Elie Cohen. 408 pages. Publisher: Fayard (October 12 2005)
There is an enigma of contemporary capitalism. How to explain that the biggest stock market crash that we have known since 1929, the bursting of the Internet bubble, did not have any of the usual effects on the general economy? Why did the fraudulent bankruptcies of Enron and Worldcom not slow down the spread of American-style financial capitalism on a planetary scale? To understand the new logics at work, Elie Cohen chose to analyze the rise and fall of two emblematic companies of the 1990s: Enron and Vivendi. Far from engaging the sole responsibility of their impetuous promoters, these two failures reveal, more deeply, the role of financial markets in determining industrial strategies. Extremely reactive, market finance reduces risks by diffusing them and aggravates them by promoting speculation. This book analyzes the formation of market myths, speculative bubbles, management methods, it describes the world of players in this risk industry (analysts, auditors, valuers) and reports on a system where collective error is preferred to breaking consensus. How to regulate financial markets without hampering the capacity for innovation? How to prevent arbitration between regulations in the new age of capitalism? These are the problems facing our governments and the major international financial institutions, questions to which Elie Cohen answers with clarity and brilliance.
Elie Cohen is an economist, research director at the CNRS and at the National Foundation for Political Science. He is notably the author of “high tech” Colbertism (1992), La Tentation hexagonale (1996) and L'Ordre économique mondial (2001).