By David Llewellyn-Smith, the founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. He is also the co-author of The Great Crash of 2008 with Ross Garnaut. Cross posted from MacroBusiness

The American academic Robert Shiller has taken another contrarian tack with his latest book Finance and the Good Society. His claim is that Western finance has lost the sense of virtue that it once had. It is interesting to trace where Shiller is wrong, or at least looking in the wrong direction. Because it tells us much about where finance has become post-capitalist and ever more dangerous.

Much of what Shiller says is right. For instance his observation that “financial institutions and financial variables are as much a source of direction andwell under way in 1869, being then thirty-four. I had been through my early experiences, nor had they been lacking in variety. I had enjoyed college and society, and got a glimpse of early professional life; a glimpse of that sufficed! Then came the army, an exceptional break. After that, I was married at thirty, and, by the time I was thirty-four, I had caught the step. At forty-four, I resigned from the railroad commissionership, having achieved a success, to become, first, the Chairman of the Board of Arbitration of the Trunk Line Railroads, and then, immediately afterwards, the President of the Union Pacific. These were both natural sequences from what had preceded. The Trunk Line Arbitration was not a success. The time for it had clearly not