In many Western capitalist economies, private indebtedness is pervasive, but it has received little attention from political philosophers. Economic theory emphasizes the liberating potential of debt contracts, but its picture is based on assumptions that do not always hold, especially when there is a background of structural injustice. Private debt contracts are likely to miss their liberating potential if there is deception or lack of information, if there is insufficient access to (regular forms of) credit, or if credit (...) is overly expensive. Markets for private debt can be mechanisms of structural injustice: rather than playing a neutral role, they reinforce injustices, because the failures of debt to be liberating disproportionately hit individuals in disadvantaged positions. By individualizing what are in fact structural problems, private debt can contribute to stigmatization, social exclusion and oppression. What is at stake, from a perspective of structural justice, is not only the distribution of income, but also the distribution of risk. The problems of private debt markets therefore require political attention. In addition to fighting the structural injustices that form the background condititions of private debt, it is also worth addressing private debt markets themselves. (shrink)

Using data from China’s public debt markets, we study the value of corporate reputation and how it interacts with legal and cultural forces to assure accountability. Exploring lawsuits that change corporate reputation, we find that firms involved in lawsuits experience a decrease in bond values and a tightening of borrowing terms. Using the heterogeneities in legal and social capital environments across Chinese provinces, we find the effects are more pronounced for private firms, firms headquartered in provinces with low (...) legal protections, and firms headquartered in provinces with high social capital. The results show that lawsuits that allege misconduct are associated with reputational penalties and that such penalties serve as substitutes for legal protections and as complements to cultural forces to provide ex post accountability and motivate ex ante trust. (shrink)

The government debt portfolio is usually the largest financial portfolio in the country. It often contains complex and risky financial structures and can generate significant risk to the state budget and the country’s financial stability. Therefore, governments are required to have sound risk management and sound public debt structures to limit exposure to market risk, debt financing or rolling risk, liquidity risk, credit, settlement and operational risk. In recent years, the debt market crises have highlighted the (...) importance of sound public debt management practices and related risks, and the need for an effective and well-developed domestic capital market. This may reduce the vulnerability of the economy to adverse economic and financial shocks. However, it is also important for the government to maintain a macroeconomic policy that ensures sound fiscal and monetary management. The aim of the research is to present the theoretical and practical aspects of extremely important issues such as public debt management and to indicate the most important implications for the financial stability of the country on the example of the Polish economy. The study uses a research method based on literature studies in the field of macroeconomics, economic policy and finance, as well as statistical analysis of the studied phenomenon. Results of research indicate that effective public debt management can reduce the economy’s vulnerability to financial threats, contribute to the financial stability of the country, maintain debt stability and protect the government’s reputation among investors. (shrink)

The article provides a moral analysis of the commercial trade of financial claims against private debtors. Secondary debt markets process a type of object that differs from regular commodities. The specificity of debt lies in its peculiar relationality that is in tension with its legal constitution as a commercial object, or with its treatment as a mere thing. The constitution of a credit claim presupposes a corresponding financial liability. Thus, debt relations are constituted by polar correlates (...) of deontic modalities. Debt buyers do not obtain mere monadic objects, but intersubjective rights of action against debtors. In turn, they arguably do not become mere owners of abstract claims, but successors to a position in a preceding social relation that is imbued with moral limitations and responsibilities. Markets for debt should thus be subjected to the deontic logic of credit relations, not to the norms of ownership in things. (shrink)

contents -/- i. death and the mask ii. shifts in the TTC ad-space iii. a virus in a superposition iv. this virus has totally hacked us v. a test of Bayesian competence vi. a siege on the Local, by the Global vii. re lab-leak theory: God did it viii. we held ourselves apart by this telescope ix. Google knows we'll all be dead x. Uber gets us all to surveil xi. Netflix pretends to be my friend xii. can teleCOMM map (...) my interior? xiii. Library's a hi-rise, in lockdown xiv. so could the A.I. announce itself xv. N_BossTRON, Surveillance Daemon xvi. prediction markets make War Profiteers xvii. hide Fish in sea, Bird in forest xviii. the DJ and the human, too much credit xix. dumb TV, an ingenious production xx. WE THE NORTH xxi. Debt: The First 5,000 Years xxii. Theses on Kingship xxiii. when i google Zeus xxiv. your Hardcore History xxv. consumerism a pacification campaign xxvi. fascism is quiet now xxvii. a Chomsky need keep record. (shrink)

This article traces John Rawls’s debt to Frank Knight’s critique of the ‘just deserts’ rationale for laissez-faire in order to defend justice as fairness against some prominent contemporary criticisms, but also to argue that desert can find a place within a Rawlsian theory of justice when desert is grounded in reciprocity. The first lesson Rawls took from Knight was that inheritance of talent and wealth are on a moral par. Knight highlighted the inconsistency of objecting to the inheritance of (...) wealth while taking for granted the legitimacy of unequal reward based on differential productive capacity. Rawls agreed that there was an inconsistency, but claimed that it should be resolved by rejecting both kinds of inequality, except to the extent they benefitted the worst off. The second lesson Rawls learned from Knight was that the size of one’s marginal product depends on supply and demand, which depend on institutional decisions that cannot themselves be made on the basis of the principle of rewarding marginal productivity. The article claims that this argument about background justice overstates its conclusion, because the dependence of contribution on institutional setup is not total. Proposals for an unconditional basic income may therefore have a strike against them, as far as a reciprocity-based conception of desert is concerned. If we follow Knight’s analysis of the competitive system, however, so too does the alternative of leaving determination of income up to the market. (shrink)

In this article, we extend the streams of research on the capital structure of socially responsible firms by investigating the impact of corporate social responsibility on firm debt maturity. Using a large sample of US firms, we provide evidence that high CSR firms significantly reduce their debt maturity. In particular, our results suggest that diversity and community are the dimensions that matter the most in explaining debt maturity. In additional analyses that use a seemingly unrelated regression approach, (...) our results show that CSR decreases the extent to which investments are financed with long-term debt and increases the extent to which investments are financed with short-term debt and shareholders’ equity. Overall, these findings support the view that high CSR firms use debt maturity to manage CSR overinvestment problems and to signal their high quality and their access to the debt market. (shrink)

