Wait…Do we even know what the financial markets are?

Alison Malisa
7 min readMar 3, 2022


Learning about refi with the axolotl

The following is the first attempt to condense and distill The End of Finance, by Massimo Amato and Luca Fantacci, chapter by chapter. As innovations and actions accelerate around decentralized and regenerative finance, understanding what finance is and how, immersed in it, our thinking may have been clouded, it is a critical time to make this brilliant book more available to students, thinkers, policymakers, and designers in this space. This first chapter invites the question- Do we actually know what the financial markets are? Direct quotes are in bold type.

Part 1- Phenomenology

Chapter 1- Do we know what the financial markets are?

For years, as financial markets grew, their popularity and their liberalization also grew. Any critique of a system that was boasting booming growth was met with the scorn for being simply outdated or complete failures.

When the 2008 financial crisis happened, it created an opportunity to pause and consider the unquestioned merits of financial growth. But, did we? Do we now or did we ever even know what the financial markets are? To what extent did the crisis help us to understand them better? Are we now better able to explain terms like finance and financial markets?

The devastating effects of finance on the planet has dovetailed with new tools for reinvention. Yet, the main principles and purpose of finance continue, unchanged and virtually unexamined.

Let’s not miss this opportunity.

The predominant attitudes towards the unfolding 2008 financial crisis can help explain why finance has remained immune to critical inquiry. The first step was denial. People called it, “a temporary setback” or a “technical adjustment”. It is a common public policy strategy to maintain trust in the financial system with assurances of its strength, projected growth, and fundamental rightness of design. Downturns were dismissed as an inevitable part of the business cycle, the usual unpredictable ups and downs of a free market economy that is simply responding to the natural forces of life.

The crisis was interpreted as a cyclical phenomenon that was bound to pass, and, above all, as nothing so serious as to call for any rethinking of the ruling model. The crisis was simply the price to be paid for prosperity. Some people prospered, while everyone else, including life itself, paid.

When the Black October of 2008 hit, suddenly everyone had known all along that the system was untenable. Yet few authorities had warned about the danger of a financial trajectory that justified global trust solely on the basis of its apparent capacity for indefinite self-perpetuation.

This is not surprising in our media-dominated society, where information is removed from mechanisms of production. Instead, public opinion is moulded by speculation. Thus, an article of faith can become an object of ridicule overnight… And swings in opinion can suddenly swing back.

When bank bailouts began in autumn, those who months earlier were warning of the dark side of finance, were glimpsing ‘signs of recovery’ or, more prudently, ‘signs that the collapse is slowing down’ by spring. Media focus immediately returned to optimism as an imperative to stabilization, and the opportunity for inquiry was again left to the heretics.

For just a few chilly and brief months, we went from applauding ‘financial innovation’ to lamenting the more traditional and sinister ‘speculation’. Unswerving faith in the ‘evident’ capacity for self-regulation of the ‘market’ had given way to an equally ‘evident’ need for regulation. It was, we were told, necessary to curb speculation, to restrict the endeavours of the financial system to ‘make money out of money’.

That didn’t last. By spring, voices of reassurance dominated and pacified. It was just a question of waiting for the negative trend to reverse, possibly with the ‘help’ of some public buffering and further financial innovation (from derivatives to crypto). There was nothing fundamental to be reformed. The Anglo-Saxon system of capitalism based on financial markets was in any case the best, and therefore not to be relinquished.

Perhaps, it was admitted, we could revisit the rules and regulations, but it was immediately added that there was no need to clamp the innovative potential of finance in the straitjacket of public control. (The same arguments that led to deregulation and to the crash in the first place.)

But can we know the fundamentals of finance in order to discern rhetoric from reality?

We have been so busy taking sides that we have forgotten to ask ourselves what it actually is that we are for or against.

Regardless of whether it proves to be definitive or temporary, the crisis is not in fact only a setback. It is also an opportunity to ask ourselves, whether we really know what we are talking about when we talk about markets and finance, and hence also about financial markets.

