The peculiarities of universal banking: politics, economics and social struggle in the making of German finance

Hughes, Matthieu (2016) The peculiarities of universal banking: politics, economics and social struggle in the making of German finance. Doctoral thesis (PhD), University of Sussex.

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Abstract

This dissertation contributes to the global political economy of finance by examining
the historical evolution of the German financial system. The origins of Germany’s nonmarket
financial structure are consistently identified as path-dependent influences of its
system of “patient” rather than “speculative” financial capitalism.

This thesis revisits the historical evolution and crystallization of German corporate
banks on universal, as opposed to specialized, financial practices. In stark contrast to the
existing literature that relies on efficiency-based explanations, it emphasizes the
political nature of bankers’ financial practices, and the role of social power in shaping
financial structure. Examining universal banking in this way stands its significance
upside down by showing its roots in speculative practices and the politics of
industrialization rather than patient finance and efficient calculation.

The thesis consists of three parts: Part I delineates the intellectual riddle posed by the
received scholarship: “despite obvious connections,” between economics and politics,
orthodox political economists have been mystified by the role of power in universal
banking’s development. It therefore outlines an historical sociology of financial
development to reassemble this puzzle. Part II charts the developmental path of German
banks from the 18th to mid 19th century. This section first stresses how early universal
banking—“mixed-banking”—was an unintended product of the speculative practices of
Rhenish financiers engaged in a political struggle over industrialization. It further
demonstrates that the adoption of “mixed-banking” practices by corporate banks must
similarly be understood in terms of power rather than as a solution to market failure.
Part III charts the historical narrative to 1914 highlighting how the early speculative
character of “mixed-banking” engendered a transformation into the concrete form of
universal banking following social struggles around the introduction of deposit banking.
The thesis underscores the general importance of examining economic institutions from
the perspective of power.

Item Type: Thesis (Doctoral)
Schools and Departments: School of Global Studies > International Relations
Subjects: H Social Sciences > HG Finance > HG1501 Banking
Depositing User: Library Cataloguing
Date Deposited: 27 Oct 2016 10:15
Last Modified: 27 Oct 2016 10:15
URI: http://sro.sussex.ac.uk/id/eprint/65083

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