Interest in credit ratings agencies and their role in financial markets is at an all-time high. Concerns about a lack of transparency concerning process, conflicts of interest, and limited competition are frequently discussed by politicians, regulators and other commentators. These issues we term the credit ratings agency trinity of solicitude. We shed some light on this trinity by considering the unique relationship that exists between corporate borrowers and the CRAs they engage to rate their securities. The exchange relationships literature (...) is used to create a model where commitment plays a central role. Technical qualities, relationship qualities and dependence are theorised as antecedents of commitment, which is described by two constructs of affective commitment and calculative commitment. The issuer’s intention to remain with the CRA, their loyalty, is the consequence of commitment. The model is operationalized by means of a survey questionnaire administered to issuers of corporate debt in the United Kingdom. As expected, perceptions of the quality of the relationship and affective commitment play an important role in CRA-issuer relations. However, contrary to expectations, the technical quality of the rating and issuer dependence on the CRA play little role in determining commitment and continuance. The implications of these findings are discussed along with areas for future research. (shrink)

For many young Americans, access to credit has become critical to completing a college education and embarking on a successful career path. Young people increasingly face the trade-off of taking on debt to complete college or foregoing college and taking their chances in the labor market without a college degree. These trade-offs are gendered by differences in college preparation and support and by the different labor market opportunities women and men face that affect the value of a college degree (...) and future difficulties they may face in repaying college debt. We examine these new realities by studying gender differences in the role of debt in the pivotal event of graduating from college using the 1997 cohort of the National Longitudinal Survey of Youth. In this article, we find that women and men both experience slowing and even diminishing probabilities of graduating when carrying high levels of debt, but that men drop out at lower levels of debt than do women. We conclude by theorizing that high levels of debt are one of the mechanisms that sort women and men into different positions in the social stratification system. (shrink)

Resumen: Las finanzas pueden servir a los derechos sociales en una economía de mercado, porque en ella están subordinadas a la economía real, y tienen carácter limitado, pero no en el capitalismo porque en él las finanzas son autorreferenciales, no tienen término, y conducen a una sociedad indefinidamente endeudada, en la que las deudas son impagables. Abstract: Finance can be useful for social rights in a market economy. This is due to the fact of the subordination of finance to real (...) economy and due to its limited character. In contrast, finance in a capitalist economy is self-referential, are boundless and lead to a society in which debts are unpayable. (shrink)

Because of the way that the international lending system works, poor nations have been forced to repay sovereign debts without having a moral obligation to do so. Suppose a corrupt public official borrows money from an international agency, or from private investors, and later on embezzles this money, or uses it to oppress the population. Suppose, further, that the lender is aware of the potential of this situation and still lends. Typically, the international community considers that successor governments have the (...) obligation to repay the funds and the interests associated to them. In fact, this is what they usually end up doing. Public officials are all aware that if they do not honour sovereign debts, they will face all kinds of negative consequences, including exclusion from future markets, loss of reputation and legal sanctions. Owing to this mechanism, entire generations have been burdened with debts fraudulently incurred in their name by governments in the past. These kinds of debts have been known in the legal literature as ‘odious’.In this article, I discuss the conditions defining the bindingness of a debt. I suggest that they can be made explicit by looking at the rules under which the lending system works at the domestic level, and by then extending these rules to the international domain. I argue that, because of their plausibility, these are the rules that should govern international lending from now on. I also discuss the feasibility of extending these rules globally, and consider potential objections to my proposal. (shrink)

We seek insights into potential benefits for firms adopting strategies to improve business sustainability in a carbon-constrained future. We investigate whether lenders incorporate a firm’s exposure to carbon-related risk into lending decisions through the cost of financing, and if so, importantly whether firms can mitigate the penalty by demonstrating an awareness of their carbon risks. We use a sample of 255 firm-year observations from eight industries over the period 2009–2013. We measure carbon-related risk exposure as the firm’s historical carbon emissions (...) and our primary measure of carbon risk awareness is based on the firm’s willingness to respond to the Carbon Disclosure Project survey. We document a positive association between cost of debt and carbon risk for firms failing to respond to the CDP. Further, this association is economically meaningful, with a one standard deviation increase in carbon risk mapping into between a 38 and 62 basis point increase in the cost of debt. Equally, we find that this penalty is effectively negated for firms exhibiting carbon risk awareness. Our results are robust when we consider alternate measures of carbon awareness—disclosure through alternative medium to the CDP and firms’ annual cash investment in new capital assets using “cleaner” technology. Our results highlight not only the importance of carbon awareness as a business strategy for polluting firms, but also its importance to lenders exposed to their clients’ default and reputational risk. The debt market appears to incorporate historical carbon emissions and forward-looking indicators of carbon performance. (shrink)

Vietnam has seen fast-rising debts, both domestic and external, in recent years. This paperreviews the literature on credit market in Vietnam, providing an up-to-date take on the domesticlending and borrowing landscape. The study highlights the strong demand for credit in both therural and urban areas, the ubiquity of informal lenders, the recent popularity of consumer financecompanies, as well as the government’s attempts to rein in its swelling public debt. Given thehigh level of borrowing, which is fueled by consumerism and (...) geopolitics, it is inevitable that theamount of debt will soon be higher than the saving of the borrowers. Unlike the conventional wisdom that creditors have more bargaining power over the borrowers, we suggest that—albeitlacking a quantitative estimation—when the debts pile up so high that the borrowers could not repay, the power dynamics may reverse. In this new politics of debt, the lenders fear to lose the money's worth and continue to lend and feed the insolvent debtors. The result is a toxic lending/borrowing market and profound lessons, from which the developing world could learn. (shrink)

