UPPSALA PAPERS IN ECONOMIC HISTORY1990

WORKING PAPER NO 9

The Network of Financial Capital

Essays in Honour of Ragnhild Lundström

20.10.1990

The Banking Project

Department of Economic History

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This research is funded by theBank of Sweden Tercentenary Foundation.

ISSN 0281-4560Uppsala universitetReprocentralen HSCUppsala 1990

Contents

Foreword 5

1 The Debate about the Causes of the Crisis 1929-33 7Alice Teichova

2 Politital Language or the Language of PoliticsICistina Björkegren

3 Publit Banking as a Social Democratic PolicyMats Larsson

4 Business History, Historital Economics andEconomic Theory. The bridge-building functionof business historyH&an Lindgren

5 Banking and Institutional TheoryJan Ottosson and Hans Sjögren

6 Ragnhild Lundström: A Bibliography

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Foreword

These essays have been collected to celebrate Ragnhild Lundström’ssixtieth birthday. The contributions in this volume come from herresearch students, her friends and her fellow members of the BankingProject, “The Role of Commercial Banks in the Industrial Transfor-mation of the 20th Century”, in which she has played an active rolesinte its inception in 1987. The purpose of this endeavour is to showour high appreciation of her as a colleague, a thesis supervisor, aseminar leader and, certsinly not least, as a generous and warm-heartedhuman being. She takes great interest in other people and she does nothesitate to sacrifice her own time to help her fellow-creatures. In theproject, Professor Lundström has taken a special interest in developingthe international aspects of our banking research, sustained by a firmbelief that only in relation to international standards can the value ofour efforts be measured. Thus, it is quite appropriate that the initiatorof the international comparative program, Professor Alice Teichova, hasprovided the initial article of our unpretentious “Festschrift”.

The editorial work on this volume has been done by Hans Sjögren,B.A., and the Bibliography of Ragnhild Lundström has been compiledwith the assistance of her husband Dr Sven Lundström. We would liketo thank them both for making this volume possible. Professor LarsSandberg, Janette Gabrielsson and Lynn Karlsson have been kindenough to solve some of the linguistic problems experienced by thoseauthor who have Swedish as their native tongue.

The Authors

The Debate about the Causes of the Crisis 1929-33(with special reference to the finantial crisis of 1931)’

Alice Teichova

The impact of the Great Depression on the economy and society, ingeneral, and on politital and economic theory, in particular, has beenseminal. In its wake there has been a steady stream of publicationsabout its causes, duration and consequences. The Great Depression hasbeen assessed and reassessed, it has been revisited, it has beencompared to previous crises, and compared with the 1970s and 1980s insearch for lessons to be learnt for policy makers of today (Herman Vander Wee, 1972; Karl Brunner, 1980; Charles P. Kindleberger and Jean-Pierre Laffargue, 1982; Ivan T. Berend and Knut Borchardt, 1986).

The reasons for the economic collapse of the early 1930s have beenstudied in great detail and in many different ways but there is littleconsensus about the causes and the character of the Great Depressionexcept, perhaps, for three general points: Firstly, that it was the deepest,all embracing (agricultural, industrial, finantial, social and politital) andlongest crisis with catastrophic consequences.

Setondly, that the crisis was global, although the United States ledthe rest of the world into depression. In the United States it was deeperand longer than in other industrial economies, with the exception ofGermany where the trough of the crisis was almost as deep but itsduration was not as long as in America. Strong doubts remain whetherthe U.S. exported the depression which is widely considered as a“homemade crisis”. Because of the instability and imbalances ineconomic and politital structures after the First World War there ismuch evidente that each large industrial nation experienced aninternally based economic contraction which was intensified by negative

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external influences. The latter applies almost certsinly to internationalfinante.

Thirdly, there is general agreement that the shock of mass unemploy-ment, the ruin of farmers and peasants, of artisans and shopkeepers, thewidespread bankruptcies and the collapse of the banking and monetarysystem must never be allowed to happen again.

It was thought that in the post-1945 world the strengthened finantialsystem and the new fistal and monetary instruments which arose out ofthe experience of the interwar period would prevent a recurrence of aworld economic crisis. The oil crisis of the 1970s and the debt crisis ofthe 1980s have raised the spectre of the 1930s again. And that explainsthe renewed interest in the economic and social history of this decade.

Some of the sharpest controversies have continued about the causesof the finantial crisis and about the economic policies which polititiansand bankers pursued in the 1930s. While none of the monocausalexplanations of the crash of 1931 can be fully satisfactory the polemicshave engendered research and writing based on ever increasing accessto contemporary sources and have thus contributed to our knowledgeand understanding of the period. Some of the questions which aredebated and are most relevant to the topic of this paper Will beconsidered next, for each approach represents a certain aspect in thecomplex mosaic of historital reality.

Many famous contemporary economists sought explanations for thecrisis in maladjustments in economic structure of each country causedby the outcome of the First World War, such as territorial changes dueto the breakup of Empires and due to the conditions of the VersaillesPeace Treaty, revolutions and social unrest, overextension of heavyindustty due to armament production and difficulties in adjusting topeace time requirements, inflations, crises and unemployment. All theseproblems interacted and accumulated until the system could not bearthe strains and cellapsed. While the arguments of the maladjustmenttheory are considered to be flawed in the light of the experiences afterthe Setond World War, when no prolonged crisis followed upon evengreater dislocations (Gottfried Haberler, 1976, pp. 24-5), the view thatprofound changes after the end of the European war in 1918 and close

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international interaction produced the collapse after 1929 should not bedismissed lightly if one looks for historital roots of socio-economicevents.

The long-term approach to explaining the Great Depression hasrecently been brought back into the debate. According to Kindleberger(Kindleberger, 1986) the background to the world depression Sternsfrom European influences which destabilised the international economy,above all, international finante. Most potent were: the Versailles Treaty;reparations and war debts - their negative effects being bolstered bythe continued US stance that these were unconnected; the over-valuation of the pound after Britain’s return to gold, on the one hand,and the undervaluation of the French franc, on the other; the ac-cumulation of gold in the US and of sterling balantes in France; USshort-term lending to Germany. These destabilising factors wereexacerbated by enlarged output outside Europe accompanied by fallingcommodity prices but rising security prices mainly on the New YorkStock Exchange. (Kindleberger, 1985, p. 268). Also in one of the mostrecent studies of the Great Depression in America the author, MichaelBernstein, convincingly ascribes the main causes for the unusual lengthof the Depression to long-term struttural changes in production,consumption and distribution in the interwar period and sees thefinantial crisis as a short-run shock within an on-going fundamental in-dustrial transformation. By an attempt to campare the 1930s with the1970s in the case of the United States he identifies analogous trends(Bernstein, 1987). Essentially similar views to those of Kindleberger andBernstein on the long-term effects of economic maladjustments hadbeen voiced more than half a century ago by the Gold Delegation ofthe Finantial Committee of the League of Nations which reported inJune 1932. But objections to its findings were raised by a MinorityReport under the influence of the renowned Swedish economist, GustavCassel, blaming the outbreak of the crisis, in the first place, on themaldistti’bution of gold which developed only after 1928. In his Memor-andum of Dissent Gustav Cassel rejected the “enurneration of economicdisturbances and maladjustments which existed before 1929” as theyoffered “no explanation of the breakdown of the gold standard” but he

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held a monetary phenomenon for its cause because hoards of gold wereconcentrated in France and the United States as a result of theundervaluation of the franc and the overvaluation of the pound and thethrottling of capita1 exports from the United States. This, in his opinion,was compounded by “the claim of reparations and war debts, combinedwith the unwillingness of the receiving countries to receive payment inthe natural form of goods and services” (Geneva, 1932, pp. 74-5, citedby Haberler, p. 22, 30).

