A comparative historical study of modern world finance reveals the unique character of the modern order. The emergence and reproduction of the Dutch financial order 44 The unfolding of the Dutch financial order 47.
Series editors’ preface
The reasons for this are not, in Langley's analysis, simply due to the rise and fall of American financial hegemony in the latter part of the twentieth century. His ability to integrate a broad historical sweep (1600s to the present day) with the details of contemporary credit movements, changes in banking regulations, and the geographic and social particularities of the Netherlands, Britain, and the USA in a sophisticated analysis of 'stability, crisis and management in the contemporary world financial order' will appeal to both specialists and non-specialists.
Acknowledgements
OECD Organisation for Economic Co-operation and Development OEEC Organisation for European Economic Cooperation OFC offshore finanscenter.
Introduction
IPE is the science of the state and for the state in the context of the international exchange economy. Several important aspects of structural discontinuity in the emergence of modern financial regulation are highlighted.
World finance
1 An Historical International Political Economy
Following Braudel, a historical IPE considers social change over the longue durée. In particular, a historical school of thought is aware that social practices are based on collectively held assumptions and procedures, which are themselves forged in the context of social and power relations in a social order (Collingwood 1946: 223).
2 An Historical International Political Economy of world
From the perspective of global finance, this leads to a recognition of the inherent spatiality of contemporary global credit practices. In the context of the wider world order, the power structure in the world financial order guides the possible organization of global credit practices.
Modern world financial orders
3 From Amsterdam to London
They also enjoyed social and political power that was crucial to their dominant position in the creation of the Dutch financial order. In our terms, London-centred aid was significant as it reflected the relative stability of the Dutch financial order. The unraveling of the Dutch financial order was a slow and protracted series of processes.
From the 1740s, however, a contradiction had begun to emerge that was to prove significant in the unraveling of the Dutch financial order. The roots of the material contradiction of the Dutch financial order lay in the rise of London and the industrialized British national political economy. Changes in the wider world order accompanied the waning relative power of Amsterdam's social forces by contributing to the gradual unraveling of the Dutch financial order.
The power relations created by the centralization of material capacities in London contributed to the capacity of London's social forces to frame the British financial order. At the heart of the relative stability of the British financial order was the diffusion through succession of the shared norms and meanings that informed London-centred credit practices.
4 From London to New York
From the Great War onwards, therefore, a competitive duality developed between London and New York as WFCs at the top of the British financial order. It was as a result of the American state's intermediation of public credit that New York-centered state credit practices were only indirectly important to the American financial order. No different than the indirect meaning of New York in terms of providing government credits in the American financial order, an 'ambivalent relationship'.
The indirect importance of New York in the American financial order was therefore not only a consequence of the nature of the distribution of the material resources of global credit practice across the American political economy. The Marshall Plan thus marked the beginning of a relatively stable formation and reproduction of the American financial order. In our sense, the social forces of New York did not enjoy the epistemic authority in the American financial order that the social forces of the dominant WFC did in earlier modern global financial orders.
Second, the distinctive organization of world credit practices reflected social and political power relations in both American state society and the wider world order that limited the role of New York's social forces in the establishment of the American financial order. Against this background, the Federal Reserve Act of 1913 represented an important victory for New York's social forces in the consolidation of American political economy (Henwood.
The contemporary world financial order
5 From New York to ‘global finance’
In the wake of the unraveling of the US financial order, global credit practices have undergone significant restructuring. Market authority, largely subordinated in the heyday of the embedded liberal American financial order, was reasserted in the organization of global credit practices. Compared to previous orders, then, the unraveling of the American financial order was highly idiosyncratic.
The decades since the end of the American financial order have been marked by a very important structural transformation in global credit practices. New York was at the forefront of the modern disintermediation of global credit practices. At the beginning of the modern period, Tokyo was of marginal importance as a place of global credit practice.
Perhaps unsurprisingly, so too was the unraveling of the American financial order. Contemporary global credit practices have undergone significant restructuring since the collapse of the US financial order in 1973–1974.
