The State, the Financial System, and Economic Modernization

Review

2014

Business History, 2020

Brief review of collection of essays on role of banks and the state in economic modernization. Focuses particularly on the United States and Europe.

Financial History Review, 1999

This article examines the political construction of, and change in, the money market in the United States between 1800 and 1836. Borrowing from the theoretical literature on institutions in political science and sociology, it explains the demise of the two Banks of the United States. It demonstrates that changes in the banking system could be traced primarily to the interaction between the executive on one hand, and financial investors on the other. Such changes are explained by the degree of unity among investors, and the ability of the executive to fracture that unity. To be more precise, the article shows that disunity among financial capital holders was a necessary precondition to the destruction of both 'national' banks. Further, the executive could sufficiently create dissension by suggesting policy measures aimed at having differential distributive consequences for different subgroups of financial capital holders. These measures, however, had to meet certain conditions to have the desired impact: they had to conform to certain vital preexisting institutions. Finally, this article seeks to offer a suggestion as to how ideational explanations for institutions can be combined with those that stress power relationships and distributional consequences (of institutions), within a single coherent theoretical framework.

Australian Economic History Review, 2012

Wzb Discussion Paper, 2001

This paper examines the historical origins of the bank-based financial systems in Germany and Japan and the market-based financial system in the US. It critically examines the "timing of industrialization" (TOI) thesis, i.e. the assertion that variation in the current structure of financial systems can be explained by differences in the timing of the "take-off" phase of industrialization. The first major claim I make is that TOI overstates both the significance of bank-based finance for the rapid industrialization of Germany and Japan and the extent to which the financial systems really were different. Second, I argue that TOI understates the importance of different patterns of state regulation, particularly starting in the 1930s, for explaining postwar differences in the financial systems. The third claim I make is that differences in financial regimes are dependent not only upon the narrow issue of financial regulation but also on the nature of the regulation of labor, including welfare regimes. Zusammenfassung In dem Papier werden die historischen Ursprünge des bankenbasierten Finanzsystems in Deutschland und Japan und des marktbasierten Finanzsystems der Vereinigten Staaten analysiert. Es wird eine kritische Überprüfung der "timing of industrialization"-These (TOI) vorgenommen. Ihre Kernaussage heißt: die Unterschiede in den derzeitigen Strukturen der Finanzsysteme können durch die Unterschiede der Zeitpunkte der "take-off"-Phasen der Industrialisierung erklärt werden. Zuerst wird in dem Papier das Argument entwickelt, dass die TOI-These sowohl die Bedeutung eines bankbasierten Finanzsystems für die schnelle Industrialisierung Deutschlands und Japans als auch das Ausmaß der Unterschiede der Finanzsysteme überbewertet. Zweitens wird argumentiert, dass die TOI-These die Bedeutung unterschiedlicher Formen von staatlicher Regulierung, vor allem die seit den 30er Jahren praktizierten, in ihrer Erklärung der Unterschiede der Nachkriegs-Finanzsysteme unterschätzt. In dem dritten hier entwickelten Argument wird gesagt, dass die Unterschiede in den Finanzregimen nicht nur von dem eher engen Aspekt der Finanzregulierung abhängen, sondern auch davon, wie Arbeit und Sozialsysteme reguliert sind.

This article examines the political construction of the money market in the United States between 1800 and 1836. In particular, it explicates the relationship between the state and the banking system by explaining the demise of the two Banks of the United States. It demonstrates that changes in the banking system could be traced primarily to the interaction between the executive on one hand, and financial investors on the other. Such changes are explained by the degree of unity among investors, and the ability of the executive to fracture that unity. To be more precise, the article shows that disunity among financial capital holders was a necessary precondition to the destruction of both ‘national’ banks. Further, the executive could sufficiently create dissention by suggesting policy measures aimed at having differential distributive consequences for different subgroups of financial capital holders. These measures, however, had to meet certain conditions to have the desired impact: they had to conform to certain vital preexisting institutions. These institutions therefore essentially defined the limits of autonomous executive action.