Milton Friedman 50 Years Later
Edited by: Luigi Zingales – University of Chicago
Since the Great Financial Crisis, Friedman’s view has become increasingly unpopular. In the political arena, many prominent political figures, from Elizabeth Warren to Joe Biden, are calling for a stakeholder-centric corporation. In academia, the British Academy stated that “A corporation must have a set of
clearly defined and aligned purposes—the goals it actively pursues and its contributions to societal goals or public interests.” Even in the business world, the Business Roundtable changed its position in 2019, proclaiming that “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.” Given the increasing challenges to Friedman’s position, and to mark the 50-year anniversary of Milton Friedman’s influential New York Times piece “The Social Responsibility of Business Is to Increase Its Profits,” Chicago University’s Stigler Center has just published an e-book collection of articles on the shareholder-stakeholder debate. The 28-piece series includes articles written by Raghuram Rajan, Anat Admati, Eugeme Fama, and Marianne Bertrand.
Milton Friedman was one of the foremost thinkers who challenged the post-war Keynesian consensus. He was immensely successful in arguing the pro-market case, and questioning the ability of government to improve on market outcomes. Today, we need to reopen these questions, using new economic thinking and new evidence; is the market bringing the unalloyed benefits that Friedman thought it would? This book is an important contribution to that reevaluation
Angus Deaton, Princeton University
Competition and Stability in Banking: The Role of Regulation and Competition Policy
By: Xavier Vives – IESE Business School
Xavier Vives argues that while competition is not responsible for fragility in banking, there are trade-offs between competition and stability. Well-designed regulations would alleviate these trade-offs but not eliminate them, and the specificity of competition in banking should be accounted for. Vives argues that regulation and competition policy should be coordinated, with tighter prudential requirements in more competitive situations, but he also shows that supervisory and competition authorities should stand separate from each other, each pursuing its own objective. Vives reviews the theory and empirics of banking competition, drawing on up-to-date analysis that incorporates the characteristics of modern market-based banking, and he looks at regulation, competition policies, and crisis interventions in Europe and the United States, as well as in emerging economies.
Shadow Networks – Financial Disorder and the System that Caused Crisis
By: Francisco Louçã, Michael Ash – ISEG Lisbon University, University of Massachusetts Amherst
Many accounts of the crisis focus on renegade activity in marginal financial sectors. Shadow Networks challenges this pervading view and sets out to demonstrate that, far from a dissident branch, the shadow finance that initiated the crisis is tightly networked with, and highly profitable for, bank-based finance. The collapse was not an accident, but baked into the system of finance from the start. Shadow Networks traces the complex web of power that caused crisis and gives vivid descriptions of the actors in the quarter century leading up to 2007 to explain how the now decade-long crisis took shape.
That the world has financialized is not news. We live, as a famous newspaper has it, “in Financial Times. But we tend to see only one aspect of financialization – the bit that we can sometimes count – the bit that goes bust with depressing regularity – the shadow banking system. What we miss is hidden in the shadows. The intellectual and political networks that sustain and nurture financialization as a social and political project. In this work Louçã and Ash seek to bring into the light those forces that would prefer to stay in the shadows.
Mark Blyth, Brown University
China’s Fintech Explosion Disruption, Innovation, and Survival
By: Sara Hsu, Jianjun Li – Fudan University, Central University of Finance and Economics in Beijing
The book highlights the disruption of traditional banking as well as the risks of fintech and regulatory technology. Hsu and Li describe major companies including Alipay and Tencent, developer of WeChat Pay and a wealth-management business, and other leading fintech firms such as Creditease, Zhong An Insurance, and JD Finance. Offering expert analysis of market potential, risks, and competition, as well as case studies of firms and consumer behavior, China’s Fintech Explosion is a must-read for anyone interested in one of the world’s breakout sectors.
Fintech started in the West, but to fully understand its adoption and innovation one must look East. This book does precisely that. It is an informative and comprehensive guide to the fast-moving area of fintech in China. This book goes beyond the techno-provision of credit to the underfunded and covers all areas of fintech, neatly blending contemporary information with analysis, case study, and research review. It is a must-read for the scholar and the student as well as those who wish to understand fintech in China.
Kent Matthews, Cardiff Business School
