New forms of regulation that prevent a recurrence of the GFC but do not unnecessarily inhibit the market are required to deal with modern global capitalism, according to Professor Robert Holton.
Professor Holton (pictured) is in Adelaide to deliver a masterclass on Global Finance at Flinders University Victoria Square from March 22 to 24.
An Emeritus Professor of Sociology at Trinity College, Dublin, Professor Holton will analyse the reasons for the global financial crisis of 2008-10, and consider the policy challenges that have emerged.
Professor Holton said that understanding what went wrong with global finance cannot be left to economists alone, since markets are not self-regulating and cannot guarantee efficient outcomes or social cohesion.
Drawing on his background in economic history and sociology, Professor Holton will demonstrate the ways in which broader social science perspectives can illuminate global financial processes and institutions.
“Markets are social and political as much as economic constructs and this affects how risks are perceived and managed, and how traders deal with one another,” he said.
“The financial crisis revealed that the mathematical models of financial traders mispriced risks; meanwhile, regulators failed to create an architecture able to comprehend and prudently manage the complex web of new financial instruments and global interdependencies created since 1970.”
Professor Holton said that global finance now needs to be radically re-thought.
“This goes far beyond questions of bankers’ remuneration, requiring forms of regulation that are neither heavy-handed nor so light as to be ineffective,” he said.
“New architectures require greater transparency, system-wide ways of identifying and managing risk, and tougher rules on the capital reserves required of key institutions.”
Flinders sociologist Professor Anthony Elliott said that Professor Holton is a major international figure in sociology.
“We are delighted to have his input into the Flinders masterclass program.”
The masterclass has been organised by the Flinders Discipline of Sociology and the Flinders Business School. To enquire about enrolment, please telephone (08) 82013521 or email sociology@flinders.edu.au
Information can be found at http://www.flinders.edu.au/sabs/sociology