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Finance and the Good Society
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Finance and the Good Society

Robert J. Shiller
Princeton UP, 2012
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7

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Recommendation

What’s so good about finance and the financial sector? Plenty, according to noted economist Robert J. Shiller. Even though much of society is furious over the financial industry’s excesses and wrongdoings, Shiller’s voice rings out in a reasoned, yet passionate – though solitary – defense of the value finance brings to society. True, he says, rogues may crop up in the industry – but most of the sector boasts intelligent, honest, hardworking men and women who contribute to advancing society and the economy for the benefit of all, not just the wealthiest. While Shiller makes good points about the way finance usually contributes to society, his straightforward presentation tends to gloss over some egregious recent examples of corporate greed and mischief. Though he cites some examples of dubious behavior, he dubs investment bankers “keepers of the peace.” Well, maybe you wouldn’t go that far, but getAbstract suggests Shiller’s lucid exposition of financiers’ responsibilities to those who welcome a commonsense approach to the reforms needed to drive the global financial engine forward.

Summary

Finance: Hero or Villain?

Few people see the field of finance as a tool to improve humanity, especially after the 2008 recession. In fact, the public perception is the opposite: Revelations of the financial industry’s greed, trickery and recklessness have cast it as a worthy target for the anger and frustration of people caught up in economic devastation. Generally, finance’s function is to manage and increase the wealth of investors and savers. Contrast that with historical definitions of the “good society,” which strives for the ideals of equity and fairness for all: rich, poor and middle class.

Yet “financial capitalism,” which is “an economic system dominated by financial transactions as opposed to industry or trade,” has an important role to play in furthering human objectives. Finance provides a “goal architecture,” a structure of ways society can advance the interests of all its members. The Latin derivation of “finance” is finis, or end. As a verb, “to finance” means to reach for a goal. Loans, mergers and mortgages are just methods of attaining beneficial objectives – start-up funding, business expansion or new homes. The “financial innovation” of...

About the Author

Yale economics professor Robert J. Shiller wrote the bestseller Irrational Exuberance and is the co-author of Animal Spirits.

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