benefits are also likely to be minimal unless there is a regulatory project in place to counteract the three social forces this paper identifies.

Configuring Financial Markets

weaadmin — Thu, 01 Nov 2012 00:04:17 +0000

We are caught between those who celebrate financial markets and calculative agents and those who denounce them. Many economists are in the former camp; many social scientists in the latter. This paper begins with a conclusion: “a pox on both your houses.” Financial markets and calculative agents are not natural, as that term is generally applied. And they certainly are not just human creations or embedded in society. Financial markets and calculative agents exist because they are formatted and constructed (performed, to use Callon’s term) in the ongoing interactions by which all collective existence (all living together) is made. Financial markets and agents are very real but for reasons that have been seldom examined or even talked about. Callon contends that primarily disciplinary economics produces markets and the calculative agents that inhabit them.

That is one of the things I will consider in this paper. But I will also follow Callon’s advice to “…explore the diversity of calculative agencies forms and distributions, and hence of organized markets. … [the market] is a many-sided, diversified, evolving device which the social sciences as well as the actors themselves contribute to reconfigure.” The central question is how are calculative agencies equipped, by economics and otherwise to carry out their calculations and thus establish the markets we see every day?

Misunderstanding the Banking Industry

weaadmin — Thu, 01 Nov 2012 00:02:02 +0000

This essay makes the case for a fundamental reconsideration of the role of the banking industry in the West in a situation where economic growth and development is much more dependent on that industry than many of us envisaged. It looks at the growing intermingling of important public social, political, economic, and financial activities between the banking industry and Western governments and the consequences of those unplanned developments.

The approach is diagnostic, not prescriptive. I hope that readers will understand that I eschew the standard reflex reactions of the political Right and the Left as they – like the system they criticize – fail to deal with the problems they purport to confront, and crucially do not understand the nature of the banking industry today.

In analysing the banking industry as it actually operates in the West, my agenda is to begin a discussion on the real nature of that industry-if we do not understand it properly, our proposals on its restructuring, reform, and regulation will be at best misplaced.

I begin by drawing attention to the fact that the banking industry no longer belongs in the public or private sectors, but is a uniquely powerful hybrid of both, and its multi-faceted activities reach directly into core activities of government. As in all human endeavours, villains occur from time to time, but my purpose is get beyond the sterility of the “blame game” to initiate a meaningful discussion on the first steps to a New Banking Order which is robust, responsible and accountable. My belief is that this first step is a dispassionate factual examination of where that industry is today. I hope this essay will be understood as an attempt to move in that direction.

Establishing Time Based Community Currencies: Means of Measure, Exchange and Storage

weaadmin — Wed, 31 Oct 2012 23:57:58 +0000

In the search for operative, sustainable and complementary currencies and the methods of applying them in the real world, this article proposes a perspective from an architect’s point of view when applying the use of time based currencies to the urban
habitat and environment, and to the provision of basic needs within its communities especially for those unable to afford them due to the reduced provisions by governing bodies, and the higher costs to these and/or to those willing to acquire them independently from the privatized substitutes.

The challenge becomes how to make the provision of these basic human, social and urban needs equitably accessible and co-operatively plentiful for the communities as well as worthwhile and competitive for investors. Too often the existing or proposed solutions are relegated to the world of charities and NGO associations and do not become interesting to the powers-that-be except out of a sense of personal, or corporate, moral obligation or social commitment.

Thus, for a time currency to serve as “money” in the purchase of these basics, three simultaneous and non-contradictory roles are demanded of it: “it must function as a means to a) measure costs, b) foment exchanges and c) record transactions (a).”

This article tackles these issues and invites debate on the positions taken.

Remembering Camelot: Recent Adventures in Economy, Law and Politics

weaadmin — Wed, 31 Oct 2012 23:55:18 +0000

After the Post-War Economy in America fell apart, Americans tried to fashion a replacement for it. Evaluation of that effort has been heavily influenced by American’s understanding of the earlier economy. By this standard the failure of attempts to build that successor economy, even one based on financial services, are obvious. As these attempts continue more attention should be paid to the social successes that anchored that earlier economy.

