The Perfect Storm: Normal Accidents and the Russian Financial Crisis of 1998
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Financial crises have become a fact of life in today's global financial system. The remarkable financial unrest of the last 20 years has been blamed on evil, "vampire squid" bankers, spendthrift politicians, greedy homeowners, global economic imbalances and flash trading/crashing robots. But when we look deeper, the proximate causes of these financial accidents fade and we begin to suspect that the profound complexity and tight coupling of the financial systems themselves are the cause and, in the words of Yale sociologist Charles Perrow, the accidents are...normal. This paper, written in 2000, tells the story of the Russian default and currency devaluation of 1998 through the lens of Perrow's "normal accidents" theory and holds clues for financial unrest that has followed.
Transcript of The Perfect Storm: Normal Accidents and the Russian Financial Crisis of 1998