Recent scholarship has underscored the possibility that capital-adequacy regulations may have contributed to the 2008 financial crisis by privileging highly rated asset-backed securities, such as mortgage-backed securities. The same regulations gave an even more privileged position to sovereign debt, leading to the question of whether they helped cause the European sovereign-debt crisis. There is little question that the regulations encouraged European banks to invest in European governments' bonds, but it does not appear that this encouragement led to more (...) government borrowing by significantly reducing the yield governments needed to pay on their debt. However, it does appear that capital-adequacy regulations—along with post-2008 liquidity regulations—concentrated sovereign risk in the European banking system, aggravating the sovereign-debt problem by requiring government bailouts that, in turn, required the issuance of more sovereign debt, further jeopardizing the governments' fiscal position and banks' solvency. Exacerbating the situation, in the midst of a panic, the European Banking Authority imposed new capital requirements on banks and effectively forced them to realize mark-to-market losses on sovereign exposures. (shrink)

Whether corporate strategic Environmental, Social, and Governance (ESG) disclosure can be effectively screened by external markets still needs more empirical support. Despite numerous studies confirming the positive impact of ESG, the issue of strategic ESG disclosure has yet to receive sufficient attention. This study examines the impact of ESG greenwashing on the cost of debt financing and stock returns using panel data of Chinese A-share listed corporates from 2012 to 2021. The study finds that external markets fail (...) to recognize ESG greenwashing in the short term, leading to a temporary reduction in the cost of debt financing and an increase in stock returns, but these effects are not lasting. Mechanism analysis shows that ESG greenwashing enhances corporate reputation and reduces the cost of debt financing through the reputation effect, stimulates investor sentiment, and improves stock returns through the sentiment effect. The study identifies management myopia, excessive power, financial distress, and information asymmetry as the main drivers. However, strong oversight by independent directors, involvement of Big Four audit firms, investor site visits, and high industry competition can mitigate these misleading effects. This research expands the understanding of the causes and economic consequences of corporate ESG greenwashing and provides empirical evidence for managing this phenomenon. (shrink)

Focusing on Greece, this essay aims to contribute to a philosophical understanding of Europe’s current financial crisis and, more generally, of the aporetic implications of the modern determination of freedom as such. One the one hand, I draw on Hegel’s Philosophy of Right in order to argue that modernity entails a potential conflict between a market economy and a state that is supposed to further the interests of the society as a whole. On the other hand, I draw on Sophocles’ (...) Oedipus the King as well as on Hegel’s account of tragedy in the Phenomenology of Spirit to reinterpret the conflict between the spheres of civil society and the state as a tragic conflict. Modernity threatens to undermine itself from within, I maintain, because the simultaneous development of capitalism and democracy makes it very hard to prevent the sphere of particular interests from encroaching upon the sphere of politics. (shrink)

Corporate bond appeared in 1992-1994 in Vietnamese capital markets. However, it is still not popular to both business sectors and academic circles. This paper explores different dimensions of Vietnamese corporate bond market using a unique and perhaps, most complete data set. State not only intervenes in the bond markets with its powerful budget and policies but also competes directly with enterprises. The dominance of state-owned enterprises and large corporations also prevents small and medium enterprises from this debt (...) financing vehicle. Whenever a convertible term is available, bondholders are more willing to accept lower fixed income payoff. But they would not likely stick to it. On the one hand, prospective bondholders could value the holdings of equity when realized favourably ex ante. On the other hand, the applicable coupon rate for such bonds could turn out negative inflation-adjusted payoff when tight monetary policy is exercised and the corresponding equity holding turns out valueless, ex post. Given the weak primary market and virtually non-existent secondary market, the corporate bond market in Vietnam reflects our perception of the relationship-based and rent-seeking behaviour in the financial markets. For the corporate bonds to really work, they critically need a higher level of liquidity to become truly tradeable financial assets. Updated entries in 2010 affirm the findings and conclusions. (shrink)

Market crises amplify fear, disrupting rational decision-making of stock investment. This study examines the relationship between investors’ information priorities—such as intuition, company performance, technical analysis, and other factors—and their fear responses (freeze, flight, and hiding) during market crashes. Using the Bayesian Mindsponge Framework (BMF) to analyze data from 1,526 investors in China and Vietnam, the findings reveal complex dynamics. We found positive associations between investors’ prioritization of social influence and intuition for investment decision-making with being freeze (i.e., not knowing what (...) to do with the owned stock), between prioritization of professionals’ evaluation and intuition with fleeing (i.e. giving up stock investment permanently), and between prioritization of professionals’ evaluation and social influence with hiding (i.e., stopping investing in stock for a while). In contrast, prioritization of companies’ performance metrics (e.g., net profit, debt, etc.) was negatively associated with being freeze, fleeing, and hiding. Meanwhile, prioritization of professionals’ evaluation, technical analysis, and liquidity was negatively associated with being freeze, fleeing, and hiding, respectively. The study highlights the importance of disseminating transparent, accurate information through government and media channels, along with implementing financial education programs, to promote rational investment decisions and reduce fear-driven behaviors. (shrink)

L’objet de la présente recherche est d’interroger les mérites de la théorie utilitariste relative aux faillites personnelles, qui est dominante dans la littérature juridique depuis que le courant Law and Economics a gagné en importance. Nous démontrons que l’argumentation utilitariste, qui est assignée aux doctrines de l’acquittement des dettes personnelles par les spécialistes de Law and Economics travaillant dans le domaine du droit des faillites, soulève des questions normatives de taille et créée des tensions quand il s’agit de décrire le (...) phénomène. Ces deux problèmes invitent les théoriciens à proposer des modèles alternatifs pour décrire les conditions dans lesquelles nos systèmes juridiques soulagent les dettes des individus qui ne sont pas en mesure de les honorer. Dans notre ouvrage à paraître, The Virtue of Bankruptcy, nous embrassons ce projet. Ici, nous proposons une étape préliminaire à ce projet plus ambitieux en démontrant que les théories utilitaristes sur lesquelles s’appuient les contributions les plus importantes de la littérature sur la question à ce jour sont perfectibles lorsqu’il s’agit de comprendre les raisons et les circonstances dans lesquelles il est possible d’offrir un nouveau départ à ceux qui n’ont pas respecté leurs obligations financières. (shrink)

