Some serious concerns we will have over the near future relate to when to expect the next financial crisis and how soon thereafter we should expect another one.

Unfortunately, the frequency of crises has increased. The liberalisation of cross-border capital flows has increased the possibility of not only contagion from crises elsewhere but also of financial profligacy in one country being exported to another. The job of South African economic policymakers should be to assert policy sovereignty by protecting our economy from contagion, global financial volatility and the domestic adoption of profligate financial practices.

There will be changes to the regulation of financial institutions and markets in many countries. However, I do not expect significant change to financial regulation. Former US President Bill Clinton's adviser and lead strategist in his 1992 election campaign, media celebrity and political commentator James Carville, was quoted in the Wall Street Journal February 25, 1993, sa saying: "I used to think that, if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody."

The political and economic influence of financial institutions, including many that are ‘too large to fail', is enormous. Large private corporations and governments are expected to make their policies and practices palatable to the few hundred people operating global financial markets and the major credit ratings agencies. Further, economic policymakers and leaders of the central banks of many countries are drawn from the large financial institutions or expect to work for one of these institutions in the future. The large and very powerful financial institutions have the ability to capture and intimidate policymakers and regulators.

One would expect that the global financial crisis would undermine the economic and political power of financial institutions. It is necessary to understand the social forces driving the power of financial institutions to understand why they have proved so resilient to financial crises and popular political outcry.

The reversal of welfare programmes and State provision and support for pensions, health insurance, unemployment benefits, housing and other necessities drives the power and influence of finance. The demographic factors in many developed countries have a significant impact on global financial markets. The proportion of their population that is older is growing. The ageing populations want to ensure that they have sufficient investments for their retirement years. They also invest more in health insurance and other insurance products because they are less able to depend on the State to provide against risk.

Most of these investments are made through institutional investors who have put pressure on large corporations to focus on high short-term returns. The ageing populations in these countries are politically important. Usually, most policymakers are older and share their interests supporting institutional investors.

We live in a world where many States will not increase their spending to increase social security and welfare services to their populations. Financial institutions profit by the inadequacy of these services. Their power stems from allocating the capital people pay for retirement investments and risk insurance. They have global financial markets as their playground. Therefore, we cannot expect major changes in global financial markets and ample regulation of financial markets unless the social forces that drive the power of finance are dealt with.

Further, the ability of financial institutions to capture and intimidate economic policymakers and regulators must be curbed. A State with a developmental economic programme will have to put in place measures to curb the power of financial institutions in their domestic economies and to protect their economies from speculation, turbulence, crises and contagion from the rest of the world.