While the maldistribution-of-gold-theory of the slump has beengenerally abondoned it does suggest that in the crucial time, at leastbetween 1929 and 1931, a rigid connection existed between world stocksof monetary gold (which were thought to be endangered by a shortfallin gold production) and the supply of credit by central banks in thefollowing respect: Continental central banks tried tenaciously to defendtheir reserves after their experiences of hyper-inflations. In doing sothey decreased their credit base and deflated prices at the same time asthe central banks of America and France accumulated gold and“sterilised” it which resulted in inflated prices of credit rather thanallowing it to increase their credit base. Concurrently commodity pricessteadily declined which exacerbated imbalances.’

Kindleberger takes up the argument of declining commodity priceswhich caused a cumulative process: producers defaulted on their bankloans, bank failures spread not only in the U.S. but internationally aswell, the contraction of production produced unemployment and in turncontraction of the money supply. Thus “the depression turned into amonetary phenomenon of international rather than United States di-mensions that ricocheted from Austria to Germany, to Britain, to Japan,to the United States and by 1935 back to the gold blot” (Kindleberger,1985, pp. 270-71). This raises the question of the monetaria and thenon-monetarist explanation of the Great Depression.

With hindsight economic theorists and economic historians havescrutinized fistal and monetary policies employed by governmentsbefore, during and after the Great Depression qualitatively. They havesubjected them to quantitative analysis to test established theories of thetrade cycle in capitalist economies.

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Cancern about the prevention of unemployment was Paramount.Keynesian macroeconomic theory has focused on weaknesses andcontradictions in the capitalist system to be countered by governmentmeasures. Because of the traumatic experience of the 1930s Keynesianremedies were adopted widely after the Setond World War, i.e.to createinvestment and employment opportunities, and thus to activate themultiplier accelerator and avoid the permanent danger of massunemployment. In the 1960s Keynesianism’s counter-cyclical demand-management to countervail the instabil@ of the capitalist system,especially its inability to produce conditions of full employment, waschallenged by the monetarist theory of Milton Friedman which blamesAmerican monetary policy for causing the crisis by allowing the moneysupply to shrink and thus failing to counteract the deflation. Monetaristssee no fundamental flaws in modern capitalism, but make blunders andtragically inappropriate monetary policy responsible for the severity andinordinate length of the Great Depression.3 Lessons drawn from thefindings of Friedman and his followers have influenced present dayeconomic policy of leading Western governments which have appliedmonetary tools with doubtful results.

The morretarist view makes the United States monetary policy respon-sible for the collapse of the American banking system and the wide-spread bankruptcies because it permitted the money supply to shrink byabout one-third. Indeed, Friedman and Schwartz see no obviousconnection between the New York stock market crash of 1929 and thedepression, but argue that the slump could have been mitigated and thedepression shortened had the Federal Reserve Board more vigorouslyincreased the reserve base through open market purchases, as thiswould have halted the deflation and prevented the breakdown of theAmerican banking system. Other monetarists extended the blame forthe depression to the gold exchange standard and, particularly, itsliquidation by Britain’s abandonment of it, as well as to France andGermany where, in their view, incorrect fistal and monetary measureshad added to the economic breakdown. Against this Friedman andSchwartz, while conceding that the gold-exchange standard rendered theinternational monetary system vulnerable, maintain that the crisis origin-

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ated in the United States (ibid., p. 359-60) was entirely domestic andwas deepened and prolonged by mistaken monetary policy which,instead of tutting the discount rate, raised it, thus failing to providecredit facilities and expand the currency.

Monetarist explanations of economic development, especially of theGreat Depression, and monetarist remedies of economic ills haveacquired a large following. However, with the failures of money supplymanagement in recent history, doubts about monetarism as the panaceahave increasingly been voiced and non-monetarist studies have appearedsinte the late 1970s. With regards to explaining the 1930s two ap-proaches are representative of alternative and broader analyses of thereasons for the depression: one, using quantitative methods, the other,traditional economic and historital analysis.

Representative for the application of sophisticated econometricmethods is the work of Peter Temin who asks pointedly in the title ofhis book Did Monetay Factors Cause the Great Depression? (Temin,1976). His study is based essentially on Keynesian economic theory andthus takes into account other than merely monetary factors. It invest-igates relationships of critical economic indicators, such as consumption,income and wealth. With regards to the period between August 1929and August 1931, i.e. between the stock market crash and the Britishsuspension of the gold standard, Temin’s results turn the Friedman andSchwartz conclusions around, because he shows that in the US.consumption plummeted and, therefore, spending declined first,followed by a contraction in the money supply. And he finds noevidente that monetary factors alone caused the depression. AlthoughKeynesians’ and monetarists’ conclusions about causes of and “medi-cines” for economic crises are entirely contradictory, they agree that thecatastrophic dimensions of the depression could have been avoided. Butsuch conclusions seem to be not only unsatisfactory but also anachronis-tie.

Representative for a traditional economic and historital analysis ofthe Great Depression is the work of Charles Kindleberger whountiringly voices his disagreement with the monetarist school (especiallyKindleberger, 1973 and 1978). He considers “the Friedman and

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Schwartz view that the Great Depression was caused by monetary policyin the United States, and nothing else” to be “a fable” (Kindleberger,1985, p. 267), and in exasperation he exclaims in a review that themonetarists would need to explain why if “less money caused thedepression more money did not cure it” (Kindleberger, 1981, p. 1586). -Of his own position in the debate Kindleberger writes that in the bookThe World in Depression 1929-1939, he “reached the conclusion that the1929 depression was so Wide, so deep, and so prolonged because therewas no international lender of last resort. Exhausted by the war andgroggy from the aborted recovery of the 1920s Great Britain wasunable to att in that capacity and the United States was unwilling to doso” (Kindleberger, 1978, p. 4). Here Kindleberger refers to the bankingcrisis of 1931 which occurred during a long-term ongoing transfer of theworld’s finantial leadership from Britain to the United States, when “theformer was too weak to rescue Austria and Germany, the latter not yetconscious of the need, the opportunny or the benefit to itself” to takeupon itself the responsibility of a lender of the last resort (Kindleberger,1986, p. 443). Kindleberger’s fortefully repeated conviction was notgenerally accepted and particularly questioned by Donald Moggridge,the leading schalar on British finantial history of the interwar period.He disputes the usefulness of “a lender of the last resort”, sinte anumber of finantial crises occurred after 1929. Because of “theunderlying sources of dis-equilibria in the international economy suchas American economic policy, French gold accumulations, the postwarposition of Germany and the underlying weakness of the British balanteof payment at the post-1925 exchange rate in a world recession”, therole of the lender of the last resort becomes rather vague and question-able (Moggridge, 1981, p. 69).

In an historital perspective there existed a serious need in theinterwar period for effective international reconstruction and rehabilita-tion programmes on the basis of international cooperation. But thegreat powers were unable even to solve the debt problem because oftheir conflicting interests. Throughout the years of the Great Depressionthe governments of the leading industrial creditor nations could notagree on a tommon initiative to alleviate the finantial and trade

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pressures. With regards to the disarray in the international monetarysystem there was a total lack of coordination of national policies toinduce expansion. Perhaps the experience with the frustrated attemptsat international cooperation in finantial reconstruction during the 1930sshow by default how indispensable international coordination - notorrly of the monetary system - is in our time.

Notes

1. This essay is dedicated to Ra Lundström and with it go the author’swarmest wishes for her sixtieth birthday.

2. This is pointed out by Robert W.D. Boyce, British Capitalism, pp. 288-290; the same, “Montagu Norman and the Finantial Crisis”, ResearchPaper prepared for the Conference The 1931 Crisis and its Aftermath(14-16 April 1982), 3.

3. Most influential has been the now famous chapter 7 (“The greatcontraction”) in Milton Friedman and Anna Schwartz (1963) TheMonetary Histoy of the United States, 1867-1960 (Princeton).

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References

Berend, Ivan T. - Borchardt, Knut (eds.) (1986), The Zmpact of theDepression of the 1930’s and its Relevante for the Contemporary World(Budapest).

