Rethinking the Global Financial Crisis: Theoretical Perspectives from Heterodox Economics

Abstract

The global crisis appeared at the end of a period called great moderation when it was accepted that everything was going well. This study aims to reveal the role of institutional factors as well as the macroeconomic dynamics that were effective in the Financial Crisis of 2008. We present general description of the crisis, evaluations about the process that led to the crisis, the global spread, the degree of success of the struggle, and what needs to be done to prevent similar situations in the future. Based on the evaluations on the causes of the crises, it is inferred that the views on institutional failures, the effect of the financial innovations and liberalization process, and the systemic tendency of capitalism to a crisis are at the forefront. The explanations for the crisis, which was not on the agenda of mainstream economics, mainly came from the representatives of heterodox economics.