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

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posted on 2023-06-09, 03:45 authored by Matthieu Hughes
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.


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  • eng


University of Sussex

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