Corporate debt default risk poses significant challenges in the business world, requiring a multifaceted approach for effective mitigation. This study, grounded in an ethical decision-making framework, investigates the influence of Confucian culture on shaping ethical corporate culture and managers’ moral capacity and its subsequent impact on corporate debt default risk. Our findings indicate that companies deeply influenced by Confucian culture tend to exhibit lower debt default risks. Specifically, companies that embrace Confucian values demonstrate an enhanced ethical corporate (...) culture and heightened individual moral capacity. These factors play crucial roles in the ethical decision-making process, thereby reducing the likelihood of engaging in risky financial behaviors. Further analysis reveals that the inhibitory effect of Confucian culture on debt default risk is particularly pronounced in enterprises operating within regions characterized by poor integrity environments and weak product market competition. This inhibitory effect can lead to a reduction in the cost of corporate debt financing and the risk of stock price crashes. Overall, this study contributes to the understanding of the interplay between culture, business ethics, and corporate risk management. (shrink)

This Article explores the relationship between consumer credit markets and bankruptcy policy. In general, I argue that the causative relationships running between borrowing and bankruptcy compel a new strategy for policing the conduct of lenders and borrowers in modern consumer credit markets. The strategy must be sensitive to the role of the credit card in lending markets and must recognize that both issuers and cardholders are well placed to respond to the increased levels of spending and indebtedness. (...) In the latter parts of the Article, I recommend mandatory minimum payment requirements, a tax on distressed credit card debt, and the subordination of payments to credit card lenders in bankruptcy. I also argue that many aspects of the American bankruptcy system, as recently reformed, are overly protective of credit card issuers. (shrink)

The study aims to explore the role of gender diversity in debt financing choices among Chinese listed firms. The study used the Chinese listed firm's data from 1991 to 2022 from the Chinese Stock Market return. The study used the fixed effect regression analysis and revealed that gender diversity positively affects debt financing among Chinese firms. Additionally, mass theory results suggested that at least three females on the board significantly influence firms. It served as the voice of gender (...) diversity to influence the board's decisions regarding debt financing. The study has several theoretical and practical implications. This study will enlighten the Chinese boardroom dynamics by reassuring them to add more females to diversity policies. It will benefit future studies on boardroom activities and debt financing in emerging economies. It will be practical guidance for the Chinese policymakers, governing authorities, and corporate executives. The study stresses the need for significant diversity on the board rather than one female presence on the board. Secondly, this study contradicts the stereotype perception that females are not making risky decisions. (shrink)

The paper addresses some similarities and differences in the institutional set-up of the classical gold standard and European Monetary Union. I argue that giving up monetary nationalism and committing to the rules of either the gold standard or EMU initially seemed to restrict the scope of state action. Therefore, the euro – like previously the gold standard – provided some policy credibility. Policy credibility was a main determinant of capital market integration and low government borrowing costs in Europe under both (...) systems. However, I shall emphasize that the membership in the gold or euro club itself did not force reforms and spending cuts upon countries that faced crisis and debt problems. The article suggests that the institutional set-ups of the gold standard and EMU determined the degree of commitment to them and the way in which countries reacted to deal with debt problems. (shrink)

Producing a properly philosophical theory of capitalism as an open axiomatic system requires adding intensive multiplicities to the mathematical account of set theory, which allows only extensive multiplicities. Doing so enables us to understand pricing as a process of transforming intensive quantities into metric quantities, and thereby develop a diagram of the dynamics of axiomatisation and of the market as the two-sided and asymmetrical recording surface of the capitalist socius whose slope represents the infinite debt owed to finance capital. (...) The capitalist market axiomatises four kinds of flows – flows of liquid capital and abstract labour, of course, but also flows of raw materials and energy and of human populations. At the same time that axiomatisation conjugates these flows in denumerable sets to extract surplus-value, it connects flows in minor, non-denumerable sets that escape axiomatisation and may become revolutionary. Such minor connections would constitute the fabric of a post-capitalist axiomatics. (shrink)

In the wake of successive crises, novel politics and ethics are emerging around attempts to institute a ‘new’ world of finance in the name of social relations. Financial start-ups and development organizations, often working alongside established financial institutions, are experimenting with the ‘social’ in order to create markets and scale up their activities. At the same time, people continue to advance social claims in finance out of concern for others. This article examines the rise, politics and ethics of this (...) experimentation in what we call ‘relational finance’. Our argument is that by rendering the social dimensions of finance explicit, contemporary relational finance makes sociality available for marketization and politicization. We illustrate this claim with three examples of mobilizations of the social in everyday lending and borrowing: social collateral, social lending and social debt. Relational finance, we conclude, is far from an unproblematic ‘alternative’ but retains ethical and political potential. (shrink)

This study examines whether penalties issued to Chinese listed companies by securities regulators for violations of corporate law affect the cost of debt, and the moderating role of corporate social responsibility fulfillment on this relationship. Our sample consists of firms listed on Shanghai and Shenzhen stock exchanges from 2011 to 2017 and the data are collected from the announcements of China Securities Regulatory Commission. The findings are as follows: punishment announcements by regulatory authorities increase the cost of debt; (...) and the effect of punishment announcements on the cost of debt is partially offset by prior CSR performance. These findings are shown to be robust. The reputation insurance effect of CSR is more pronounced in state-owned enterprises and in an institutional environment with low marketization, a weak legal environment, and low information transparency. The findings support the reputation insurance hypothesis of CSR and employ the cost of debt as a governance mechanism. (shrink)

