Martin Wolf > Quotes

“This book aims to learn from that mistake. One of its goals is to ask whether Minsky’s demand for a theory that generates the possibility of great depressions is reasonable and, if so, how economists should respond. I believe it is quite reasonable. Many mainstream economists react by arguing that crises are impossible to forecast: if they were not, they would either already have happened or been forestalled by rational agents. That is certainly a satisfying doctrine, since few mainstream economists foresaw the crisis, or even the possibility of one. For the dominant school of neoclassical economics, depressions are a result of some external (or, as economists say, ‘exogenous’) shock, not of forces generated within the system.”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“A country with secure property rights, scientific inquiry and technological innovation will become richer. But, since division of labour is limited by the size of the market, it will also benefit from trade, not just in goods and services, but in ideas, capital and people. The smaller a country is, the greater the benefits. Trade is far cheaper than empire, just as internal development is a less costly route to prosperity than plunder. This was the heart of Angell's argument.”
― Martin Wolf, Why Globalization Works

“Depressions are indeed one of the states a capitalist economy can fall into. An economic theory that does not incorporate that possibility is as relevant as a theory of biology that excludes the risk of extinctions, a theory of the body that excludes the risk of heart attacks, or a theory of bridge-building that excludes the risk of collapse.”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“Governments had socialized the liabilities of the core institutions of the global financial system.”
― Martin Wolf, The Shifts and the Shocks: What We've Learned--and Have Still to Learn--from the Financial Crisis

“banks were ‘international in life, but national in death’.”
― Martin Wolf, The Shifts and the Shocks: What We've Learned--and Have Still to Learn--from the Financial Crisis

“As Minsky argued, stability destabilizes. This is an aspect of what George Soros, the successful speculator and innovative economic thinker, calls ‘reflexivity’: the way human beings think determines the reality in which they live.”
― Martin Wolf, The Shifts and the Shocks: What We've Learned--and Have Still to Learn--from the Financial Crisis

“possibility is that the crisis happened partly because the economic models of the mainstream rendered that outcome ostensibly so unlikely in theory that they ended up making it far more likely in practice. The insouciance encouraged by the rational-expectations and efficient-market hypotheses made regulators and investors careless. As Minsky argued, stability destabilizes. This is an aspect of what George Soros, the successful speculator and innovative economic thinker, calls ‘reflexivity’: the way human beings think determines the reality in which they live.5 Naive economics helps cause unstable economies. Meanwhile,”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“many of their supporters attribute the failure to “traitors”; belief in the effectiveness of institutions diminishes; and finally a post-populist recession causes demoralization, which leads to yet another enfeebling bout of populism. Some countries—Argentina is the paradigmatic example—seem unable to escape from such a spiral of mistrust, failure, and yet more mistrust.”
― Martin Wolf, The Crisis of Democratic Capitalism

“The executives who drove their banks (and the world economy) into the ground, before the global financial crisis, mostly walked off with large fortunes, while tens of millions of innocent people’s lives were ruined and governments were forced to provide huge bailouts.[116] Enormous fines were levied on banks, but these were paid by the mass of shareholders. Only one banker went to prison in the US and none went to prison in the UK, even though these were epicenters of the crisis. Moreover, the one banker in the US to go to prison, Kareem Serageldin, was a minor figure. In Iceland, in contrast, twenty-five bankers were convicted, another eleven in Spain, and seven in Ireland.[117] This degree of impunity in the US and UK undermines the legitimacy of their market systems.”
― Martin Wolf, The Crisis of Democratic Capitalism

“cuando la gente rechaza a los que mandan, no es que no deposite su confianza en nadie, sino que la deposita en cualquiera. Por desgracia, a menudo su búsqueda se centra en charlatanes, mafiosos, fanáticos o una mezcla letal de las tres cosas. Entonces se destruyen las instituciones, la corrupción se vuelve endémica y desaparece la capacidad de hacer política sensata. Incluso es posible que un país se convierta en irreformable. El capital social e institucional necesario para renovarlo desaparece y se convierte en un Estado fallido.”
― Martin Wolf, La crisis del capitalismo democrático: Por qué el matrimonio entre democracia y capitalismo se está diluyendo y qué debemos hacer para solucionarlo (Deusto)

