Amid the carnage of bankruptcies, soaring unemployment, and millions of families losing their homes during the financial crisis of 2007-2009 lay the bloody corpse of a set of ideas that had underpinned the economics of the previous thirty years. A system that had been delivering unprecedented prosperity on a global scale suddenly teetered on the verge of collapse. Capitalism was seemingly exposed as a house of cards. We’re at a crossroads, and decisions about how to reshape a discredited capitalism will profoundly affect whether the coming years will be ones of depression, stagnation, or renewed prosperity. Matthew Bishop and Michael Green first take a step back and analyze what can be learned from financial crises of the past-from the Tulip Craze of the seventeenth century through the Great Depression of the 1930s, Japan’s Great Deflation, and the Long-Term Capital debacle of the 1990s to the unprecedented interventions of the government during the past year-to set the agenda for a reformed twenty-first-century capitalism. The Road from Ruin explains:
Why bubbles are the consequence of financial innovations that generate economic breakthroughs, but why it would be wrong to abandon these inventions of the financial engineers. Stifling innovation and risk-taking would come at a huge cost to future prosperity.
Why the economy needed a fiscal stimulus to recover from the crisis. Bishop and Green show how economic dogmatists of the Right who opposed the stimulus got it wrong, but warn that those on the Left who want the stimulus to run and run could usher in a new era of high inflation.
The danger of focusing on the financial symptoms of the crisis without tackling the underlying economic causes, such as the world operating on the dollar standard. Bishop and Green show why the role of the dollar as the world’s reserve currency is not a problem just for the rest of the world but for the United States as well.
Why many of capitalism’s champions-especially the advocates of the efficient market hypothesis lost touch with reality. The Road from Ruin provides insights into new ideas in economics that recognize how the complexity and irrationality of the human beings who make up the economy can be harnessed to build a better capitalism.
Remarkably, the issues we face today have presented themselves in one form or another over the past three centuries. Matthew Bishop and Michael Green skillfully draw both the lessons learned and prescriptions for reform to prevent another catastrophic meltdown and put America back on top.
Charlie Rose: Matthew Bishop Interview
Time: 23:24
Synopsis
Amid the carnage of bankruptcies, soaring unemployment, and millions of families losing their homes during the financial crisis of 2007-2009 lay the bloody corpse of a set of ideas that had underpinned the economics of the previous thirty years. A system that had been delivering unprecedented prosperity on a global scale suddenly teetered on the verge of collapse. Capitalism was seemingly exposed as a house of cards. We’re at a crossroads, and decisions about how to reshape a discredited capitalism will profoundly affect whether the coming years will be ones of depression, stagnation, or renewed prosperity. Matthew Bishop and Michael Green first take a step back and analyze what can be learned from financial crises of the past-from the Tulip Craze of the seventeenth century through the Great Depression of the 1930s, Japan’s Great Deflation, and the Long-Term Capital debacle of the 1990s to the unprecedented interventions of the government during the past year-to set the agenda for a reformed twenty-first-century capitalism. The Road from Ruin explains:
Remarkably, the issues we face today have presented themselves in one form or another over the past three centuries. Matthew Bishop and Michael Green skillfully draw both the lessons learned and prescriptions for reform to prevent another catastrophic meltdown and put America back on top.