In this paper, I show that Polleit and Mariano (2011) are right in concluding that Credit Default Swaps (CDS) are per se unobjectionable from Rothbard’s libertarian perspective on property rights and contract theory, but that they fail to derive this conclusion properly. I therefore outline the proper explanation. In addition, though Polleit and Mariano are correct in pointing out that speculation with CDS can conceivably hurt the borrowers’ interests, they fail to grasp that this can be the case only in (...) some peculiar circumstances that I identify. In other words, they miss the bigger picture, the one outside special circumstances, in which CDS trading has the opposite effect. That is, CDS facilitate debt accumulation, including government debt accumulation. Finally, I point out how this can precipitate the collapse of fiat money regimes. An incidental goal of the analysis is to provide a better account than Polleit and Mariano of recent government interventions in and around CDS markets. (shrink)

In this paper we examine some of the economic and ethical consequences of different credit market regulations, including usury laws, complete prohibition of interest and providing ease to the borrower upon default. The references to these credit market regulations can be found in many religious and moral philosophy texts. We first examine the effectiveness of these regulations in deterring exploitative lending by developing a model that shows lending can be regulated through either act-based or harm-based regulations. We show that act-based (...) regulations which comprise usury laws and complete prohibition of interest deter lenders more than harm-based regulations which constitute bankruptcy laws. We then analyze that while the regulations may deter certain forms of lending behavior, they may also create certain externalities by contributing towards inequity and societal risk. We propose that a regulator’s choice of implementing credit market regulations maybe dependent on her ethical commitment towards growth and reduction of inequity. We suggest the usury laws are more ethical than bankruptcy laws; however, discouraging the use of debt contracts through prohibition of interest and encouraging the use of risk sharing contracts maybe the most ethical way to regulate the credit markets. (shrink)

Recent financial events, especially the subprime and the sovereign debts crises, have revived debate on debts, the necessity of debt repayment and the eventuality of debt cancellations. A milestone in this debate was reached by David Graeber’s Debt (Brooklyn: Melville House, 2011), but despite the richness of this essay, many normative questions remain unanswered. Should debt always be repaid? Who should repay it? Should government deficits be allowed or even encouraged? Alexander Douglas’ recent book aims to (...) provide an answer to all these questions. The main endeavour of the book lies in applied philosophy, that is in finding general principles able to answer such questions and to reconcile our possibly conflicting intuitions about debt and credit. However, the analysis is largely nourished by history, linguistics and economics, which makes the book highly original and multidisciplinary. The author’s general thesis is that. (shrink)

The present essay contends that progressive readings of Smith ignore the influence of theological concepts and religious ideas on his work, notably three distinct strands: first, seventeenth- and eighteenth-century natural theology; second, Jansenist Augustinianism; third, Stoic arguments of theodicy. Taken together, these theological elements help explain why Smith’s moral philosophy and political economy intensifies the secular early modern and Enlightenment idea that the Fall brought about ‘radical evil’ and a ‘fatherless world’ in need of permanent divine intervention. As such, Smith (...) views the market as divine regulation of human sinfulness and an instrument to serve God’s providential plan. Indeed, the ‘invisible hand of the market’ represents a nominalist realm where human cooperation intersects with divine providence, blending private self-interest with the public commonweal. I will also argue that Smith’s conception of a morally neutral market is ultimately incompatible with creedal Christianity, in particular orthodox catholic Christian ideas of the common good in which all can share and the practice of charity for those most in need who have been abandoned by state bureaucracy and the marketplace. The main reason is that Smith, not unlike Calvin, tends to divorce human contract from divine gift by dividing the theo-logic of gratuitous reciprocal giving from the economic logic of contract – a dualism that bears an uncanny resemblance with Suárez’s Baroque scholasticism of which Smith’s friend David Hume was rightly critical. In particular, the Reformation and Counter-Reformation theology of Calvin, Luther and Suárez sunders ‘pure nature’ from the supernatural and develops a ‘two ends’ account of human nature, according to which human beings have a natural end separate from their supernatural finality. So instead of participating in the divine oikonomia of asymmetrical gift-exchange, human society and the economy operate autonomously and are ordered towards a purely natural end. Smith conceptualises the market mechanism as both a fundamental precondition for interpersonal relationality and at the same time separate from the sociality it engenders. Smith’s anthropology hovers half-way between Machiavelli and Mandeville’s homo œconomicus in search for maximal profit, on the one hand, and the diametrically opposed conception of man as a gift-exchanging animal striving for mutual social recognition, on the other hand. By viewing market exchange as separate from the private virtues of benevolence, justice and prudence, he introduces a split between the exercise of moral virtues and the operation of commercial society. Such a divide is wholly foreign to the project of an overarching civil compact in the writings of Smith’s contemporary Antonio Genovesi and other members of the Italian schools of civic humanism and civil economy. In consequence, Smith’s œuvre marks a decisive shift from civil to political economy. (shrink)

This paper examines the epistemological arguments about markets and planning that emerged in a series of unpublished exchanges between Hayek and Neurath. The exchanges reveal problems for standard accounts of both the socialist calculation debates and logical empiricism. They also raise questions concerning the sources of ignorance and uncertainty in modern economies, and the role of market and non-market organisations in the distribution and coordination of limited knowledge, which remain relevant to contemporary debates in economics. Hayek had argued that (...) Neurath's work exemplified the errors of rationalism that underpinned the socialist project. In response Neurath highlighted assumptions about the limits of reason and predictability that the two theorists shared and attempted to turn those assumptions back against Hayek in a defence of the possibility of socialist planning. The paper critically compares Neurath's and Hayek's criticisms of rationalism and considers how far Neurath is successful in his attempt to employ Hayek's assumptions against Hayek himself. (Published Online April 18 2006) Footnotes1 I would like to thank the staff at the Vienna Circle Institute for their assistance in consulting their copy of the Neurath Nachlass. I owe a debt of gratitude to Thomas Uebel and David Archard for their comments on earlier versions of this paper. I would like to acknowledge the support of the Arts and Humanities Research Board and a Manchester University Hallsworth Fellowship in writing this paper. (shrink)

