Disillusionment with the market driven economic system in a period of global economic downturn.

Abstract

This study also showed how inter-connected the world is because the global financial crisis started in one part of the world but affected every country worldwide. The global financial crisis made it necessary to revisit the writings of the British economist John Maynard Keynes who is considered one of the most influential economists of the 20th century and one of the fathers of modern macroeconomics. He advocated an interventionist form of government policy, believing markets left to their own devices could be destructive, leading to cycles of recessions, depressions and booms. That is what the world witnessed during the global financial crisis. Keynes ideas helped rebuild economies after World War II, until the 1970s when his ideas were abandoned for freer market systems. What then happened was regulation began to weaken as the world economies started to recover. This scenario is likely to repeat itself even when the financial crisis is over. Market capitalism is still going to dominate the world economies because in as much as transaction will be regulated but the behaviour of finance institutions will be difficult to regulate. During the period under review, the South African financial sector and the mining industry felt the impact of the global financial crisis as shown in this study. Despite signs of a turnaround in economic activity in South Africa, financial systems are still vulnerable to risk and a renewed loss of confidence. The adverse feedback effects from the real economy, therefore, remain a concern and present new challenges for safeguarding the stability of the global financial system. The global economic crisis offers an opportunity for South Africa to act and provide long term solutions. Strict regulation should be applied not only to the financial sector but to smaller business entities as well.