Crisis is always a possibility in the financial world and whenever one is unleashed, almost everyone is taken by surprise.

The bursting of the tech stock bubble is just the latest example of this phenomenon.

We see grown men in exchanges around the world, wearing brightly-coloured jackets that would do a flamboyant jockey proud, screaming instructions and gesticulating wildly. Worried investors anxiously scan screens for the latest news. We worry about our livelihoods and savings.

The 1997-1999 period saw chaos in Asia, the intervention of the Fed to rescue hedge fund Long Term Capital Management as stock markets plunged, and the collapse of the Russian economy.

What causes financial crises and how do they spread? Can they be avoided?

These questions were the focus of a conference in Moscow last year and the latest publication from the Centre for Post Collectivist Studies in London is a collection of papers delivered at this event.

The problem with free enterprise is managing the ups and downs without stifling entrepreneurs. Uncertainty and investment decisions go hand-in-hand. John Maynard Keynes said if the capital equipment of the world depended on cool calculations of prospective yield, it would never have been built.

A Merill Lynch economist points out in Financial Crises that the boom-and-bust cycle in emerging markets is partly caused by the fact that short-term returns are the main concern for most market participants.

"The longest time horizon for most decision-making is one year." The market is driven by greed and fear.

Globalisation - the development of information technology and pools of capital devoted to pursuing maximum gains around the world - has worsened the problem of crisis contagion.

Is the International Monetary Fund capable of being the world's knight in shining armour? Burdened with increasing expectations, the IMF needs limited and defined goals to succeed.

Stock market integration and cross-listing is another question examined in Financial Crises. Not so much developments as a merger between the London and Frankfurt exchanges - in a transition economy like Russia, privatisation measures could aim at listing companies on foreign markets which are better able to monitor firms.

The essays in Financial Crises raise important questions and offer some interesting solutions. But the collection suffers somewhat from coming out of a conference - flat-footed, often worthy but dull - rather than appearing as a series of essays specifically written for publication.

jmulqueen@irish-times.ie