‘The Current Crisis of Capitalism’: What Sort of Crisis?

Abstract

Keeping an open mind on the severity of the financial crisis and its implications for capitalism, this article focuses on the role of the state and financial institutions in monetary regulation. Questioning whether orthodox economic theorists and policy-makers share the same world view as professional and central bankers, it argues that the monetary system has in the past twenty years been stabilised through trust relations, rather than by markets. Furthermore, in this process, which was not sufficiently recognised by the practitioners, such trust relations were unable to cope with the impersonality of money. The nub of the question about a ‘crisis of capitalism’ is how nation-states can possibly control money — the most anarchic and global social relation in the world today. The article questions Keynesianism and economic liberalism alike, by asking if it is possible for states to force global banks to take the risks of lending for development. It argues that the real focus of attention needs to be the practices of complex international banking networks and the way ‘banks march in step’.