If we are to understand its innermost nature and hence also its rationale, we must instead know how to see, and above all where to look.

We need a phenomenology of finance precisely because its underlying features tend not to manifest themselves. Economic discourse is so caught up debating for or against present day dogma, we fail to recognize that either way, we are still swimming in the dogma.

The idea of financial deregulation has become popular because the idea of regulation has become so hazy.

So the very idea of capitalism continues to be misunderstood dogma. So much so its supporters boast it is, “the worst way of organizing the allocation of financial resources, except for the available alternatives.” (Eichengreen) This, of course, echoing the famous words attributed to Winston Churchill: “Democracy is the worst form of government except for all those other forms that have been tried.”

So it appear as the last word has been said on both governance and economics. While perhaps not perfect, the dogmatic conclusion remains that there is no better alternative to democracy and capitalism.

Of course, in regard to Churchill’s words about democracy, he was speaking in the middle of a lethal fight for hegemony between fascism, communism and the nascent mass democracy.

Yet, If there is one thing for which fanatical support makes no sense, it is precisely democracy, which exists through criticism.

A democracy that justifies itself simply on the grounds that there are no known alternatives is already on the point of turning into something unnamed and dangerous.

A somewhat Darwinian conclusion that we had come to “the end of history” by evolving to the imperfect yet optimal systems of democracy and capitalism furthered the idea of these two as being the same. Democratization was therefore always accompanied by the rapid opening up of local markets to the flow of international capital.

Financial protectionism became associated with political protectionism, and dismissed as the strategy of a corrupt ruling class trying to defend against democratization. Opening the doors to financial markets was just as dogmatically seen as necessary to pave the way for democracy.

The evolution of society therefore became inextricably associated with financial deregulation.

Capitalism, defined by laissez-faire financial markets, was understood first and foremost as the primary means to make the world run better and more efficient. The following quote likely encompasses what you know to be why capitalism is the best:

Because of their role in financing new ideas, financial markets keep alive the process of ‘creative destruction’ — whereby old ideas and organizations are constantly challenged and replaced by new, better ones. Without vibrant, innovative financial markets, economies would invariably ossify and decline. (2004)

In order to see the dogma inherent within the thinking, we must examine it point by point.

The ‘system’ is above attack in principle by virtue of being irreplaceable in fact. The opposite inference also holds, however: the system is irreplaceable in fact as long as it appears to be above attack in principle. In other words, it is the best because it exists. The real is rational.

Further, due to the self-correcting nature of the free market, the free market is the only way to rationally evolve toward an ever-better reality. Turning a blind eye to any other structural design mechanism, the capitalist system is like ‘architecture with no architect’. Blinded by dogma, the only essential factor of capitalism is the movement of markets, which creates the life force of the economy. With no constructive rule, there is no regulative rule. Regulation is deregulation in this system.

We understand capitalism as if it were guided by natural laws and the natural forces of evolution, ‘The international monetary and financial system has evolved incrementally from the gold standard to the gold-exchange standard, to the Bretton Woods gold-dollar system, and now to the post-Bretton Woods “nonsystem”.’

Taking such an evolutionary perspective on financial markets, nothing is to be done about the recurring crises. If they happen, they are an unavoidable aspect of creative destruction.

With no specific rule set and no specific purpose, the economy has no inherent alarm system to go off when it is not working.

Even if a crises were to be embraced as a reason for reform or regulation, what those would be remains unknown. And what measures would be applied to know whether the new rule set is functioning? How will we know if the rules are adequate if we don’t know what should be regulated?

If we don’t know the end goal of finance, how will we determine whether or not it is getting us there?



Alison Malisa

EconoWitch||Stirring the pot of Economics Education & Research 4 Peace, Prosperity, Regeneration, and Wellbeing for All. Prosocial||Nature||Salutogenesis