The prevailing bias, politically and economically, remains in favor of competition and conflict. They are inefficient and cumbersome, devious and political. The reality is that cooperation has failed in this world. And yet this one-sided emphasis on competition, this belief that economic and social Darwinism can be the guiding principle of our society, this is also false. This is nowhere more evident than in global financial markets.
Trade is only one-tenth of the value of financial markets globally.
Well, as the Asian crisis demonstrates, this is just not true. The idea that free markets will tend toward equilibrium is a theoretical construct from classical economics. But experience shows that as much as it may apply in the case of ordinary goods, it does not apply to financial markets. That is because there is a two-way interaction between events and expectations. When you buy a share, you are expressing a prediction, but your prediction affects the future to which it relates.