At a time when the issues surrounding accounting standards in Europe and worldwide grow in importance in a way unknown before now, it is worth questioning why our leaders and governments are suddenly interested in a subject matter that has been somewhat despised until now. Even the President of the French Republic has expressed his anxieties that certain accounting standards would lead to an excessive “financialization” of the economy. The debate may soon turn to politics or even party politics, which does not encourage serenity. Behind this new word, one can see looming the idea that the economy is too much the servant of the markets, which are whimsical, irrational, too volatile. They favour short-termism and work as a disincentive to long-term, stable investment etc. There is a long list of arguments, more often used when markets are falling than when they are rising. Not all these arguments are without merit, though.
General de Gaulle is said to have once declared: “the policies of France are not dictated by the market”. That may have been true. However, it is on that market that the French state at present sells its holdings in its state-owned enterprises. This is also where it borrows, and its financial soundness is then scrutinized like that of any borrower.
True, the ups and downs of the markets in recent years are not commonly perceived as having been dictated by a pattern of rational behaviour. As any theory, ...