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Genealogy of Finance: Long-term History and Alternatives

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  • Ann E. Davis

Abstract

In periods of history with rapid social and economic change, it is useful to examine the long-term history of particular arrangements. Money is one of these institutions that seems eternal and unchanging, but that has changed dramatically over time. For example, money was typically conceived as coins made of precious metal and stamped with the image of the ruler. As long-distance trade expanded in the early modern period, money was represented by paper, most often letters of exchange among merchants who trusted one another because of common membership in a community. The emergence of the fiscal/military state enabled populations to have some role in the issue and uses of money, such as the Italian city-states of Republican form, like Florence and Venice. After the “Glorious Revolution†in 1688, the Bank of England (BOE) innovated with merchant monopoly corporations engaging in state-supported long-distance trade, the stock of which backed public debt. The political controversies surrounding the formation of the BOE reveal some of the alternative possibilities, a merchant-oriented bank, supported by the Whigs, or a land bank supported by the Tories. After the industrial revolution, the use of credit for real investment aided the accumulation of surplus, by the productivity treadmill. After the Great Depression, the extension of finance into the lives of the citizens proceeded, with debt financing for housing, education, and retirement, encompassing the entire life cycle. The dominance of the United States after World War II enabled that country to sustain a hegemonic currency, based on the expansion of trade and supply chains to Emerging Market Countries. Along with the tech bubble in the second decade of the twenty-first century, the crypto bubble expanded hopes for an alternative form of money. Such a long-term history can be informed by analysis of the role of money as a symbol, mobilized by meanings enacted in human institutions. Such a view can provide a method of interpreting the long term evolution of money, restoring the political dimension and human agency to the abstract impersonal mechanical notion of the market. Such a perspective can better inform consideration of alternative institutions to accommodate challenges like geopolitical competition, war, and climate change. JEL Classification: B51, B52, G20, N20, P48

Suggested Citation

  • Ann E. Davis, 2023. "Genealogy of Finance: Long-term History and Alternatives," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(4), pages 660-669, December.
  • Handle: RePEc:sae:reorpe:v:55:y:2023:i:4:p:660-669
    DOI: 10.1177/04866134231174568
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    References listed on IDEAS

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    1. Tony Lawson, 2022. "Social positioning theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 46(1), pages 1-39.
    2. Wennerlind, Carl, 2011. "Casualties of Credit: The English Financial Revolution, 1620-1720," Economics Books, Harvard University Press, number 9780674047389, Spring.
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    More about this item

    Keywords

    money; financial circuits; public sphere;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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