The Global Financial Crisis: Learning fromRegulatory and Governance Studies
Regulatory and governance studies help locate power and responsibility in the global ﬁnancial crisis. I argue that corporate and state power worked together incenters like New York and London to shape regulation and that power was spread around the world. In the response to the crisis, responsibility for regulation will remain largely systems-based rather than centrally directed. However, thosesystems should be located in the culture of the elites, which are socially and spatially based, as much as in the economics of the markets or the cognition of the ﬁrms. And that responsibility has limits, so there should be greater democraticcontrol of ﬁnance and less dependence on ﬁnance capitalism for essential services,social security, and environment protection.
The global ﬁnancial crisis (GFC) has been devastating for many people andhas revealed the instability of the world economy. Yet it would seem the crisishas allowed some people to proﬁt, and it appears likely that large risks willremain in the system (International Monetary Fund 2009). The GFChas raised many issues of concern, the greatest overall being the governabilityof the ﬁnancial system. How might regulatory and governance studies helppolicymakers and citizens to think about that systemic issue?
My forumpiece, drafted in the early stages of the GFC “meltdown,” pursues thisquestion and suggests where those studies might and might not assist.My premise is not a novel one; the prospects for reform of regulation canonly be assessed once we locate power and responsibility within the ﬁnancialsystem. Corporate and state power often work together. Thus, we mustconsider whether the responses to the GFC recognize that conﬁguration of power well enough to reform ﬁnancial regulation. My main suggestion is thatthe cultures of the elites are as important to that reform as the economics of the markets. The piece has a rather pessimistic conclusion: if elite culturescannot be encouraged to reform, democracies should reduce dependenceon ﬁnance capitalism for housing, essential services, social security, andenvironmental sustainability.
Address correspondence to Chris Arup, Department of Business Law, Faculty of Businessand Economics, Monash University, PO Box 197, Caulﬁeld East, Victoria, Australia 3145.Telephone:
61 3 9903 1026; E-mail: email@example.com.LAW & POLICY, Vol. 32, No. 3, July 2010 ISSN 0265–8240© 2010 The AuthorJournal compilation © 2010 The University of Denver/Colorado Seminary