Collaboration: Rethinking how we think about the politics of regulation

weaadmin — Wed, 31 Oct 2012 23:53:55 +0000

Local political pressures seem to frame and steer conversations about difficult financial regulatory questions of global impact. Translating from one language to another or from one specialty to another falls short of working together and may even block finding creative ways of describing critical questions. The online conference model is one attempt to address these methodological concerns, and this paper presents a variation of this model, Meridian 180, which is an experiment of transpacific collaboration headquartered at Cornell Law School.

So foul and fair a day: the prosecution of Standard Chartered, state-federal relations and the return of Banquo’s ghost

weaadmin — Wed, 31 Oct 2012 23:51:57 +0000

The State Government of New York has re-emerged as a pivotal broker of financial regulation. Enforcement action taken by the Department of Financial Services against Standard Chartered for violations of sanctions against Iran, as well as subpoenas issued by the State Attorney General to banks implicated in the manipulation of the London Inter-Bank Offered Rate (“LIBOR)”, reflect independent power. The unresolved question is whether its exercise demonstrates opportunistic deployment of extortionist impulses. The paper evaluates the impact on state-federal relations across mandate, process and agency. It argues
that while the return of New York reflects opportunism, the opportunity has been caused by a systemic failure of regulation first identified by Eliot Spitzer, the proclaimed Sherriff of Wall Street, a decade earlier.

The financial market problems from some developing countries point of view and its policy implications

weaadmin — Wed, 31 Oct 2012 23:50:22 +0000

In this paper by utilizing institutional and evolutionary economics concepts and micro-meso-macro framework, first differences in the developing countries financial system have been identified with the acknowledgement of underdevelopment in information transition stages of states and laws, and the institutionalization of science and technology. Then most important financial system theories from different schools of thought have been reviewed in order to make some essentials for the developing countries financial economics by assistance of these theories concepts and aforementioned framework. As a result of these premises, in the developing countries micro financial economics, beside household and firms, other micro units such as tribe, clan, and village have been introduced and on the macro financial economics, state and international financial environment were considered as two important players. These elements and players interactions lead to a situation that most traditional micro units are isolated from financial system and the integration to global financial system mostly depends on state approach of international relationship with developed countries.

Public currency at the precipice

weaadmin — Wed, 31 Oct 2012 23:44:07 +0000

In this paper I look at how Mario Draghi, President of the European Central Bank, sought in the summer of 2012 to remake the euro as a “public currency” and, thus, further both the old and new agendas of European integration. To achieve this Draghi had to re-design the communicative architecture of the euro in order to speak to the predicaments of the European public. Yet to do this meant approaching the precipice: acknowledging that the ECB had lost control of the management of monetary policy.

Money, interest rate and financial markets

weaadmin — Wed, 31 Oct 2012 23:39:22 +0000

This paper brings into focus some general – and indeed basic – aspects of financial markets and processes, the understanding of which is indispensible for the investigation of many penetrating questions that, notwithstanding their importance, are likely to be set aside by more specialist and sophisticated treatments of financial flows.

We shall start with the most typical and important of financial phenomena, money, thereby illuminating various crucial traits and characteristics relating to the subject matter of this conference. It will be shown that the changeable role and meaning of money over time has had a strong impact upon the overall financial landscape, primarily by way of the weakening of the working and interactions of various financial activities. This analysis makes evident both the difficulty but also the urgency of restoring the exogenous character of the money supply.

We further focus upon the interest rate, underlining the nonessential role of this variable that, nevertheless, stands at the root of so many exasperating and destabilizing speculations.

Finally, we face the problem of how to bring into being a financial market that does not strive for mastery over production but is rather content to work in the service of production; we face the problem, that is to say, of how we can foster simpler and more transparent financial markets that are able to reconcile efficiency with social justice.