About Crises, Competiveness and Globalization

Abstract

The present edition of the Journal of Organisational Transformation and Social Change features an eclectic mix of articles dealing with topical issues: the causes of financial crises, concerns about economic integration, globalisation misgivings and expectations. Two of the five articles involve quantitative analysis while the others are based on literature review. The article by Tucker focuses on the pivotal role of complacency in the financial crises over the last two decades. The main argument is that long periods of economic stability lead to complacency in both investors and institutions. This means complacency in analysing investment decisions, herding behaviour and lax regulative practices. His take on complacency contributes to the discussion of biases generated by long periods of stability like Andrew Haldane’s ‘disaster myopia’ which makes economic agents underestimate the probability of negative outcomes. Self-assurance and myopia compound financial markets problems and contagion. Tucker argues that, in this context, events leading to the crises always appear to be unique and the crises appear impossible to prevent. However, unlike Mandelbrot’s (2008) ‘wild randomness’ and Taleb’s (2007) ‘black swan’ arguments, Tucker maintains that there are warning signs foretelling the impeding crises, identifiable transmission mechanisms of the crisis and, thus, also lessons to be learned. While it is easy to argue that, in hindsight, symptoms leading to the crisis are evident and explainable (what Taleb calls ‘retrospective distortion’) Tucker makes a compelling argument for addressing the complacency and try to enhance the awareness and level of education and