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2009 Abstracts Stage 3

The 2007-2009 Financial Crisis: Enlightenment Reason in the Financial Markets

Jacob Atkinson, 2009, Stage 3

Project Territory, Object and Aims: “We are in the midst of the worst financial crisis since the 1930s.” This is the opening statement from economist George Soros found in ‘The New Paradigm for Financial Markets’. Due to the importance of this event I decided to study the 2007-2009 Financial Crisis within the Territory of Economics with the aim of diagnosing its causes. The object contains many smaller fields which have contributed to its emergence such as the growth and collapse of the United States housing bubble and the collapse of Mortgage lenders and related businesses. House prices and the value of the FTSE 100 are depicted below. Quantitative Economic versus Qualitative Hermeneutical Analysis: I discovered the causes of the crisis by collecting quantitative economic data to understand the preceding events. Initial analysis led me to the conclusion that the financial crisis was caused by poor lending policies of mortgages that could not be repaid. To contrast this research and fully engage with my object I then collected Qualitative evidence from economist George Soros and philosophical data from my chosen field of Critical theory. Specifically I used the works of Theodor Adorno and Jürgen Habermas regarding types of reason born in the Enlightenment era. After collecting this research I was led to a deeper, more fundamental finding stating that: the financial crisis was in fact caused by the use of Instrumental and Subject Centred Reason within the financial markets leading to the use of Identity Thinking. With the actual philosophical causes of the crisis identified I then investigated Adorno and Habermas’ solutions to those types of derogatory reason. These solutions are: Communicative Action and Negative Dialectics. I then applied these as a solution to the financial crisis itself.

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