The financialization of mass wealth, banking crises and politics over the long run

The co-evolution of democratic politics and mass, financialized wealth has destabilized highly integrated financial systems and the socio-political underpinnings of neoliberal policy norms at domestic and global levels. Over the long run, it has increased the political pressure on governments to undertake bailouts during major banking crises and, by raising voters’ attentiveness to wealth losses and distributional inequities, has sharply raised the bar for government performance. The result has been more costly bailouts, greater political instability and the sustained politicization of wealth cleavages in crisis aftermaths. We underline the crucial importance and modernity of this phenomenon by showing how the high concentration of wealth in pre-1914 Britain and America among elites was associated with limited crisis interventions and surprisingly tranquil political aftermaths. By contrast, the 2007–2009 crises in both countries epitomise the political dilemmas facing elected governments in a new world of mass financialized wealth and the impact on political polarization and democratic politics. We show that these dilemmas were embryonic in the interwar period and highlight how the evolutionary forces shaping policy and political outcomes reveal the importance of time, context and the effects of long cycles in the world economy and global politics

A Scholar in Action in Interwar America: John H. Williams on Trade Theory and Bretton Woods

In this paper we analyse the scientific contributions of Harvard economist John H. Williams as international trade theorist and monetary reformer together with his activities as a Vice President of the Federal Reserve Bank of New York. In the first 2 Sections we first present a succinct overview of Williams’ main contributions to international trade theory and to the interwar debate on the reform of the international monetary system. Particular attention will be devoted to his early academic writings which contained different critical arguments against the two main tenets of classical international economics: the Ricardian theory of comparative advantages and the gold standard. These criticisms formed the theoretical rationale and the analytical background of Williams’ key currency approach to the reform of the international monetary system. The key currency plan was first formulated while Williams advised Roosevelt and Morghenthau to sign a Tripartite agreement with Britain and France, and was later refined during the negotiations which brought to the approval of the Bretton Woods agreement. In this respect, Section 4 is devoted to analyse the contents of Williams’ proposal and to reconstruct his main criticisms of the two official plans presented by John Maynard Keynes and Harry Dexter White. Section 5 is devoted to examine Keynes’ and White’s reactions and to elucidate what aspects of Williams’ ideas managed to influence the shaping of the Bretton Woods Agreements. Finally, Section 6 presents some general conclusions. Sections 4 and 5 have greatly benefited from the use of archival sources which have been quoted at length, mostly in the footnotes. However, the most interesting piece – Williams’ own minutes of his first meeting with Keynes in October 1943 during the Washington negotiations – has been wholly reproduced in the Appendix