Economic crises are managed with collective collateral
Economy is often understood as a market-controlled phenomenon. When solutions are sought to economic problems, the phrase “the markets have spoken” is used as a justification for the decisions made. The markets are an important control mechanism but they alone cannot explain the functioning of the economy. In his dissertation, Pekka Piironen, M.Soc.Sc., suggests that in its present form, capitalism should be characterised as a system of economic uncertainty.
It is a political, economic and social system that is guided by political interests and that we all help to maintain.
According to the study Pekka Piironen has made for the Aalto School of Economics, economic and financial crises are managed with collective collateral. The losses arising during economic crises can only be covered afterwards, in an unlimited manner and by all players of society, in other words, with collective collateral.
This is in contrast to the way in which insurance companies operate; they can provide limited coverage allowing policyholders to prepare for risks in advance.
A rupture keeps the economy going
Piironen’s conclusion is that an economic rupture, such as an economic or financial crisis, and collective collateral form an axis that ensures economic continuity. An economic rupture is mainly a result of unpredictability, but also of testing, innovation and creation of something new. Paradoxically, a rupture keeps the economy going.
Ultimately, the ruptures resulting from this uncertainty can only be covered with collective collateral. In economic structures, this means that we can only improve our living conditions and standard of living by ensuring value generation. This means that in order to secure the future of our economic system, we must all face the consequences of financial crises and provide the necessary collective collateral.
Piironen bases his economic analysis on philosophy, economics and social sciences. These discussions have provided the necessary material for creating new concepts. The purpose of the creation of the new concepts has been to better understand the essence of the present economic system.
Public examination of the doctoral dissertation
Epävarmuuden talous, the doctoral dissertation of Pekka Piironen (M.Soc.Sc., University of Joensuu) in the subject area Organisations and Management will be examined at Aalto University School of Economics (Chydenia, Stora Enso Hall, 3rd floor, Runeberginkatu 22–24, Helsinki) on Friday 18 May 2012, at 12.00 noon. Professor Risto Heiskala (University of Tampere) will act as opponent and Professor Risto Tainio as custos.
Media representatives may request free copies from the School of Economics Communications Unit, viestinta-econ [at] aalto [dot] fi or tel. +358 50 566 5673. The dissertation can be ordered by email from: toolo [at] ayy [dot] fi.
pekka.piironen [at] aalto [dot] fi
tel. +358 40 586 5496