The question of whether corporate social responsibility (CSR) has a positive impact on firm value has been almost exclusively analysed from the perspective of the stock market. We have therefore investigated the relationship between the valuation of Euro corporate bonds and the standards of CSR of mainly European companies for the first time in this article. Generally, the debt market exhibits a considerable weight for corporate finance, for which reason creditors should basically play a significant role in the transmission (...) of CSR into the valuation of financial instruments. Given that socially responsible firms are often regarded as economically more successful and less risky, they should have lower risk premia. The results of the empirical analysis, however, reveal that based on an extensive data panel the risk premium for socially responsible firms – according to the classification by SAM Group – was ceterius paribus higher than for non-socially responsible companies. However, only one case of the models investigated was weakly significant. Thus, largely the relationship has to be classified as marginal; so CSR has apparently not yet been incorporated into the pricing of corporate bonds. (shrink)

This chapter argues for deregulation of the credit-rating market. Credit-rating agencies are supposed to contribute to the informational needs of investors trading bonds. They provide ratings of debt issued by corporations and governments, as well as of structured debt instruments (e.g. mortgage-backed securities). As many academics, regulators, and commentators have pointed out, the ratings of structured instruments turned out to be highly inaccurate, and, as a result, they have argued for tighter regulation of the industry. This chapter shows, (...) however, that the role of credit-rating agencies in achieving justice in finance is not as great as these commentators believe. It therefore argues instead for deregulation. Since the 1930s, lawgivers have unjustifiably elevated the rating agencies into official, legally binding sources of information concerning credit risk, thereby unjustifiably causing many institutional investors to outsource their epistemic responsibilities, that is, their responsibility to investigate credit risk themselves. (shrink)

This special section explores the intersection of social finance and financial innovation in contemporary technologies of relational finance. The articles that follow study detailed cases of contemporary experiments in payments, money and credit-debt relations. By way of introduction, in this short piece we outline three paradoxes at the heart of these experiments: the feudal life of capitalist financial innovation; the social life of supposedly asocial crypto-currencies; and the market life of relational financial dissent.

Numerous U.S. cities suffered immense fiscal strain following the subprime mortgage crisis and financial crash of 2007–8. Diminished revenues, tightened credit, and speculative financing that went bad in the aftermath fueled widespread fiscal distress on the local scale. Although the current moment resembles fiscal crises that crested in cities in the 1970s–90s, two factors distinguish the current period. First, municipal affairs have become thoroughly financialized—dominated by speculative securities and volatile debt arrangements—such that local crisis can no longer be understood (...) apart from financial market instability. Second, local fiscal politics have become increasingly removed from democratic oversight and control. This de-democratization hinders the capacity of political communities to reregulate markets and rebuild urban communities. An analytic model derived from the work of Hyman Minsky and Karl Polanyi emphasizes how cities become ensnared in a “financial instability” cycle and how communities seek to protect themselves by way of the “double movement.”. (shrink)

It is often assumed that conventional ethics will contribute positively to economics and business, but here, this judgment will be examined. The conventional ethics of our time is dominated by altruistic philosophy, which has deep roots in religion. Such an idealistic ‘altruistic ethics’ especially emphasizes helping the least advantaged. This principle is contrasted with a more profane ‘reciprocal ethics.’ This term is used for the principle of mutual advantage central to a number of significant philosophers. This latter principle is compatible (...) with the practical norms constituting the morals of the market, while the former implies major adjustment of behavior and policies. Many ethicists consider their field to be ‘applied ethics,’ bringing the concrete rules and practices of the economic sector closer to honored first principles of philosophy. Is it reasonable to expect an influence by the ideas of altruistic ethics to improve the morals and policies of the economy? The process of the Heavily Indebted Poor Countries (HIPC) Initiative of the United Nations illustrates a probably crucial connection with altruistic ethics. Is this project, supported by religiously inspired groups, a sound way to treat a serious global problem? The disadvantages of this project are discussed and alternatives with better potential are presented. The article suggests that altruistic ethics is a dubious foundation for constructive morality and that its dominance in contemporary philosophy constitutes a major obstacle to a more open-minded analysis and sound policies. (shrink)

We examine the influence of social capital in the municipal bond market. Defined as the norms and networks that encourage cooperation, social capital is a social construct which captures a region’s level of altruism, trustworthiness, and propensity to honor obligations. We expect that municipalities with high social capital are more trustworthy and likely to honor their debt obligations, which will result in lower bond yields. Our findings confirm that the bonds issued by municipalities located in high social capital counties (...) exhibit lower yields compared to the municipalities located in low social capital counties. Our findings are also supported by bond prices in the secondary market, which shows that bonds from the municipalities located in high social capital regions have higher prices. Additional tests reveal that the influence of social capital is stronger for general obligation bonds, suggesting that social capital matters more for bonds where the willingness of municipalities to pay taxes is an important factor. Lastly, we document that the bonds of municipalities in high social capital areas are less likely to have insurance, suggesting that social capital may act as a substitute for bond insurance. (shrink)

This book examines how legal systems and mechanisms give shape to the capitalist economic system. In this regard, it focuses on the most important of these systems, such as monetary and financial law, company law, fiscality, contract and labour law. Further, the book provides a thorough analysis of the underlying ethical values of said legal systems and mechanisms. It also gives an overview of several potentially devastating related effects, such as poverty, the increasing polarisation between rich and poor, climate change, (...) and mounting debts at both the public and private level. The book concludes by presenting proposals for change. Given its critical analysis of legal systems and mechanisms in connection with the value choices dictated by economic ideologies, the book will be of particular interest to legal and economic academics, researchers and students, but also to policymakers, and, more generally, to anyone with a genuine concern for how the socio-economic order will evolve. (shrink)

In this essay, digital hibridity stands for the perpetual availability of life as both labour and debt for capital, both in real life and online. At the heart of these reflections is the realization that the digital is a regime in which finance capital believes it is finally free from any dependency on social reproduction. With the move from value to price, from labor to debt, from revolution to disruption, and from avant-garde to speculation, the digital evolved as (...) the material of capital and the totality of the social has been replaced by the tidal liquidity of finance; immaterial labor, touching images on the screen, the rhizomatic panopticon of the Internet, shock-work on social media, and cryptocurrencies are all examples of the ways in which the digital and financial shadow each other. This new regime entails a series of conversions that change the ways in which meaning is organized—from the point of production to the point of realization, from strikes to riots, from working class to surplus populations, from solidarity to conspiracy, and from organization to petty sovereignty. (shrink)

