ABSTRACT
This chapter examines whether attaining sustainable global prosperity at the historical moment will require global financial governance. Global finance has evolved in ways that have compromised its functionality for the economy as a whole, in favour of an emphasis on zero-sum speculation and on position-taking within the shadow-banking megaplex. The chapter presents the history of post-War finance, considering whether the immense changes observed are evidence of gradual evolution or of coercive, self-undermining shifts? It argues that the post-regulation evolution of financial structure since the 1980s is not problematic, a view embedded in the finance/growth literature. The chapter suggests that financial markets are not self-adjusting, and instead can generate crises with unpredictable – and adverse – consequences for the normal functioning of national macroeconomics. It considers what reforms in financial structure are needed to renew the economic functionality of finance. The chapter discusses a gradualist understanding of the links between financial development and economic activity.