“crises that hit the high-income countries after August 2007 have altered our world. But its analysis is rooted in how these shocks originated in prior shifts – the interactions between changes in the global economy and the financial system. It asks how these disturbing events will – and should – change the ways we think about economics. It also asks how they will – and should – change the policies followed by the affected countries and the rest of the world. The book is an exploration of an altered”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“The lowest among the advanced liberal democracies were France (6.7), Belgium (6.6) and Italy (5.5). At or below two were Bangladesh (0.4), Nigeria (1.0), Uganda (1.9), Indonesia (1.9), Bolivia (2.0), Kenya (2.0) and Cameroon (2.0). Meanwhile, Russia and Pakistan were on 2.3, India on 2.7, China on 3.5, Brazil on 4.0.25 There is, as one might expect, strong evidence that corruption impairs economic growth. Nobody wants to invest or do the other growth-promoting things discussed in Chapters 2 and 3 in a highly corrupt country.26 Yet all corruption is not equal in its effects. Analysts distinguish centralized from decentralized corruption. Under centralized corruption, one person determines the size of the take. Call this Suharto’s Indonesia. Under decentralized corruption, officials and politicians compete for the take. Call this India.”
― Martin Wolf, Why Globalization Works

“Can ‘It’ – a Great Depression – happen again? And if ‘It’ can happen why didn’t ‘It’ occur in the years since World War II? These are questions that naturally follow from both the historical record and the comparative success of the past thirty-five years. To answer these questions it is necessary to have an economic theory which makes great depressions one of the possible states in which our type of capitalist economy can find itself.”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“In a country supposedly dedicated to the ideals of market economics, arguably the most important social function of finance – lending for home purchase – had become almost completely nationalized.”
― Martin Wolf, The Shifts and the Shocks: What We've Learned--and Have Still to Learn--from the Financial Crisis

“The attempt to resolve its problems by turning the Eurozone into a bigger Germany is going to prove unworkable. If this is not understood – and it is not, as yet, where it matters – further crises seem certain.”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“insouciance”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“collective DC plan,”
― Martin Wolf, The Crisis of Democratic Capitalism

“These events have not been the first to change my views on economics since I started studying the subject at Oxford University in 1967.9 Over the subsequent forty-five years I have learned a great deal and, unsurprisingly, changed my mind from time to time. In the late 1960s and early 1970s, for example, I came to the view that a bigger role for markets and a macroeconomic policy dedicated to monetary stability were essential, in both high-income and developing countries. I participated, therefore, in the move towards more market-oriented economic perspectives that took place at that time. I was particularly impressed with the Austrian view of the market economy as a system for encouraging the search for profitable opportunities, in contrast to the neoclassical fixation with equilibrium: the writings of Joseph Schumpeter and Hayek were (and remain) powerful influences. The present crisis has underlined my scepticism about equilibrium,”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis

“Por consiguiente, como advirtió Aristóteles, los altos niveles de desigualdad de la riqueza corroerán la política democrática.”
― Martin Wolf, La crisis del capitalismo democrático: Por qué el matrimonio entre democracia y capitalismo se está diluyendo y qué debemos hacer para solucionarlo (Deusto)

“Es evidente, por lo tanto, que la mejor comunidad política es la constituida por la clase media, y que es posible que sean bien gobernadas esas ciudades en las que el elemento intermedio es numeroso y más fuerte que los otros dos,”
― Martin Wolf, La crisis del capitalismo democrático: Por qué el matrimonio entre democracia y capitalismo se está diluyendo y qué debemos hacer para solucionarlo (Deusto)

“Professor Rajan describes the results as follows: ‘So long as large countries like Germany and Japan are structurally inclined – indeed required – to export, global supply washes around the world looking for countries that have the weakest policies or the least discipline, tempting them to spend until they simply cannot afford it and succumb to crisis.’26 Why these countries have ended up with structural savings surpluses and a concomitant tendency towards running substantial current-account surpluses is unclear. It may be that they put greater weight on production than on consumption. It may be that they see a need to reduce risks by becoming net creditors, as has also been true of China. It may be that they see success in export markets as a triumph in a form of peaceful economic warfare. It may be that the export-driven growth after the Second World War shaped their subsequent economic structures. In the German case, it may be because of a resolute rejection of demand management and so a need to rely on changes in net exports as a way to balance demand and supply (as explained in Chapter Two). In fact, the outcome has probably been shaped by all these things. It is no doubt also because of the ageing of societies. But that is not a sufficient explanation. Note that many ageing societies do not run large current-account surpluses (consider Italy, for example) and that Germany ran sizeable current-account surpluses before ageing had really set in (prior to German unification).”
― Martin Wolf, The Shifts and the Shocks: What we've learned – and have still to learn – from the financial crisis