David Bourghelle and Philippe Rozin
The thinking of the philosopher Baruch Spinoza is gradually entering the field of social science. In this paper, we are particularly interested in applying his theory of affects…
Abstract
The thinking of the philosopher Baruch Spinoza is gradually entering the field of social science. In this paper, we are particularly interested in applying his theory of affects to the analysis of passionate collective behaviours at work in the field of financial markets. The general hypothesis that underpins our work is the idea that, in a context of radical uncertainty about the future, the succession of common affect regimes translates into passionate sequences that determine investor behaviour and produce market dynamics. Using an analysis of the stock market cycles of Taffler, Bellotti, and Agarwal (2018), Taffler, Agarwal, and Wang (2019), we show that the Spinozist concept of common affects can help us to understand the mechanisms in the production of collective emotion and to account for the speculative dynamics at the origin of the great financial bubbles.
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The academic world is too often disconnected with the needs and realities of the economy and society. It has not sufficiently drawn lessons from the 2008 financial crisis, and…
Abstract
The academic world is too often disconnected with the needs and realities of the economy and society. It has not sufficiently drawn lessons from the 2008 financial crisis, and repeatedly demonstrates great restraint when faced with financial scandals. Its responsibility is, however, to analyze these problems and to argue objectively.
To make sure academic freedom is not merely empty words or a pleasant principle inscribed on university pediments, it must be exercised and practiced regularly by faculty members. The field of finance addresses the issue of (asset) prices but does not transmit values. Money is presented implicitly or explicitly as an end rather than a means.
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Financialisation being but the end product of a complex process, countering it is not a question of modifying individual behaviour but of changing the law. In sharecropping, the…
Abstract
Financialisation being but the end product of a complex process, countering it is not a question of modifying individual behaviour but of changing the law. In sharecropping, the standard contract between landowner and labourer gets shared only based on what has actually been produced: risk is being shared along the terms of the contract guaranteeing to both parties a share of the produce, not a fixed quantity of it. Imbalance creeps in when rent is being paid without being a true share of wealth having been created, in what is nowadays called ‘consumer credit’: when interest is charged and paid from wealth that has not been generated through combining human labour with the resources lent as an investment but by the borrower mortgaging wages yet to come. Got historically added to the dysfunction of consumer lending, speculation with the meaning traditionally assigned to it in finance of ‘wagers on the rise or fall of the price of financial products’. Speculation doesn't add any economic value but shifts only amounts of money between bettors, generating a number of risks. Counterparty risk: the loser possibly defaulting, triggering then a damaging chain reaction of defaults. Moral hazard risk: bettors attempt to push the market in the direction favouring their bet. Systemic risk: bettors take advantage of the well-established fact that should they lose, the public sector will act as a saviour of last resort, bailing them out. This all can be redressed by law, and by law only.