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Systemic Fear and Forward-Looking Finance

We have just posted the next installment of Shimshon Bichler and Jonathan Nitzan‘s “Contours of Crisis” article series: Systemic Fear and Forward-Looking Finance. The article puts forward an original thesis about the class underpinnings—and indeed class limits—of modern finance theory.

Here’s the beginning of the article:

This is the third installment in our series about the current crisis. The first article examined the conventional view that this is a finance-led crisis, a turmoil triggered and exacerbated by “financial excesses.” The second debunked the “mismatch thesis,” the belief that the present crisis is our punishment for letting financial fiction distort economic “reality.” The current paper takes on the notion of the forward-looking investor. According to the conventional creed, investors are forever looking into the future: they discount not profits that have already been earned, but those that they expect to earn. This forward-looking premise lies at the heart of modern finance, and investors usually follow its rituals with religious zeal.

But not always.

Occasionally, capitalism is struck by a systemic crisis, a period in which the very existence of the system is put into question. And when that happens, all bets are off. Capitalists lose sight of the future, and forward-looking finance suddenly collapses.

Read the full article.


  1. […] In November, Nitzan presented his and Bichler’s “systemic fear” thesis–including the correlation data that supposedly supports it—in a presentation to a joint session of the prestigious Harvard Law School and Harvard’s equally prestigious Kennedy School of Government. And a different version of the same argument, featuring the same correlation data, appeared earlier in an article they published in Dollars & Sense, a left-liberal economics magazine. […]

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