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New Left Review 57, May-June 2009



If a single root cause has predominated in explanations of the current global financial crisis, it is ‘deregulation’. [*] This article is adapted from ‘The Political Economy of the Subprime Crisis’, co-authored with Sam Gindin and Scott Aquanno, the new concluding chapter of Panitch and Konings, eds, American Empire and the Political Economy of Global Finance, second edition, forthcoming from Palgrave. Lack of state oversight of financial markets is widely cited—not only in the opinion columns of the financial press, but by left-wing commentators, too—as having permitted the perilous over-leveraging of financial institutions, based on weakly securitized debt, that has brought about the present debacle. This diagnosis of the cause of the crisis also steers towards a particular solution: if deregulation allowed markets to get out of control, then we must look to re-regulation as the way out. Thus Will Hutton sees the subprime crisis as the result of decades of laissez-faire policies, resulting in excessive financial growth and instability; now that ‘Anglo-Saxon financial capitalism has suffered a fundamental reverse’, he looks forward to the return of Keynesian regulatory policies. Eric Helleiner also hopes that ‘the crisis may be pushing us toward a more decentralized and re-regulated global financial order . . . more compatible with diverse forms of capitalism’ that would ‘sit less comfortably with an entirely liberal set of rules for the movement of capital and financial services’. By contrast, Robin Blackburn’s analysis of the crisis makes the point that ‘financialization was born in a quite heavily regulated world’, and he questions whether ‘more and better regulation’, even while needed, will ‘be enough’. But his account of the crisis mainly emphasizes rampant financial innovation in an unregulated shadow banking system. [1] Will Hutton, ‘The us took action in the face of crisis’, Observer, 21 September 2008; Eric Helleiner, ‘The return of regulation’, Globe and Mail, 18 September 2008; Robin Blackburn, ‘The Subprime Crisis’, nlr 50, March–April 2008.

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Leo Panitch, Martijn Konings, ‘Myths of Neoliberal Deregulation’, NLR 57: £3

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