Minsky proposed classifying firms in three categories: hedge finance units which borrow no more than they are able to service in interest and principal out of operating cash flows, speculative finance units which are overleveraged to the point where they can service interest on their debt out of operating cash flows, but cannot repay the principal, and thus must continually roll over their existing debt, and Ponzi finance units, whose operating cash flows are inadequate even to service interest (...) on their debt. In Minsky’s financial instability hypothesis protracted prosperity leads endogenously to firms overleveraging themselves and transforming a market dominated by hedge finance into one dominated by speculative and Ponzi finance. Since Ponzi finance units are forced to sell off assets to service their existing interest payments, once the market is sufficiently dominated by Ponzi finance units, this creates an oversupply of assets offered for sale, and the resulting debt deflation causes a financial crisis and drastic shortage of liquidity. It appears this crisis state can be brought about by a deceptively low critical mass of Ponzi and speculative finance units. This paper uses a large 2002–2009 quarterly data set of all publicly traded North American firms and foreign firms traded on North American exchanges, a total of 8,905 stocks. Financial ratios are used to classify these firms in each quarter according to Minsky’s FIH categories. Market value is used to weight the categories, and average betas are computed as measures of volatility. Results provide dramatic support for the FIH. The FIH is then reinterpreted in terms of Austrian business cycle theory, which depends on inflationary credit expansion to drive the unsustainable prosperity. According to Minsky’s FIH, unsustainable prosperity emerges endogenously as long periods of economic expansion make borrowers and lenders alike more willing to engage in investment activities for which they fail to see the inherent risk. It becomes clear that this process is amplified and exacerbated by credit expansion. Minsky’s FIH helps flesh out some of the missing dynamics of the malinvestment liquidation phase of ABC theory, and the two views turn out to be surprisingly complementary. (shrink)

Is it possible to really give a gift? This may, at first glance, seem like a peripheral question for philosophy, which normally directs its attention to seemingly bigger questions. The dynamics of the gift move into philosophy from anthropology and sociology, but Jacques Derrida insists that this question belongs at the heart of philosophy. This volume takes up Derrida's challenge to invest in the question of a gift, and the relationship between gift and economy. The powerful and corruptive forces of (...) economy can wreak havoc on every effort to give or receive a pure gift. Each of the essays investigates some aspect of the gift, and the way economics relate to the sheer hospitality and generosity implied in the idea of giving. Is there a blessed economy? Must economics always operate in a sinister and exploitive fashion? What can be learned by the philosophical investigations related to this concept? There is something about the event or idea of the gift that cannot be entirely explained by the machinations of economy. In the giving of a gift something happens, if only unpredictably and rarely, that cannot be explained by the calculus that tracks the exchange of money, property, goods, debt and power. This excess that confounds the reduction of the gift to the dynamics of power and exchange is a source of creative fascination for a wide range of philosophers, including the collection of scholars who have contributed to this book. (shrink)

This study revisits the relation between corporate performance and corporate social responsibility in the context of a major shift in firms’ credit risk status. Relying on corporate credit rating as a performance indicator, we examine whether firms under the scrutiny of rating agencies trade-off CSR engagement for credit quality improvement. To explore whether firms adjust their CSR engagement after a focal rating change, we focus on the investment–speculative grade threshold because of its importance in accessing the public debt market. (...) We find that firms that lose the investment grade rating subsequently increase CSR engagement. We also uncover that improving CSR engagement helps firms restore their credit ratings ex post. Our findings support the view of CSR engagement as a valuable risk management strategy. (shrink)

If neoliberalism names a mode of « governance by debt », the task which is addressed here, starting from Althusser’s article on Ideology and State Ideological Apparatuses is that of the formation of « subjects » within the framework of a social structure where paramount importance is given to « liberty ». The mobile hypothesis adopted here involves the reformulation of the question of subjectivity in terms not only of the interpellation of the subject by the policeman, as in (...) the Althusserian scenario, but also in terms of its interpellation through advertising. Without postulating a suppression or replacement of the earlier apparatus, the challenge addressed here is to try to envisage how State coercion is redoubled by Market conditioning. If the “classical” mode of interpellation couples the Forbidden to the logic of guilt, what is to be examined in the case of this new apparatus is the coupling of hedonistic permissiveness and victimization, to ensure that that consumers, all by themselves, will walk to credit. In considering these issues, we shall draw upon two contemporary readers of Althusser’s text, Slavoj Žižek et Judith Butler. (shrink)

Market competition is intensifying. The necessity and path of adopting the diversified management model in the media industry are explored to delve into the influence of the media diversification model and entrepreneurship on enterprise financial performance. Besides, the relevant theories such as the media diversification model and entrepreneurial spirit are expounded. Furthermore, Time Publishing & Media is taken as the representative of the media diversification model. Finally, the influence of entrepreneurship on financial performance is discussed regarding entrepreneurship in the Yangtze (...) River Delta as the research object. The profitability, solvency, and operation ability of Time Publishing & Media are analyzed. It is found that there are problems in the profitability and operation ability of Time Publishing & Media. The solvency is good, and the risk of debt repayment is low. As a result, a diversified management model may not have a positive impact on enterprise performance. In addition, the entrepreneurial spirit of the Yangtze River Delta is studied, and the results reveal that the F values from 2017 to 2019 are about 66.24, 10.78, and 60.39, respectively, with a significance of 0.00. It implies that the stronger the entrepreneur’s ability to take risks, the better the financial performance of the enterprise, but the risk should be appropriate. Therefore, the research on the influence of the media diversification model and entrepreneurship on the financial performance of enterprises in the environment of sustainable development has guided significance for enterprises to improve their business performance and market competitiveness. (shrink)

