Finance and the Good Society

Finance has a reputation problem; it is perceived by some as a bad actor behind the mortgage and debt crises in the United States and Europe, economic inequality, and market manipulations. In his new book Finance and the Good Society (Princeton University Press, April 4, 2012), Robert J. Shiller, the Arthur M. Okun Professor of Economics, argues that finance shouldn't be condemned, but used as a force to achieve the greater goals of society.

"Imagine the development of a new laboratory, the funding of a medical research project, the building of a new university, or the construction of a new city subway system," writes Shiller. "Finance provides structure to these and other enterprises and institutions throughout society. If finance succeeds for all of us, it helps to build a good society. The better we understand this point, the better we will grasp the need for ongoing financial innovation."

In the book, Shiller argues that rethinking finance and its role in society requires defining finance more broadly, as not merely stocks and bonds and mathematical equations, but as the stewardship of society's assets. He looks at the roles and responsibilities of people working in finance—including investment bankers, lawyers, regulators, and educators—and explains how financial innovation will alter them, how they can be more effective, and why particular roles have generated public hostility. He also examines the strengths and weaknesses of the financial system, asserting that the financial crises and "ugliness" that sometimes result should not provoke people to dismiss the concept of financial capitalism because doing so would make it impossible to accomplish important goals in society. He describes how finance has historically contributed to the good of society through financial innovations such as insurance, mortgages, and pensions that have underwritten the prosperity of millions of people.

Read excerpts from Finance and the Good Society in a four-part series published by Bloomberg:

Part I: Walt Whitman, First Artist of Finance

Part 2: Finance Isn't as Amoral as it Seems

Part 3: Don't Resent the Rich; Fix the Tax Code

Part 4: Logic of Finance Can Banish Corruption