Bernstein, Michael A. (1987), The Great Depression. Delayed recoveryand economic change in America, 1929-1939 (Cambridge); Final Reportof the Gold Delegation of the League of Nations, (1932), (Geneva).

Boyce, Robert W.D., British Cupitalism.

Boyce, Robert W.D. (1982), “Montagu Norman and the FinantialCrisis”, Research Paper prepared for the Conference The 1931 Crisisand its Aftermath 14-16 April 1982.

Brunner, Karl (ed.) (1980), The Greut Depression Revisited (The Hague).

Friedman, Milton - Schwartz, Anna (1963) The Monetav History of theUnited States, 1867-1960 (Princeton).

Haberler, Gottfried (1976), The World Economy, Monq, and the GreatDepression 1919-1939 (Washington DC).

Kindleberger, Charles P. (1973), The World in Depression 1929-1939(Berkeley).

Kindleberger, Charles P. (1978), Manias, Panics, and Crashes. A Historyof Financiul Crises (New York).

Kindleberger, Charles P. (1981) “Review of The great depressionrevisited” in Brunner, Karl (ed.) Journal of Economic Literature, X1X,December.

Kindleberger, Charles P. - Laffargue, Jean-Pierre (eds.) (1982), Finan-cial Crises Theory, History, and Policy (Cambridge).

Kindleberger, Charles P. (1985) Keynesianism vs. Monetarism and OtherEssays in Finantial History (London).

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Kindleberger, Charles P. (1986), “International capita1 movements andforeign-exchange markets in crisis: the 1930s and the 198Os”, in Berend-Borchardt (eds.), The Impact of the Depression of the 1930’s and itsRelevante for the Contemporary World (Budapest).

Moggridge, D. E. (1981), “Finantial Crises and Lenders of Last Resort:Policy in the Crises of 1920 and 1929”, Journal of European EconomickILstory, lO/l, Spring 1981.

Temin, Peter (1976), Did Monetary Factors Cause the Great Depression?(New York).

Van der Wee, Herman (ed.) (1972), The Great Depression Revisited (TheHague).

Politital Language or the Language of Politics

Kristina Björkyen

Try to find one definition of politital language in literature and you Willeventually end up with a multitude of explanations. Studies can anaZyzearguments like Andersson, Furberg 1977, Dieckman 1969, Hedquist 1982or they can have their focus on discourse like van Dijk 1984, Heritageand Greatbatch 1986, Shapiro 1981, Stubbs 1983. They can be stylistic-sociologital like Josepson 198.5, Svensson, Mårtensson 1988 andThelander 1986. Popular, especially among French and Germanscientists is lexicomebie, where we find works of Robin 1973, Rindermanand Schildt 1988 and politics against minor@ lanpage and dialetts, likeBourdieu 1984. The bistory of ideas and mental+ is a large field of studywith representatives like Hunt 1984, Stedman-Jones 1984, Bauman 1983and Berggren 1988. Studies on politital language can be rhetorical, atradition which stretches from Aristotle, Cicero, Quintilianus andVossius to Ong 1982, Johanesson 1983,1987 and Fafner 1982. Followingthe Reagan erapolitical science in North America has focused a lot ofattention on politital rhetoric and the development of a new “electronicage” language. Authors like Riker 1986, Jamieson 1988 and Groenbeckbelong to this tradition.

In this paper 1 Will try to describe studies made in some of theseareas. Starting of with social scientists who regard language in itself aspolitital my first object of study is Murray Edelman and his work on thepolitital language of the helping professions.

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The politital language of the helping professions

In a very interesting paper Edelman examines language as used inpsychiatry, social work, psychiatric nursing, publit school education andlaw enforcement. The observations made were based upon extensive(and as he says “depressing”) reading of textbooks and journals of theseprofessions published in the last decade.

Edelman looked for covert as well as overt justifications for statusdifferentials, power differentials and authority.

Language is always an intrinsic part of some particular socialsituation; it is never an independent instrument or simply a toolfor description. By naively perceiving it as a tool, we mask itsprofound part in creating social relationships and in evoking theroles and the “selves” of those involved in the relationships. Socialscientists, and a large segment of the publit, have grown sensitiveand allergic to agnational politital rhetoric and to the ambiguitiesof such labels as “democracy “, “communist” and “law and order”.The most fundamental and long lasting influences upon polititalbeliefs grow, however, from language that is not perceived aspolitital at all, but nonetheless structures perceptions of status,authority, merit deviance, and the causes of social problems, . ..thespecial language of the helping professions, which we are social-ized to see as professional and as non-politital, is a major exampleof this leve1 of politics, though not the only one (Edelman 1984,~~.296-297).

Edelman points out that categorization is necessary to science as to allperception, but it is also a politital tool that establishes status andpower hierarchies. The problem is that we ordinarily assume that aclassification scheme is either scientific or politital, but actually anycategory can serve either of both functions, depending on the interestsof those who employ it and not because of anything inherent in theterm. Edelman finds that the ambiguity of “helping” becomes very clearwhen examining the tontrasting ways in which society “helps” elites andnon-elites. Subsidies from the publit treasury to businessmen are not

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justified as being help to individuals, he says, but rather as promotionof a generally supported goal such as defence, agriculture, transpor-tation, and so on. The abstractions are not personified in the peoplewho get depletion allowances, cost-plus contracts, tax write-offs or freegovernment services. The word “help” is not used in the tontext. Nor isthere in this case a dependency relationship or direct personalrelationship between recipient and a grantor. When “help” is given tothe poor a very different set of role relationships and benefits appears.The beneficiaries are personified and brought into focus. They areindividuals living off the tax payer.

The helping professions are the most effective contemporaryagents of social conformity and isolation. In playing this polititalrole they undergird the entire politital structure, yet are largelyspared from self-criticism, and even from politital observationthrough a special symbolic language (Edelman 1984, p.301).

Close to Edelman% concept one finds Pierre Bourdieus’, who in hisessay on what it means to talk (1984), turns against Sassure, Chomskyand structuralism and their thesis on the ideal speaker.

Without going into technicalities, one can say that Bourdieu focusesour attention on the implications of linguistics for our view of language.He stresses that linguistics is an intellectual philosophy that makeslanguage the object of intellectual understanding and not a tool foraction and power. To do as linguistics does, speak of “language” withoutbeing more explicit, means, says Bourdieu, that one silently accepts theofficial definition of the official language of a politital unity. This is, hecontinues, the language that is enforced on the subordinates of thatterritory. Language is a code, partly in the meaning of a cipher andpartly as a norm system. Official language is always allied with the state.Using the French revolution as an example Bourdieu finds that holdingup legitimate language at the expense of lotal dialetts was part of astrategy to make permanent the achievments of the Revolution throughthe production and reproduction of the “new man”.

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Condillacs theory that turns language into a method makes itpossible to identify revolutional language with revolutionalthinking. To reform language, to refine it from uses connectedwith the old régime and then reenforce it, purified, means toenforte a thinking that is purified and refined in itself (Bourdieu1984, p.33).

This is not communication but a way to make people recognize andacknowledge a new authoritarian discourse with its “... new polititalvocabulaty, references, metafors, euphemisms and that representationof the social world that it bears within it” (Bourdieu 1984).

Riker and the Art of Politital Manipulation

4 somewhat different approach to politital language is presented byWilliam Riker in his “The Art of Politital Manipulation”. Rikerintroduces the concept of “heresthetics”, that is the art of manipulation.The “heresthetician” uses language to manipulate other people.

He talks to them, asking them questions and telling them fatts; heutters arguments, giving reasons for believing his arguments aretrue; and he describes social nature, importing to his descriptionthe exact twist that leads others to respond to nature as he wishes. . . Logit is concerned with the truth-value of sentences. Grammaris concerned with the communication-value of sentences. Rhetoricis concerned with the Persuasion-value of sentences. And heres-thetic is concerned with the strategy-value of sentences. In eachcase, the art involves the use of language to accomplish somepurpose: to arrive at truth, to communicate, to persuade and tomanipulate (Riker 1986, p.x).

