The Impact of Financial Regulations on Global Economic Instability
The primary focus of the paper is on how financial regulations lead to global economic instability. However, there are risks of ignoring these laws in terms of capitalism's vicious circle.
The 2008 Global Financial Crisis
After the 2008 global financial crisis (GFC), analysts have been keeping a close eye on global economic developments. Several questions have already been posed by numerous economic bodies, including the International Monetary Fund (IMF), which has categorically listed the various factors that may have resulted in the recent economic turmoil in the world. IMF, for instance, has blamed the turbulence on the China's export-only-driven economy, the loose monetary policies in the US, and the lower prices of commodities. All these claims have been supported in the article.
A Shift in Capital Flows
The article reiterates that there has been a shift from worldwide capitalism to a newer system of capital flow emanating from the declining powers to the increasing powers (Palat, 2010). The article also articulates that the current period is distinguished by the capital flow from the rising powers to declining powers, thus it is a clear mark of reversal of normality. There exist two hurdles which must be overcome to achieve this, and they are; firstly, absorption of the displaced labor as a result of its excess organic capital composition and secondly, diminishing the escalating inequalities in income whose impact has restricted market growth and rekindling social conflicts. However, it has to be noted that if the key challenges facing the global economy are mishandled, then there would be incidences of recurrence. Major global economic powerhouses such as China, the US, Middle East Asia, and Europe should all play their economic games safely to avoid plunging the world for instance back to the GFC of 2008.
Reference
Palat, R. A. (2010). World Turned Upside Down? Rise of the global South and the contemporary global financial turbulence. Third World Quarterly, 31(3), 365-384.
