Understanding the financial crisis

Posted in articles, banks, economics, finance by thenextwavefutures on 15 July, 2010

The global financial crisis was caused by the collision of different systems, operating at different timescales. There are more shocks to come.

I’ve not been able to blog recently – a mix of work commitments and being away – but I’m delighted to say that during that time the article I wrote with Hardin Tibbs on the global financial crisis has been published in the Journal of Futures Studies. We argue that to understand the financial crisis, it’s necessary to look across multiple timescales, and at the same time. There’s a short-run story about the financial sector, going back thirty-forty years, which is also bound up with a technology story; there’s a longer-run story about energy, which goes back to the development of oil as a significant energy source in the early 1900s; and there’s another – more long-term – story about the end of modernity, a story which started being told around 350 years ago. Each of these suggest a system running up against its limits, and each of them on their own could have caused the crisis. The global scale of the crisis was because these different systemic stories started to interact. And looking at it in this way, it is clear that the crisis isn’t over yet.