The heresthetic is grounded on social-choice theory, decision theorywhich is a special branch of economic and politital theory. Social choicetheory consists of descriptions and analyses of the way that preferencesof individual members of a group are amalgamated into a decision forthe group as a whole.

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For a person who expects to loose on some decision, the fundamentalheresthetical devise is to divide the majority with a new alternative, onethat he prefers to the alternative previously expected to win. The modelRiker uses to show how manipulation is possible is based on fourassumptions: that there are individuals with preferences, that there arealternatives, that there is more than one dimension and that there aremethods for choosing, here elections.

Figure.

Source: Riker 1986 p.146

The figure shows two dimensions x and y; these dimensions couldarbitrarily be on the one hand teachers’ salaries and on the other theteacher/student quota, so that point x,,y, is a combination of persontwo’s choices. If only one dimension existed, say x, the ideal pointswould be on the horisontal axis x,, x2, x3 and so on. Having a major@voting in this one dimension would result in x, winning. If x1 is set

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against any point to the left or to the right, it would win by the rules ofmajority, because individuals 2 and 3 would choose x,, sinte this pointis closer to their respective ideals. Sinte x, can win over all otheralternatives on the axis, x1 is an equilibrium position. By introducing asetond dimension, y, the equilibrium position is lost. Regarding y as theonly dimension leaves us with y3 as median. But unfortunately thecombination x1y3 represents two individuals and is therefore not apossible median. An equilibrium based on a median person disappearsin two dimensions (that is if one person does not make median choicesin both dimensions, but this rearly happens, especially not when moreindividuals are involved). Rikers point is that there is no equilibriumposition, not even in this simple example using three individuals. Theabsense of an equilibrium makes the outcome unpredictable. ElettorsWill move round h, i and k in an eternal circuit until someone ends theprocess through active intervention. Rikers model shows that manyoutcomes are possible (Riker 1986).

Which one occurs depends, of course, on how elever and skillfullpeople stop the process to their advantage (Riker 1986, p.146).

Riker finds that the heresthetic manipulator can choose between threealternatives (or use them all): these are controlling the agenda, strategicvoting and manipulation of dimensions (Riker 1986).

Stepping down from these abstract levels of Edelman, Riker andBourdieu one reaches formulations of politital language as it is given byGunnar Fredriksson. Fredriksson regards politital language as a variantof normative language appearing in a politital tontext. Normativelanguage is thus language used as to affect the actions of people andgroups. Politital tontext is the publit debate on society manifested inthe Parliament, leader columns, party programs, official reports, polititaltheories, publit speeches and so on (Fredriksson 1982). Studiespresented further in this paper fall into this last broad category. Theyare concrete examples of the features of this type of language.

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Lasswell’s politital language and Hertzler on social movements

Harold Lasswell’s “Language of Politi& is a classic in the field ofquantitative semantics, examining key terms, slogans and doctrines fromthe point of view of how they are understood. Lasswells object of studyis early Communist Russia and Nazi Germany. He points out that allpolitital doctrines tonsist of basic expectations and demands thatcancern power relations and practices in society, that is Credenda inopposition to admirable ones, Miranda. In the same way, legal andeconomic theories have often served as formulations of polititaldoctrines, beside the scientific purport they may have had. Key symbolsare basic codes of the politital myth - right, freedom, equality, demo-cracy etc - and their function is to create an experience that can beshared by all members of the community or group. The slogan/maximis a terse of words that gets its meaning through repetition and tontext- Trial by Jury, Freedom of Speech, the King never dies etc. Lasswellholds that the style of politics varies according to the basic situation ofpower. Politital situations can be classified according to the degree ofdespotism or democracy. The most intense crisis is physical combat andit includes battles, riots and uprising. As a rule a low leve1 of tensioncharacterizes the formulation of policy through parliamentary debate,election speeches etc. Least tense is the ceremonial occasion on whichdifferentes are played down and symbols of unity played up. These areevents like memorial services and celebrations of victory. When theoutlook is optimistic, language becomes more prolix and diversified andopposite; when pessimistic, style grows tense and repetitious. Thelanguage of combat is highly standardized and is composed of one or atmost a few words that are repeated in a pattern. It gets repetitious andeffect-contrasted. Where the tension is lower there is more of adiversity, and a wider range of expression is allowed.

Joyce Hertzler gives a similar description of the various stages oflanguage in social movements. She holds that in the period of ag-gravation and intubation there must be a clear tut verbal formulationof the grounds for interest and dissatisfaction. The period of initiationis characterized by “speechifying”, by the leaders’ agitating, preaching,

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haranguing and by promotional literature. In the period of organisation,then, ideology must be stated with some specificity, and policies, plansand programs must be set forth in language which is precise as tostatement and functional form. In the final period of institutionalisationthe structures, principles and rules of operation must be clearly statedin the constitution and by-laws. The uses of language in social move-ments are multiform and include the elimination of derogatory termssuch as “nigger” and the development of special terms of meanings suchas “citizen” in the French Revolution and “comrade” in the movementsof communism and socialism (Hertzler 1965).

Moving our attention to Sweden Olle Josephson has made an interes-ting study of the early Social Democratic movement. The questionposed was: what happens when an uprising elass captures the officiallanguage? Josepson finds, by following individual members of the move-ment, that the tendency is to assimilate rather than to question theofficial language. The goal is to master pecularities and specialitiesbetter than the elass that is to be overthrown; questions of form becomeof great importante. Anyone who was both a student and a SocialDemocrat at the turn of the century could most certsinly be expectedto hold May Day speeches. The famous Swedish economist EmilSommarin is a typical example on how academics, once they had foundtheir way into the Social Democratic movement, were rapidly placed inpositions where they could att as verbal style-formers. But, Josepsoncontinues, the process was not univocal or unargued. There was amovement towards a simpler language, closer to the language spoken.The Social Democratic press often’ met with complaints for beingdifficult to read. Josepson still stresses, though, that this was just amovement within the movement, barely affecting language as iscommonly believed (Josepson 1985).

Research on modern Swedish politital language has been done bySvensson, Thelander and Malmgren respectively. Jan Svensson analyseslanguage in newspaper articles, leader-columns and parliamentarydebate, comparing the 1950s and 1980s. He assumes (his theory basedon Jurgen Habermas’ Strukturwandel der Öffentlichkeit) that changesin publit life have an effect on the use of language, so that:

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a) rational reasoning in discussions has disappeared and has beenreplaced by a demonstration of prepackaged positions.

b) the development of the media has led to oversupply and shallowtontent.

c) the changing characteristics of the audience, from a critical massto a consumption unit promotes the entertaining elements inpolitital discussion.

d) compromise solutions between pressure groups lead to a vaguerlanguage.

e) the roles of polititians and journalists have been professionalised.f) politital activity uses techniques that have their origin in publit

relations and advertising, which tends to be reflected in thelanguage.

Svensson’s findings are that newspaper artides have lost their personaldiscussing tone and have become more stereotype and monotonous.kader-cohmns still keep their critical, analyzing character in the 1980sbut are built up in a more simple syntactical way. If the Parliament wasused for discussions in the 1950s it is an arena for marking partystandpoints in the 1980s. In general sentences have grown shorter,subordinate clause have tended to diminish and the official language hasadapted the character of spoken Swedish (Svensson, Mårtensson 1988).

Thelander, finally, asked if there were any differentes in the languagespoken by male and female polititians. She found, perhaps surprisingly,that there were no differentes, at least not on a parliamentary level. Asa matter of fatt one could interpret the results as if the language offemale polititians in the Parliament was even more “male” than that oftheir male counterparts. By “male” Thelander means lengthy speeches,abstract language and technical reasoning. On lower levels of thepolitital arena dissimilarities were found. Female polititians on lotal andregional levels did speak in a somewhat different fashion than theirmale counterparts (Thelander 1986).

