20282 - HISTORY, INSTITUTIONS AND CRISES OF THE GLOBAL FINANCIAL SYSTEM

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The course addresses a central feature of modern economic history: monetary and financial institutions are becoming more and more complex and at the same time increasingly exposed to the risk of deeper and more devastating crises. However, this history of increasing complexity cannot be interpreted in terms of Darwinian evolution. Rather, the course offers evidence of the presence of different organisational principles in monetary and financial systems, where what prevails is not always the most efficient principle, but the one most suited to logics of hegemony. The non-evolutionary character of financial history, the presence of organisational principles that cannot be reduced to variants of the same type, requires explicit attention to the logical, historical and psychological underpinnings of Western monetary and financial architectures, and thus also to the economic doctrines most implicitly underlying them. The history of monetary and financial architectures, as well as their performances and crises, thus also implies an attention to the history of economic doctrines in the monetary and financial field, with a view to their critical reassessment.

In line with the structure of the textbook, the course is divided into three sections:

The first section focuses on the logical and psychological structure of the financial problem, and the role that time and expectations play in finance The starting point is Chapter 12 of J. M. Keynes's General Theory, focusing on the conceptual conventions that govern the calculations and psychology of financial theorists and practitioners, on the problems that these conventions solve, but also on those that they contribute to create. Particularly important is the Keynesian focus on long-term expectations in determining investment choices, and the role of liquidity preference as a mass psychological response to long-term uncertainty. This is followed by a review of the main interpretative strands on the role of expectations in finance, from Keynes and Knight's considerations of risk and uncertainty to recent critiques of the efficient market hypothesis and the role of expectations in macroeconomic models.

The second section is historical in nature. Starting from the current post-pandemic situation and generalised geopolitical instability, the course proceeds backwards through the crises of capitalism of the 20th and 19th centuries to the origins of financial markets. The aim is to show that the particular concatenation governing Western financial history is not deterministic, and thus not compatible with a purely evolutionary representation of it. In this historical reconstruction, in fact, alternative options to the current structure of financial markets, of capital mobility, of the role of public debt, and of the management of the international monetary system will emerge, sometimes actually operating, sometimes explicitly discarded, but always susceptible to being taken up again, even from new technological supports. The aim of the historical interpretation is to unearth the economic, technical and ideological motivations that led to the spread of financial markets based on liquidity and expectations.

The third section aims to give an account of the latest interpretative trends and reform proposals in the monetary and financial field, conceived in response to the 2007 crisis and even more so to the recent Covid and war crises.  The projects of innovative monetary systems, both local and global, the emergence of digital currencies, both public (CBDC) and private, both complementary and alternative, the appearance of new financial structures, also linked to new technological potentials (fintech and blockchain) are reviewed. This is also to further verify the theoretical considerations of the first part of the course. Particular emphasis will be placed on the stabilising role of government bonds as safe assets and on the issue of European government debt, its expansion and how to manage it in the aftermath of the pandemic crisis and beyond.

The knowledge that students will have acquired at the end of the course will concern both economic history and the history of economic thought, and therefore indirectly also the assumptions of current monetary and financial theories. In particular, the student will be able to:

• trace the historical origin of the current institutional framework of monetary and financial systems,
• assess the strengths and weaknesses, threats and opportunities, of alternative monetary and financial architectures,
• recognize and express the often unspoken assumptions of current theories,
• distinguish between different basic orientations,
• identify their theoretical and ideological significance.

This knowledge will enable the student to describe and define with greater accuracy the current trends in finance in view of estimating their theoretical soundness and practical desirability.

An intelligent use of the knowledge acquired during the course will enable the students to move with more intellectual freedom in their professional field. In particular, the historical knowledge of facts and thoughts will allow them to design new tools with more awareness thanks to the ability to formulate hypotheses with greater accuracy and to interpret the present situation with greater awareness of its logical and historical assumptions. At the end of the course, students will be able to give perspective depth to their technical knowledge, since they will be able to relate them both to their historical origin and to their current trends.

The oral examination (plus an optional written essay for attending students) will also be an opportunity for them to practice in what was once known as the rhetorical art of composing speeches, now better known as communication skills.

• Face-to-face lectures
• Online lectures
• Guest speaker's talks (in class or in distance)
• Case studies /Incidents (traditional, online)
• Individual assignments
• Group assignments

• Online lectures: delivered by one of the instructors who will be based in London during the term
• Guest speaker’s talks (in class or in distance): leading experts in European macroeconomics and global asset management
• Case studies /Incidents (traditional, online): specifically in the third part of the course concerning monetary and financial innovations
• Individual assignments/Group assignments: short essay for attending students on topics discussed with the instructors

The oral exam consists in a talk of around 20 minutes revolving around the topics of the teaching materials and lectures, aimed at assessing the ability of the students to accurately present and critically discuss the main turning points in the history and theory of finance.

Attending students have the option to write a short essay, either individually or in small groups of 2-3 people, after having defined a research question and a set of initial references with one of the instructors. For students who take this option, the oral exam will revolve only around part II of the textbook (History) and the oral exam and the essay will both weigh 50% in the final grade.

The oral exam consists in a talk of around 20 minutes revolving around the topics of the teaching materials, aimed at assessing the ability of the students to accurately present and critically discuss the main turning points in the history and theory of finance.

• M. Amato and L. Fantacci, The End of Finance, Polity, 2012, parts I and II.
• Lecture notes.

• M. Amato and L. Fantacci, The End of Finance, Polity, 2012, parts I and II.
• Three papers from a list of readings that will be provided at the beginning of the course