Date: Wednesday 12 October 2016
Time: 18:00 -19:30
Speaker: Terry Barker
Talk Title: 'Financialisation of the Global Economic System Past, Present and Future & its Relevance to Austerity Economics’
Location: Ramsden Room, St Catharine's College
Terry Barker has an honorary chair at School of Environmental Sciences, Faculty of Science, University of East Anglia; and he is a Senior Department Fellow in the Department of Land Economy, University of Cambridge. He was the Director of 4CMR until his retirement in 2011, but remains Chairman of Cambridge Econometrics and Founder of the Cambridge Trust for New Thinking in Economics, which preceded the similarly named Soros Foundation. He has written on endogenous money in the 21st Century and (with others) he has published in 2009 an econometric analysis and projection of the outcome of the global economic crisis that began with the Lehman bankruptcy in September 2008. At the time, he called for the managed bankruptcy of all the banks in trouble, a policy that was abandoned by the US authorities following the panic of 15 September 2008, when Lehman was forced into bankruptcy. His projections of a long-term liquidity trap for the global economy, followed by much lower world growth, were remarkable prescient compared to the New Consensus “return to equilibrium” at the time.
Financialisation will be defined, and the causes and effects will be divided into those ‘internal’ to financial services, and those ‘external’ to the sector. The external ones in turn will be divided into those of the ‘supply side’, e.g. the provision of legal services for tax avoidance and evasion, and those on the ‘demand side’, e.g. purchases of financial services across industries as Boards of Directors have become dominated by financial executives. Financialisation at the global level is a modern phenomenon, and began in the late1980s in London and New York. The later diffusion across countries and over time will be assessed quantitatively, relying on structural analysis of world input-output tables over time. I shall then make a qualitative analysis of why this has happened and what are the main effects, especially in relation to austerity economics as practised by the UK Chancellor and the banking community since 2010. I shall conclude on how the spread of financialisation will come to an end, either in systemic collapse or in a regulatory revolution in the UK and USA.