Elizabeth Anderson exalts the transition from the aristocratic to the modern ethic of debt as one of the most significant cultural achievements of capitalism. Whereas the debitor was once forced to compromise his liberty, dignity, and equality, today the rights and freedoms of insolvents are legally protected, and disadvantaged members of the community can readily obtain credit without personal supplication. Anderson’s intuition was, until recently, widely shared. Then came the financial crisis of 2007-08 and the ensuing global recession, triggered (...) by mass defaults among “sub-prime” borrowers. Many had entered the mortgage market with no proof of income, no assets behind them, no down-payment, a chequered credit history, and a generally reduced repayment capacity. Suddenly a flurry of criticism was unleashed against the lowering of credit standards and the government programs which pressured lenders to service the poor. My aim in this paper is not to assess the democratization of credit from the point of view of economic efficiency or political prudence, but rather to provide a much needed ethical appraisal. Any number of reasons might be advanced for why a particular government policy is morally objectionable. I will concentrate on the least controversial reason conceivable: the policy violates the rights of citizens. Whether this is true of government-driven credit-democratization - specifically, whether it violates the rights of the lenders compelled to act as agents of the policy, the rights of the third parties exposed to the risks associated with the expansion of credit markets, or both – is the question that I take up here. (shrink)

Safronov’s Nietzsche’s Political Economy is a pioneering appraisal of Nietzsche’s critique of industrial culture and its unfolding crisis. The author contends that Nietzsche remains unique in conceptualizing the upheavals of modern political economy in terms of the crisis of its governing values. Nietzsche scrutinises the norms which, not only preside over the unfathomable build-up in debt, the proliferation of meaningless, impersonal slavery and the rise of increasingly repressive social control systems, but inevitably set these precarious tendencies of modern political (...) economy on a collision course liable to culminate in an unprecedented human and environmental catastrophe. Safronov explores the core themes of Nietzsche’s political economy—debt, slavery, and the division of labour—with reference to the influential views of Adam Smith and Karl Marx, as well as against the backdrop of the Long Depression (1873–1896), the first truly international crisis of industrial capitalism, during which most of Nietzsche’s work was completed. -/- In Nietzsche’s assessment, modern political economy is predicated on the valuations that diminish humankind’s prospects and harm the planet’s future by consistently enfeebling the present, as long as there is profit to be made from it. Nietzsche’s critical insight, which challenges the most fundamental tenet of modern economics and finance, is that in order to build a stronger and intrinsically more valuable future in lieu of simply speculating on it, as though the liberal Promised Land could descend upon us like the manna from heaven at the wave of an invisible hand [of the market], it is necessary to walk from the future we dare to envisage resolutely back to the present we inhabit to determine what demands achieving such a vision would impose upon us, instead of embellishing the ‘here and now’ by cynically discounting the future to the [net] value of the present while disparaging, disowning and rewriting the past to unburden ourselves of its troubling legacy, as we continue to frivolously squander its capital to the alluring tunes of the ‘sirens who in the marketplace sing to us of the future’. The enabling mechanism for changing our valuing perspectives, Nietzsche tells us, lies dormant in us and it must be unlocked before it is too late. (shrink)

It is widely agreed that one of the core functions of government is to supply public goods that markets either fail to provide or cannot provide efficiently. I will suggest that arguments for government provision of public goods require fundamental moral judgments in addition to the usual economic considerations about the relative efficacy of markets and governments in supplying them. While philosophers and policymakers owe a debt of gratitude to economists for developing the theory of public goods, (...) the link between public goods and public policy cannot be forged without moral reflection on the proper function and scope of government power. (shrink)

Drawing on risk mitigation theory, this article examines whether the improvement of firms’ social performance reduces debt financing costs (CDFs) in China, the world’s largest emerging market. Employing both the ordinary least square (OLS) and the two-stage instrumental variable regression methods, we find that improved corporate social responsibility (CSR) reduces the CDF when firms’ CSR investment is lower than an optimal level; however, this relationship is reversed after the CSR investment exceeds the optimal level. Firms with extremely low or (...) extremely high CSR are subject to a higher CDF. The results also suggest that the optimal CSR level for small firms is higher than that for large firms. This study is the first to document a U-shaped relationship between CSR and CDF and also the first to investigate this relationship within an emerging market context. (shrink)

Irrational debt decisions at the individual level may harm collective welfare. For this reason, regulators are committed to encourage information-based behaviours in order to enhance likelihood of appropriate indebtedness. We analyse, with a diff-in-diff estimator, the Italian case offered by the Legislative Decree that reformed the consumer credit market adopting European Directive 2008/48/ec, and that reinforced the mandatory information acquisition, jointly asked to lenders and borrowers, before granting/receiving consumer credit. By using micro-data on 60.000 consumer credit borrowers, in total, (...) randomly sampled from the most relevant Italian Credit Bureau, our findings support that, in the medium term, the new consumer credit regulation has improved borrowers’ repayment ability, enhancing the quality of credit distribution. Nevertheless, a simplistic ‘better information-better behaviour’ relationship cannot be assured. This success is likely due to conjunct adaptation of behaviours, with shared responsibilities experienced on both the demand and offer side of the consumer credit marketplace. (shrink)

We analyze whether companies involved in a security class action suit (SCAS) exhibit differential capital structure decisions, and if the information revealed by a corporate scandal affects the security issuances and stock prices of industry peers. Our findings show that before a SCAS is filed, companies involved in a scandal show a greater amount of security offerings than their peers and, due to equity mispricing, are more likely to use equity as a financing mechanism. Following a SCAS filling, these companies (...) exhibit a decreasing amount of total external finance raised and lower levels of book and market leverage. Industry peers' issuance patterns exhibit significant contagion, with reduced debt and equity issuance following the SCAS filing. Corporate scandals also have meaningful negative effects on stock prices and bond ratings. Similar to capital structure, we document contagion at the industry level with peers' share prices yielding negative returns as well. (shrink)