Similar studies of inter-party differentes have failed to find anyremarkable diversification along the politital scale. Except for the left-wing party and the conservatives, along whom a special terminology is

2 6

used at times, there is no differente between the politital parties in theSwedish Parhament, at least not regarding the usage of language(Malmgren 1989).

Some final words

We see in this paper how varied ideas about politital language can be.By just presenting a fragment, one cannot easily present one definitionof it. Depending on your aims and goals the focus on politital languagecan be quite arbitrary. It seems though, as Paul Corcoran holds, to bea category that bears some relationship to ordinary experience.

In the absente of careful reflection, at least, “politital language”appears to be a term refering with simple plausibility to things wesay, hear or read as we go about our daily routine . . . we are moreapt to think that “politital language” is really language aboutpohtics . . . On first reflection, therefore, we would identify polititallanguage by its tontent, rather than by its form (Corcoran 1979, p.xii).

27

References

Andersson J., Furberg M. (1984), Språk och påverkan (Klippan).

Berggren, Henrik (1988), “Proletärerna vid Mimers brunn”, HistoriskTidskrift, No 2/88.

Bauman, Richard (1983) Let your words be few (Cambridge studies inoral and Literate Culture, Cambridge).

Bourdieu, Pierre (1984) “Vad det vill säga att tala” Skeptron No 1184.

Corcoran, Paul E (1979), Politital Language and Rhetoric (Austin).

Dieckman, Walther (1969), Sprache in der Politik - Einfurung in diepragmatik und semantik in der politischen sprache (Heidelberg).

van Dijk, Teun A (1984), Prejudice in Discourse (Philadelphia).

Edelman, Murray (1984), “The politital language of the helpingprofessions” in Language and Politics, ed. M Shapiro (New York).

Fafner, Jörgen (1982), Tanke og tale - den retoriske tradition i Ves-teurapa (Copenhagen).

Fredriksson, Gunnar (1982), Det politiska språket (Stockholm).

Groenbeck, Bruce (1989), Electric rhetoric.

Hedquist, Rolf (1982), Amdyser av radiosändningar Beredskapsnämndenför psykologiskt försvar no 115 (Stockholm.)

Hertzler, Joyce (196.5) A Sociology of Language (New York).

Hunt, Lynn (1984) Politics, culture and elass in the French revolution(UCLA).

Heritage, J - Greatbatch D (1986), “Generating applause: A study ofrhetoric and response at party politital conferences”, American Journalof Sociology No 1186.

28

Jamieson, Kathleen Hall (1988), Eloquence in an Electronic Age(New York and Oxford).

Johanesson, Kurt (1983), Svensk retorik - fr& Stockholms blodbad tillAlmedalen.

Johanesson, Kurt (1987), Det fru ordets martyrer - Heroer på of-fentlighetens scen.

Josepsson, Olle (1985), “Vägen över språkklyftan eller åt skogen medpropositionsordningarna”, Spr&vBrd, No 2185.

Lasswell, Harold (1949), Language of Politics - studies in quantitativesemantics (New York).

Malmgren, Sven-Göran (1989), “Om övertalande ord i riksdagspartiernasspråk”, Orden speglar samhället (Stockholm).

Ong, Walther J (1982), Oral@ and Literacy - the technologizing of theword (London and New York).

Riker, William (1986) The Art of Politital Manipulation (New York).

Robin, Regine (1973) Histoire et linguistique (Paris).

Rinderman, B - Schildt J (1988), Politsch-sozialer wortschatz in 19Jahrhundeti.

Shapiro, Michael (1981) Language and politital understanding (Yale).

Stedman-Jones, Gareth (1982), Languages of Glass - studies in Englishworking elass histoty 1832-1982 (Cambridge).

Stubbs, Michael (1983), Discourse analysis - the sociolinguistic analysisof natural language (Oxford).

Svensson J - Mårtensson E (1988), Offentlighetsstruktur och spn?k-förändring (1ns ttutionen för nordiska språk Lund 14).t’

Thelander, Kerstin (1986) PolitikersprBk i könsperspektiv (Stockholm).

Publit Banking as a Social Democratic Policy

Mats Larsson

Introduction

The issue of publit banking has been of great importante for the SocialDemocratic Party for the whole of the 20th century. Proposals for thenationalization of industry, including banking, were put forward in theParty program in 1920. But it was not this revolutionary attitude thatdominated the Social Democrats. As early as during the interwar perioda more pragmatic policy was adopted.

In this paper 1 Will analyze the politital discussion preceding theestablishment of Sveriges Kreditbank AB - the first wholly state ownedcommercial bank - in 1951.

Theory and Practice - the Social Democratic Party Congress in 1920

The Social Democratic Party was in the 1910s strongly involved in thedemocratization of Swedish politital life. After equal voting rights wereintroduced in 1918, the party lost one of its principal politital topics,thereby creating the need for a new major politital idea to be putbefore the voters. The Social Democratic interest in changing theeconomy became the new leading topic. This contributed to formingSweden3 socialistic ideology.

The issue of publit guidante of the economy arose during World War1, when the state provisionally took over control of key industries inkey-branthes. Despite strong propaganda from some Social Democratsand other left wing socialists, these wartime regulations were not

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followed up by an industrial nationalization. The majority of theSwedish parhament were against such policies. (Tingsten, 1941, pp 236)

This, however, was the beginning of an extensive debate aboutnationalization by both the Social Democrats and non-socialists. For afew years - until the beginning of 1920 - the Social Democrats triedto develop a consistent policy for changing Sweden’s economy. As inseveral other European countries demands for the socialization of tradeand industry were adopted in the program. The party congress at thebeginning of 1920 accepted this new program, which was to be the basisfor the campaign preceding the election in the autumn that year.(Tingsten, 1941 pp. 241)’

In this new program, the state was to take over all natural resources,industrial companies, banking and finante institutions, transport andcommunications in order to form a planned economy. To understandhow this economic reform was to be carried out, we have referred tothe opinions of leading part ideologists. Gustaf Möller - later tobecome minister for social welfare - had already in 1918 outlined hownationalization should take place. Two years later this was followed byanother publication in which Möller presented, in detail, his - andprobably also large parts of the Social Democratic Party? - view oneconomic developments. Nationalization was first to affect the majorsupplies of raw material resources such as wood, iron and energy. Inorder to handle this sector of publit companies, Möller recommendedthe creation of a publit commercial bank to work alongside the privatebanks. A quick nationalization of the whole banking system was notmotivated, sinte it could lead to liquidations among industrial com-panies and to unemployment. The intention thus was not in the firststeps towards nationalization to take over the banks - which otherwisewould have been quite natural - as this would involve too great a risk.(Socialdemokratins efterkrigsprogram, 1920, punkt X111; Möller, 1920;Tingsten, 1941, pp. 241)

Nationalization was to be carried out successively and only when thevarious industrial sectors were ready for a final takeover. For the timebeing, the state could enforte controls and regulations for the develop-ment of different sectors.’

31

In order to strengthen the working elass and the tonsumers, theywere to be given the right to participate in the control of nationalizedcompanies. Gustaf Möller also pleaded the introduction of a specialcouncil for each industrial sector, which had not yet been taken over bythe state. Within these councils, owners, workers, tonsumers and publitrepresentatives would be allowed insight and decision making. Thiscould, according to Möller, be used to quicken the pace in develop-ments towards nationalization. (Möller, 1920)

This might seem radieal, but in other issues the Social Democrats hadmore conciliatory policies. Thus, there was no hesitation that Companyowners be compensated by the state for losses incurred by national-ization - a superior task considering the strain on the treasury. In orderto strengthen the state budget a new taxation system with higher capita1and income taxes for the wealthy was introduced.

