The summer university is intended not only for the review of recent advances in the field of humanities and social sciences, but also to learn practical lessons from these developments in search for solutions to common problems. During the last Summer University in 2009 the attendants explored various ideas about the cause of the financial crisis of 2007 and 2008 to find the most appropriate remedies going into the future. Analysts agreed that the crisis was not due to a lack of financial market regulations, but rather a lack of accountability by various economic actors, flawed legislative and fiscal policies (housing policy, monetary policy, etc.) and other financial regulations which had distorted market signals and fostered moral hazard problems. They concluded that tightened regulation will not alleviate the crisis, but instead that reinstituting competitive market discipline will lead to responsible management. Since 2008, another wave of financial crises has swept through many states and legislatures. There was Greece in autumn of 2009, followed by Ireland, Portugal, and Spain.
Other economies within the European Union and in the United States have been better off. This recent crisis is, perhaps, without precedent in terms of magnitude and scope. It raises deeper, more complex questions than even the financial crisis of 2007-2008. Once again, it is important to base the search for solutions on an accurate and honest analysis of the causes. Should we see the crises of 2009-2010 as a consequence of policies implanted to over the crisis of 2007-2008? Have states endangered their own financial stability by making efforts to stimulate their economies after the 2007-2008 down turn or should we see the crisis of 2009-2010 as the natural result of what happen in 2008? Has the United States, through excessive regulation and economic redistribution of wealth destabilized markets and made financial commitments it can longer keep?
In other words, are we really facing a crisis of capitalism or a crisis of an over-regulated, welfare state? Given that the crisis is deep, whatever the exact nature, a profound questioning of the principle operational foundations of the State and/or the market will be necessary. For example, assuming that there is a crisis of the welfare state, how do we make sure that the State will refrain from overextending beyond a sustainable size and mission scope in the future? Should there be constitutional limits on the powers of the State? Will there be limits on the State’s ability to tax or raise debt? Is a complete overhaul of the mechanisms of fiat money creation necessary? How do we explain to those who have benefited from the welfare state that “Providence” may disappear? How significant would a shift in the public’s mindset be in order to pursue a new direction? How have things operated before where government power has been redefined?
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