6 The making of the contemporary world
At the roots of the unique pattern of power relations in the contemporary financial order is the highly characteristic unraveling of the American financial order. The social forces associated with each WFC of the triad all enjoy material power that was a consequence of the establishment of the contemporary order. The capital, which was centralized in Tokyo in the course of the contemporary financial order, meanwhile had three major sources.
The contemporary material predominance of the social forces of New York and London was not itself sufficient to ensure their influence on the establishment of the contemporary financial order. Several features of the wider world order effectively served to increase the power of the social forces of New York and, to a lesser extent, London in the establishment of the contemporary financial order. The shifting nature of competition between states had particular implications for the creation of the contemporary financial order.
Under such a reading, the contemporary financial order would become the re-creation of the American financial order. Rather than a straightforward continuation of American power, the material power relations that have produced the contemporary financial order thus favor the social forces of New York and London.
7 Stability, crises and governance in the
The decentralization of the contemporary order has not necessarily proved to be a structural obstacle to the establishment of relative stability. The different understanding of credit practices in Tokyo was highlighted once more in the wake of the Asian financial crisis (Bello 1998: 434). The neoliberal orthodox explanation for contemporary world financial crises first came to light during the debt crisis of the early 1980s.
However, there are several important conjunctural features in the market-based governance of the contemporary financial order, as the institutionalization of credit practices has a distinctive pattern. Yet decentralization has not destroyed the interdependence of state and market institutions in the governance of the contemporary order. The gap between the rhetoric and reality of governance also goes to the heart of today's financial order.
Neoliberal acceptance of the contemporary financial order is largely limited to the transnational financial community, which shares a fairly minimal perceived interest in preventing its collapse. Despite these challenges and changes, neoliberal organizational principles of financial governance remain at the core of the consensus (Broad and Cavanagh 2000).
Conclusion
Recognizing the financing of credit practices provides a basis for discursive contestation of neoliberal explanations of contemporary world finance. This is especially the case in the so-called emerging market state-societies that have borne the brunt of the trends of the contemporary world financial crisis. Regulation stands as a totem pole for many who seek the controlled dismantling of the contemporary financial order and the creation of a new order.
Collective action in terms of reregulation seeks to take advantage of the political space that this contradiction provides. The agenda here is the strengthening of the national political economy in the name of social democracy. Yet there remain several drawbacks in terms of the political potential of collective action focusing on reregulation.
The extensive re-regulation of contemporary world finance would also bring about fundamental change in the wider world order if the edifice of the national political economy was to be rebuilt. Key to the democratization of global finance for new multilateralism is collective action in the sphere of civil society through social movements that will ultimately transform both the epistemic and formal governance of the contemporary financial order.
Bibliography
Mittelman (red) Innovation and Transformation in International Studies, Cambridge: Cambridge University Press. 1999) 'East Asia's tumbling dominoes: financial crises and the myth of the regional model', i L. Saville (red) Socialist Register, London: The Merlin Press. 1992) 'London as an international financial centre', i L. Neorealism and Its Critics, New York: Columbia University Press, genoptrykt i R.W. Sinclair, Approaches to World Order, Cambridge: Cambridge University Press.
1996) Short Circuit: Strengthening Local Economies for Security in an Unstable World, London: Lilliput Press. eds) (1998) Money and the Nation State: The Financial Revolution, Government, and the Global Monetary System, New Brunswick, NJ: Transaction Publishers. Wilkin (eds) Globalization and the South, Basingstoke: Macmillan. 1994) ‘The Neostructuralist Agenda in International Relations’, in R. Kindleberger (ed.) Economic Response: Comparative Studies in Trade, Finance and Growth, London: Harvard University Press. 1978) Manias, panics and crashes: a history of financial crises, London: Macmillan.
1994) 'International Political Economy: abiding discord', Review of International Political Economy The accomplishments of International Political Economy', i S. Zalewski (eds) International Theory: Positivism and Beyond, Cambridge: Cambridge University Press. 1994) 'Internationale relationer og storstilet historisk forandring', i A.J.R.