Leading Social Democrats, however, were well aware of the risk thatpublit companies could become inactive and bureaucratic. Nationalizedcompanies should therefore keep there independence in relation togovernment, in spite of publit ownership. Private initiatives wereimportant within both the capitalistic and socialistic production system.Cooperation was ascribed a certain importante even in the future.(Tingsten, 1941, pp. 242)

The Social Democratic Program for nationalization hence indicatedthat a state takeover of trade and industry would be a lengthy process.Neither the Swedish publit nor the Social Democratic Party were inpractice ready for such a struttural change. The Social Democratic viewwas not even on the theoretical leve1 quite clear, and the nationalizationdebate continued for the rest of the 1920s without a party programbeing drawn up for future nationalization. There was a considerabledivision in the party between those who pleaded a deterministic marxismand those who had a more reformist attitude. (Lewin, 1970, pp. 33)

Sinte the Social Democrats did not benefit from a majority in par-liament during the interwar period, the question of how to handlenationalization in practice did not arise during the 1920s. The com-paratively rapid economic development in Sweden in the 1920s insteadgave weight to the Liberals’ and Conservatives’ criticism of the Social

32

Democrats policies. In the so-talled “Socialization election” of 1920 theSocial Democrats only gained about 30 per cent of the votes - whichwas less than in the previous election. Considering the new equalvoting-rights this result must be regarded as a setback, and an importantreason for this could have been the question of nationalization, whichdominated the election campaign. (Carlsson - Rosén, 1970, pp. 534;Lewin, 1970, pp. 34)

The poor result of the election opened the door for a more moderateview on nationalization. Social Democrat Nils Karleby - editor ofSkånska Socialdemokraten - suggested in an article in 1926 that thegoal of the working elass was to receive a larger part of publit resour-tes. The nationalization of trade and industry should not therefore beseen as an absolute prerequisite. If, for example, it was possible toachieve a more just distribution of production profits purely byinfluencing industry, this could replace nationalization. Karleby alsobelieved that the free tompetition policies would determine the sectorsand enterprises that should be nationalized. If the state instead activelyparticipated to encourage nationalization, the result could be slowereconomic growth and a poorer standard of living for the working elass.(Karleby, 1926, pp. 87; Lewin, 1970, pp. 37)

An other example of pragmatic Social Democratic policies was thelabour market policy which the Party practiced during the interwarperiod. This aimed at creating a minimum standard of living leve1 forthe unemployed - through so talled relief work. The Liberals and mostright-wing Social Democrats wanted the wages for this relief work to belower than on the open market in order to stimulate this groupindividuals to go back to regular jobs. (Lewin, 1970, pp. 47)

The radieal economic policies which the Social Democrats began toformulate in the 1910s thus culminated in a new Party program in 1920.During the following decade the Party program’s demand for national-ization was strongly moderated. The socialization of Swedish bankinghad not been especially emphasized. However, when the commercialbanks were hit by a finantial crisis, in the beginning of the 1920s theSocial Democratic demand for nationalization, as well as the Liberal’seconomic policies had to be reconsidered.

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The Bank Crisis of the 1920s

The high leve1 of business activity experienced in Sweden during theFirst World War decreased considerably in 1918 and 1919. The highrate of inflation during the war years lessened somewhat, but pricescontinued to be high well into the summer of 1920. During the followingyear, however, prices fel1 by more than 50 per cent. This rapid deflationproved disastrous for many companies, and loans taken during theinflationary years became more and more difficult to repay.

This situation posed a serious dilemma for many banks becausecredits often had to be given against no or bad securities. Losses onloans were frequent among commercial banks and depreciations onassets could not be avoided. Due to these losses several banks had togo inte liquidation and were taken over by other banks.

In some cases, however, there was no private financier able to takeover these banks suffering economic problems, and the government wasforced to att in order to avoid a general finantial crisis.

The agrarian crises in the beginning of the 1920s jeopardized ABSvenska Lantmännens Bank, and in February 1923 a proposal for itsreconstruction was put forward. The amount of depreciation neededwould use nearly all of the share capital, while at the same timeadditional funds - from the farmers - were hard to obtain. Thegovernment’s fear of a large bank liquidation, however, led to areconstruction. Through direct shareholding and through a specialCompany the state took over nearly 100 per cent of the ownership in thenew reconstructed “Jordbrukarbanken” in april 1923. This should not,however, be seen as a step towards the nationalization of commercialbanking, but as a means of solving a finantial crisis. (Larsson, forth-coming)

The same situation occurred in 1925 when AB Nordiska Handelsban-ken, due to large losses, had to be reconstructed. The new bank - ABGöteborgs Handelsbank - which was formed to take over the oldbank’s business, could orrly to 50 per cent be established with privatecapital. The remaining part of the share capita1 was paid by the state,

3 4

and thus from 1925 there were two commercial banks in Sweden withlarge publit interests. (Waara, 1980, pp. 29)

From Socialization to Welfare Ideology - the Debate in the 1930s

The politital development in the 1920s showed that the Social Demo-crats neither ideologitally nor in practice were ready for a far-reachingsocialization of the economy. Despite a division in the Party during the1920s concerning nationalization, there was a tendency towards moremoderate Social Democratic policies. The idea of a slow reformation ofsociety was also strengthened under Social Democratic governments.

Social Democratic policies, however were somewhat radicalized in1928 when a proposal for a change in inheritance tax was used for amore even distribution of publit resources. Another proposal, which wasput forward in 1928, was the establishment of a publit commercial bank.This bank would operate both depositing and lending services on theopen market in tompetition with private banks and thus guaranteeingthat the private banks did not misuse their market position. ConsideringGustaf Möller’s dissociation from the establishment of a publitcommercial bank - due to practical problems - this proposal tame asa surprise. A major reason for the updating of this question was anewly-presented analysis which emphasized the close connectionsbetween banks and industrial companies - were the banks in fattmasters of industry or were they their setvants?

The Liberals and Conservatives criticised the proposal for establishinga publit commercial bank for being a part of a larger socializationprogram. This criticism was also supported by some Social Democraticnewspapers, which were strongly in favour of the proposal. RichardSandler - a former Social Democratic prime minister - however,meant that the proposal was only an element in strengthening com-petition within the banking system, in order to avoid monopolization.The proposal also showed that the publit takeover of Jordbrukarbankenwas not to be the basis for more extensive publit commercial banking.

35

The majority in parliament was not in favour of the Social Demo-cratic proposal and after the election in 1928 the party’s position whichwas dominated by the proposal for an inheritance tax reform, becameeven weaker.

The Social Democratic strategy for nationalization was, during theend of the 1920s and beginning of the 30s examined by the so talledSocialization Committee. The Committee’s findings were presented forthe Party Executive before the election in 1932. Sinte publit opinionfavoured the Social Democrats, the Party Executive was strongly againstradieal proposals concerning the economy. The Socialization Committeeand the Executive therefore agreed that there would not be a national-ization of industry, agriculture or any other sector. Therefore, no officialSocial Democratic proposal for socialization was presented prior to theelection in 1932. (Tingsten, 1941, pp. 328)

The cost of expropriation of private property was an importantreason for the Party’s dissociation from the nationalization principle.Instead, the state would have to manage their enterprises in tompetitionwith private firms. This also meant that the Social Democrats gave uptheir attempts to formulate a strategy for the implementation ofsocialization. The paragraph concerning the nationalization of trade andindustry was not, however, taken out of the Party program. ErnstWigforss - later Minister of Finante - was of the opinion thatsocialization as a principle was important in case the capitalistic systembe hit by such a crisis that socialization would be the only solution. Thisalso meant that the advantages of socialization could be used asprinciples, without having to be practical solutions (Tingsten, 1941, pp.329).

