It’s All About the Money
The subtitle of this book is “Politically Skewed Financial Markets and How to Fix Them”. As readers might have already noticed, I have so far been much more copious in expounding upon the first part of the subtitle and relatively sparse with suggestions related to the second. I have definitely been more preoccupied with the skewing of markets by politics than by the fixing of those markets. Partly this is because any account of the skewing necessarily involves a description of the numerous channels by which the state and the financial markets are linked and affect one another. This naturally prolongs the diagnostic side of the story. Thus, we saw how the maneuvering room that politicians have is constrained by the financial markets and how central banks increasingly act in response to significant moves in the stock market. We also observed a myriad of political phenomena that get assimilated into market prices, including elections, cabinet negotiations, legislation, interest group lobbying, and wars. Indeed, the very existence of the bond, stock, and derivative markets is only truly explicable in political terms. Many are the highways and byways passing between politics and finance.
Yet the reader may have also detected a note of fatalism running throughout the exposition of the political-financial nexus. The mutual influences between the two parts notwithstanding, the political fact of democracy structures that whole nexus. So when the resulting array of connections are distorted in ways that undermine the common good, it is not simply © The Author(s) 2017
G. Bragues, Money, Markets, and Democracy,
a particular policy, institution, or narrow set of interests that is to blame. It is democracy itself—the political regime that defines the architecture governing most of the world’s financial markets, if not almost all the leading markets. Since democracy is not something we want to abandon—it being humanity’s best option to advance personal freedom, dignity, and flourishing—my account does admittedly conduce to a sense of resignation before the ingrained tendencies of popularly elected government. Such a frame of mind is not fertile ground for the suggestion of fixes.
I confess my susceptibility to this temptation of accepting what democracy has impressed upon the financial markets. My lack of forthcomingness with solutions up to now can be taken as a tacit manifestation of that fatalism. But it is a feeling that must be resisted.