Time for New Rules
We are publishing From Crisis to Recovery, a new book from the OECD Insights series here on the blog, chapter-by-chapter. This book traces the roots and the course of the crisis, how it has affected jobs, pensions and trade, while charting the prospects for recovery.
These chapters are “works in progress” and their content will evolve. Reader comments are encouraged and will be used in shaping the book.
Is there – to misquote William Shakespeare – something rotten with the state of capitalism? In the wake of the financial crisis, many people seem to think there is. According to a poll commissioned by the BBC World Service of people in 27 countries, only around one in ten believed capitalism works well. In just two of the surveyed countries did that number rise above one in five – 25% in the United States and 21% in Pakistan.
Unhappy as people were, the poll showed little appetite for throwing out capitalism altogether – fewer than one in four supported that notion. But people do want change – reform and regulation that will check capitalism’s worst excesses.
That view is shared by many political leaders. In 2009, Germany’s Chancellor Angela Merkel and the Netherlands’ then-Prime Minister Jan Peter Balkenende argued that “it is clear that over the past few decades, as the financial system has globalised at unprecedented speed, the various systems of rules and of rules and supervision have not kept pace”. In the United States, President Barack Obama declared that “we need strong rules of the road to guard against the kind of systemic risks that we’ve seen”. In the United Kingdom, Prime Minister Gordon Brown said that “instead of a globalisation that threatens to become values-free and rules-free, we need a world of shared global rules founded on shared global values”.
But what form should those rules and values take? How can we best harness capitalism’s power to deliver innovation and satisfy our material needs while minimising its tendency to go off the rails from time to time.
This chapter looks at some of the themes that have emerged in reform and regulation since the crisis began, focusing on three main areas:
►Regulating financial markets
►Tackling tax evasion, and
►Creating a “global standard” for ethical behaviour