Suchergebnisse

Since the 2008 crisis, the economics literature has shown a renewed interest in Keynes's "beauty contest" (BC) as a fundamental aspect of the functioning of financial markets. We argue that to understand the importance of the BC, psychological and informational factors are of small importance, and a dynamic-structural approach should be followed instead: the BC framework is paramount because it is rooted in the historical trajectory of capitalism and it is not simply a consequence of "irrational" (i.e., biased) agents. In this genuine form, the BC mechanism allows one to understand the main trends of a financialized world. Moreover, the conventional nature of financial markets provides a sound method for assessing different economic policies whose effectiveness depends on how much they can influence the convention itself. This alternative understanding of the BC can be used to start the needed rethinking of economics, urged by the crisis, that is for now reduced to studying the financial and psychological "imperfections" of the market.

The transition to a green economy is arguably the most important economic transformation of the next decades. To be completed it requires the mobilization of astounding resources, a flow of technological innovation and a whole series of new rules going from technical standards to financial regulation. Given the resources it needs, the transition, to be credible, requires a full engagement of the financial system. On this regard we analyze the policy set-up of Europe, the most advanced area on the issue. We identify a three-layer functioning of the EU project for transition. The first one ("green products") is fully compatible with the present financial system. A second layer entails changes in the business model and organization of financial operators but it can be phased in with minor overhauls. Finally, there is a third layer, largely incompatible with the present financial system, yet crucial to achieve transition. We show that, according to the same EU analysis, the transition needs a total change in the financial landscape and therefore it is, rebus sic stantibus, intrinsically unfeasible. We suggest ways to escape the dilemma that connects financial stability and green economy.