This attitude against an active nationalization of the Swedisheconomy did not stop the Social Democrats from introducing bills inparliament for more radieal economic policies. The only direct proposalfor nationalization of a part of the economy, however, tame from A.Hermansson, who at several times during the end of the 1930s andbeginning of the 40s demanded the nationalization of private insurancecompanies. This proposal was not only voted down by the Liberals andConservatives in parliament, but was also counteracted by other Social

36

Democrats. For Hermansson, as well as for other party officials, themajor reason for nationalizing insurance companies was to tut costs andthereby reduce insurance premiums. The official Social Democratic, aswell as state, policy during the 1940s was, however, to strengthen theinsured’s position through other measures. (Grip, 1987, pp. 31)

As the Social Democrats had abandoned their demand for thenationalization of trade and industry, activities in other parts of thegovernment’s policies grew larger. The building up of the welfare statewas started, for example with voluntary unemployment insurance in1934 and a national old-age pension scheme in 1935. Some measureswere also taken to protect employment in agriculture as well as industry.This led to a distrust from private companies of what the real reasonwas for the increased governmental involvement in the economy. Eventhe Liberal and Conservative parties reacted, and accused the SocialDemocrats of having blind faith in governmental activities. In actual fattlarge parts of the implemented Social Democratic policies coincidedwith what we today know as keynesian policies.

The Social Democratic Postwar Program

Sweden? economic policies were during World War II concentrated onthe access to products essential to the defence and survival of thepopulation. This implied a comparatively extensive governmental controlover large sectors of industry.

Towards the end of the war, the politital parties started to developguidelines for postwar development and the wartime policy of comprom-ise was replaced by a more intense debate. This debate had more or lessthe same points of departure as the discussion ten years earlier abouta planned economy. Some radicalization, however, had taken placetowards the end of World War II. The Liberal and Conservative parties’acceptante of some parts of the Social Democratic program from the1930s was one example. Social reform policies and protection againstunemployment were no longer controversial subjetts. The Social

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Democratic demand for increased governmental control of industry,however, caused considerable debate. (Lewin, 1970, pp. 186)3

The Social Democrats had during the 1930s left their demands forthe nationalization of trade and industry in favour of a more extensivecontrol of a planned economy. This had involved governmental insightin industry as well as a wider participation in decision-making processesfor workers. These politital ideas were also carried into the 1940s butwere then given a more struttural form in the Social DemocraticPostwar program and by the so-talled “Myrdalskommissionen”.

The Social Democratic Postwar program was accepted by itsCongress in 1944 and included guidelines for the continued develop-ment of all sectors of society in the near, as well as in the distant future.The program was marked by a general pessimism for the postwareconomy, sinte polititians feared an economic crisis - like the one in1920-22. Increased publit control and involvement in the economywould therefore be unavoidable in the near future to protect companiesand workers. It was not, however, these questions but the more long-term development policies sketched out in the postwar program, whichbecame subjetts of debate. (Arbetarrörelsens efterkrigsprogram, 1944,

PP. 3)In the long-term according to the postwar program, there was a need

for greater efficiency and democracy within industry in order to satisfythe workers’ standard of living requirements and right to participate indecision-making processes in private companies. This increased demandfor struttural rationalization, in order to tut production costs, was acontinuation of the policy adopted as early as in the 1920s. Karleby andWigforss had already during this period maintained that the Partyshould abandon their dogmatic demands for socialization in favour ofpolicies encouraging efficiency in production.

This did not, however, imply that publit enterprising should beabolished. On the contrary, in the Social Democratic Postwar program,it was stated that enterprises for the publit good should be started tocompete with private companies in order to counteract mismanagementand tendencies toward’s monopolization. The credit market was onesector in which the Social Democrats especially wanted to strengthen

38

the state’s role, and this could be done through the establishment of apublit commercial bank. (Arbetarrörelsens efterkrigsprogram, 1944, pp.79)

The Social Democratic Postwar program was strongly criticised,especially by the Liberals, Conservatives and private enterprises, butalso from within the Party. In the internal debate the program wascriticised for deviating from the Marxist theory. Prior@ for industrialrationalization was the same as accepting the capitalist economy, whichwas more drastic than the labour market policies of the 1930s. Theprogram was also criticised for being the final departure from national-ization. (Lewin, 1970, pp. 224)

Despite this criticism, the realization of the Postwar program soonbegan. In proposals put before parliament in the beginning of 1945 theSocial Democrats suggested several measures to promote the rational-ization and democratization of industry. These proposals were intro-duced while the coalition government was still in power and the Liberalsand Conservatives therefore criticised the Social Democrats for havingbroken the party truce. Therefore in July 1945 there was a governmentrestructure which left only the Social Democrat’s in the cabinet.

During the following years - until 1948 - the debate concerning aplanned economy was extensive. The Liberals and Conservativesbelieved that the Social Democratic Postwar program threatenedfundamental rights. There was a risk that industry would be regulatedby governmental decrees, while formally remaining private, the rights ofthe individual and tonsumers could in the long-term threatened.Furthermore the demand for nationalization in certain sectors was -according to the politital opposition - still of current interest and couldbe seen in special sectorial reports. (Lewin, 1970, pp. 224)4

There were, however, some Liberals and Conservatives who viewedthe Social Democratic program more moderately. Professor A.Montgomery, for example, pointed out the differente between socializa-tion and planning, and meant that the Social Democrats did not aim fora gradual nationalization, but tried to influence the economy to thebenefit of all. For example, to counteract unemployment the SocialDemocrats wanted increased mobilny on the labour market and not

39

more governmental control. In both Montgomery’s and the SocialDemocrats’ argumentation, could be discerned Keynesian policies whichthe Social Democrats were to promote during the 1950s. (Ekonomiskrevy 1945, pp. 239)

The Establishment of a Publit Commercial Bank

The extensive sectorial reports that were made in the 1940s alsoaffected the credit market. In 1945 a committee was formed to analyzethe development of banking and the question of establishing a publitcommercial bank. However, this committee soon had to look at moreimmediate problems facing the Swedish credit market.

The need for capita1 was great, especially within the building sectorand in agriculture where the government promoted rationalization andstruttural changes. The committee had to find suitable ways for thecredit institutions to participate in the financing of these projects, butalso to look at how the state could contribute with capital. Thereforethe establishment of a publit commercial bank was of great importante.

State activities on the credit market had up until then included thepost-office savings banks as well as some of the national banks’ ac-tivities. Furthermore the state was, sinte the 1920s joint owner of twocommercial banks - the Jordbrukarbanken and Göteborgs Han-delsbank. Through special funds the state could also participate in thefinancing of other projects. This disrupted picture of governmentactivities on the credit market was of great importante when thecommittee suggested the establishment of a new and larger publitcommercial bank.

The committee reported that there ought to be advantages in the co-ordination of publit activities on the credit market. Considering thelarge need for capita1 in agriculture and the building sector, governmen-tal lending would probably be increased within a couple of years. Thesectorial reports that were to be presented would, for example, lead tomore governmental credits (SOU 1949:13, 1949, pp. 35). Theseconclusions were logital consequences of the Social Democratic policy,

4 0

which had been initiated by proposals presented to parliament in 194.5,which promoted rationalization and struttural changes in industry.

There were, however, other reasons for the establishment of a publitcommercial bank. Not all publit lending could be executed by ordinarycommercial banks. Technical obstacles, such as the need for securities,limited the commercial banks’ lending (SOU 1949:13, 1949, p. 37).

The committee also meant that officially-favoured sectors of theeconomy could encounter difficulties in obtaining credit - compared toother sectors - from the ordinary commercial banks. This problemcould perhaps be solved through the allocation of publit funds forcertain credits, which the banks could use for lending. This, however,seemed to be an inconvenient solution; it would be better if publitlending were concentrated to one special bank.

An important reason for the establishment of a publit commercialbank was also that the National Bank?, the “Riksbank”, activities shouldbe concentrated to central banking. The administration of special funds- which previously had been done by the Riksbank - should togetherwith activities connected with commercial banking be transferred to thenew publit bank. This prioritization of central banking was a result ofthe increased role Riksbanken was to play in the 1950s being respon-sible for monetary policies in Sweden.

Private commercial banks had for several decades established closelinks with industrial and trading companies. The government attemptedto break these contacts during the interwar period, but was unsuc-cessful. Interlocking directorates and ownership through investmentcompanies meant that the banks still held strong positions vis-a-vis theircustomers, which could result in discrimination when lending to othercustomers. A publit commercial bank could, thus, counterbalance this“power of capital”.

