Economic theory suggests that financial innovation must lead to failures. And, in particular, since successful innovations are hard to predict, the infrastructure necessary to support innovation needs to lag the innovations themselves, which increases the probability that controls will be insufficient at times to prevent breakdowns in governance mechanisms. Failures, however, do not lead to the conclusion that re-regulation will succeed in stemming future failures. Or that society will be better off with fewer freedoms. Although governments are able to regulate organisational forms, they are unable to regulate the services provided by competing entities, many yet to be born. Organisational forms change with financial innovations. Although functions of finance remain static and are similar in Africa, Asia, Europe and the United States, their provision is dynamic as entities attempt to profit by providing services at lower cost and greater benefit than competing alternatives.
We would be derelict to regulate the financial industry heavily without attempting to understand the cost and benefits of regulation and without a thorough understanding of the causes of this crisis. With haste, new forms of regulation will probably not lead to less chance of further crisis and failures. History suggests that even the most heavily regulated banking (and broker/dealer) sectors have collapsed or nearly collapsed on myriad previous occasions. New regulations have supplanted old regulations to no avail« .
* « I sing the praises of financial innovation » – Steve Waldman.
* « Thoughts on Banking » – Arnold Kling.
* « The Complexity Approach to Economics : a Paradigm Shift » – Magda Fontana.
* « Ontological issues in evolutionary economics : The debate between Generalized Darwinism and the Continuity Hypothesis » – Jack Vromen. Le genre de thème que j’adore !