The 2nd “Sustainable Global Financial System” workshop, hold at the IASS, took place December 13-14. If you log in and go to “Media” you find the documents related to the workshop – any workshop participant can upload such documents. Feel free to place posts and comments on the GSS page – please mark the post with the category “Sustainable Finance” (and others if you wish).
Below you can see the online chat related to the workshop:
- To Carlo from Ulf:
Two main challenges for the global governance of the financial markets is how to steer money creation and how to address the global imbalances
- To Ulf from Carlo:
Can you write down the brief statement you just made (11:57am) so we can use it as a quote?
A fundamentalist statement: Theories should not just be internally consistent (i.e. not include contradictory statements) but also externally consistent, i.e. in line with what actually happens in the real world. Central banks that evaluate their own monetary policy with models that do not depict the credit mechanism are not up to their task. And this is what happened in the past decade.
Who wrote the fundamentalist statement?
Well, the one who outed himself as a fundamentalist: Armin
We do not understand cancer. We do not understand the climate system. We do not understand the financial system. The physicians are aware of the fact that they do not understand cancer. The climate community is not aware of the fact that they do not understand the climate system. What about the finance community?
We know a few things about cancer, e.g. smoking is likely to trigger it and certain forms of cancer can be treated with a high chance of success. Professionals dealing with cancer are aware of these facts, they are aware of the fact that many aspects of cancer are mysterious (in a threatening way) to us, and they try to keep learning. Their learning strategies may be poor, but they are there.
And a major shift in attitude happened. When the German Cancer Research Center started in the 60s, they thought that by the year 2000, the problem of cancer would be solved. Now they are much more humble. They do not longer expect that in some decades hence, we will have solved the cancer problem. I interprete this as conscious acknowledgement of the enormour challenge that human bio-chemistry confronts us with. I do not see a likewise acknowledgment of the enourmous challenge in the climate community. I sense a growing consciousness for the challenge ahead in parts of the financial community. Am I mistaken?
Allow me to skip the climate example to look directly at the finance thing. It seems to me that until the financial crisis there was a very strong consensus among professionals dealing with finance. According to that consensus existing institutions were appropriate to guarantee a financial system that increased human well-being worldwide. Things had to be improved here and there, mainly to restrain political interference with markets not justified by some external effect.
Now that consensus is broken. Some stick to it, some don’t. That’s where our discussions are work become important.
link provided by Jay Pocklington:
Jobs report of the World Bank
Stiglitz on World Bank http://www.globalpolicy.org/component/content/article/209/42796.htmlhttp://www.project-syndicate.org/commentary/whose-world-bank-
- Gerd Leipold:
The mandate of the IMF must be to work towards a sustainable economy. If it does not, it does not have a mandate.
it seems that we have a spectrum of opinion about whether John Kay is on target – which is good. There seems to be a promising research question ahead that is genuinely transdisciplinary as it involves theoretical and practical engineering, organisational sociology (Perrow style), international policy science, and economics, among others.
- Joseph Potvin:
This addition is a little late for the workshop itself, but might be of interest to some for follow-up. The Earth Reserve Index is an adaptable free/libre/open source method for calibrating prices of tangible goods and services based on a selection of biophysical indicators that reflect relative trends in ecosystem integrity and resource availability. This is work-in-progress.