The committee also stated that a publit commercial bank could breakthe tendency towards cartellization, and also stimulate tompetition.However, the committee could not prove that the banks appliedexorbitant interest rates or that there was a lack of objectivity in theirlending. The existence of a publit commercial bank could still, however,be of guidante for the development of the market (SOU 1949:13, 1949,

41

pp. 46). This stand corresponded well with the guidelines for economicaldevelopment, which were included in the Social Democratic Postwarprogram. Free tompetition and the need for continued rationalizationwould primarily benefit the tonsumers.

On the whole, the committee’s proposals, made a stronger case forstate intervention on the credit market. However, neither greatercontrol of banking activities nor the old proposal for nationalizationwere included in the proposals. The committee stated, however, anadditional reason for establishing a publit commercial bank: the generalmistrust for private commercial banking. The creation of a state ownedbank would perhaps alleviate this mistrust, to the advantage of privatebanking. (SOU 1949:13, 1949, p. 49)

There were, however, problems connected with the establishment andoperations of the new bank. It could not be given total responsibility forstate lending to agriculture and in connection with the new productionof domestic dwellings. A publit commercial bank was therefore not thefinal solution for state lending to favoured sectors. (SOU 1949:13, 1949,

PP* 40)In order to fulfil its obligations as lender to the building sector the

bank also needed an extensive network of branch offices, where therewas lotal knowledge about borrowers and the value of securities. Thecreation of this network could in part be done within the framework ofthe committee’s proposals.

The new publit commercial bank was to be based on Jordbrukar-banken, which to 99 per cent was state owned. Additional lotal branchoffices were to be taken over from Riksbanken and also from the joint-owned Göteborgs Handelsbank. Government shares in GöteborgsHandelsbank were sold to Skandinaviska Banken, which in principletook over the bank’s operations. A total of 14 offices, however, weretaken over by the new publit bank. With help from the Bank InspectionBoard an additional four offices were taken over from SkandinaviskaBanken, and one office each from Wermlandsbanken and GöteborgsBank. (Prop. 1949:151; Klahr, 1988, p. 47)

The new bank’s operations were thus founded on ready-establishedcontacts within publit banking. Government offices and enterprises were

42

also supposed to use the new publit bank as their main banking contact,unless this caused major practical problems.

In the committee’s original proposal for the establishment of a publitcommercial bank this new bank was also supposed to take over someparts of Riksbankens operations. This, however, led to a discussionbetween the National Bank and Jordbrukarbanken, and when par-liament approved the establishment of a new publit bank, thesecontroversial suggestions were omitted (Klahr, 1988, pp. 48). This meantthat the structure of business of the new Sveriges Kreditbank AB - thenew name was adopted in January 1951 - was to be the same as forprivate commercial banks.

Conclusion

The Social Democratic Party’s attitude towards commercial bankingduring the first half of the 20th century was complex. In the 1910s and20s the question of nationalization of banking dominated the debate. Inthe 1930s however, the Party’s policy towards banking became morepragmatic and demands for socialization were no longer of currentinterest.

Instead the Social Democrats adopted a more Keynesian policy inorder to build up a welfare state. When finally a wholly state-ownedcommercial bank was established in 1951, this was a consequence of thenew role the state was to play in economic policy and not as a first steptowards the nationalization of banking.

Notes

1. The Social Democrats had by March 1920 formed a governmentreplacing a Liberal cabinet. This also led to a more tangible shaping ofthe following Social Democratic policy.

2. Publit control of economic developments had sinte the 1870s - whena section for bank control was formed in the Finante Department -

43

been a major element in the development of the Swedish bankingsystem. The purpose with this control, however, was not to directbanking towards socialization, but to protect deposits.

3. The general politital radicalization in the beginning of the 1940s canbe explained by several factors. The economic development during thewar had been successful and the Social Democrats in particularregarded a large publit involvement in the economy as essential for therestoration of the economy after the war. At the same time a newgeneration of polititians entered the scene, which especially among theLiberals and Conservatives meant a larger interest in a more radiealpolicy.

4. These sectorial reports had been initiated by “Myrdalskommissionen”,which from the middle of the 1940s was working with an overview ofSwedens long term development. Only in one of the reports - the oilreport - however, did the committee recommend the nationalization ofa certain sector.

44

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Arbetarrörelsens efterkrigsprogram (1944) (Stockholm).

Carlsson, Sten - Rosén, Jerker (1970), Svensk historia, del 2 (Stock-holm).

Grip, Gunvall (1987), vill du fihet eller tvdng? Svensk försäkringspolitik1935-1945 (Uppsala).

Karleby, Nils (1926), Socialismen inför verkligheten (Stockholm).

Klahr, Håkan (1988), PKbanken - Historien om en affärsbank (Stock-holm).

Larsson, Mats (forthcoming 1991) “Governmental Subsidies or InternalRestructuring - Swedish Commercial Banks During the Crisis of the192Os”, in Cottrell P., Lindgren H. and Teichova A. (eds.), EuropeanIndustry and Banking 1920-1939.

Lewin, Leif (1970), Planhush&llningsdebatten (Stockholm).

Möller, Gustaf (1920) Socialisetingsproblemen (Stockholm).

Prop. 1949:151 (1949), Proposition angående inrättande av en statligaffärsbank m.m. (Stockholm).

Socialdemokraternas efterkrigsprogram 1920 (Stockholm).

SOU 1949:13 (1949) Betänkande med förslag om inrättande av enstatlig affärsbank (Stockholm).

Tingsten, Herbert (1941), Den svenska socialdemokratiens idéutveckling,del 1 (Stockholm).

Waara, Lennart (1980) Den statliga företagssektoms expansion (Stoc-kholm).

Business History, Historital Economicsand Economic Theory. The bridge-building

function of business history.

H&kun Lindgren

History Matters - But in What Way?

Even most deductive and econometric model-orientated economistswould agree that history in some way or another matters. When itcomes to the question of how history influences on the behaviour ofman, however, the differentes in opinions even among historians mightbe substantial, at least when ranking the importante of our arguments.My main point in this paper is that business history and historitaleconomics is a necessary adjunct to economic theory. It gives us notonly the necessary empirital foundations of theory, but also alternative- and in some ways better - tools to explain and understand phenom-enons within the social and economic field. These assertations are notvery original (McCloskey, 1976), but the arguments are hardly eversustained by any attempts to systematize and model out the tontents anhistorital approach or, an historital method.

General arguments for an historital approach, often used in thereturring debate on the position of humanities in society, are 1)historital knowledge enrithes our lives, both practically and spiritually;2) history points at alternative ways of solving fundamental social andeconomic problems and 3) it increases our preparedness to acceptchange as a necessary condition for (what we think is) progress. But inrelation to the social scientist, who is looking for generalny, the mostpowerful argument would be that all theoretical notions of how socialphenomena interact are based on historital experience. In all times manhas been looking for, and constructing, regularities, which are used as

45

4 6

a guidante in our struggle for existence. On occasion, these notions areformalized into scientifique theories, based on well defined conceptsand establishing more or less stable “laws” among these concepts.

From a scientific point of view the importante of history is not onlyto serve as an empirital arsenal to support one theory or the other. Tofind empirital support backirigg up a theory or an hypothesis is not verydifficult, as reality is imperfectly complex and diverse. Still history isimportant in serving as a laboratory to test the theories of socialengineering, but rather in making clear under which conditions a theoryis not valid than confirming it. In constructing new, and perhaps morerelevant, concepts, to raise the leve1 of abstraction, and to demonstratethe special and extremely time bound preconditions on which formaltheories are built, history becomes the spearhead for new theoreticalanalysis and truly important in the scientific community.

Moreover, applying an historital approach means nothing but arestoration of a methodological approach which the formalizedeconomics of today once lost. Up to the “Jevonian-Walrasian Revolu-tion” in the end of the 19th century, the scope of economic researchwas broader and to an astonishly large extent characterized by historitalmethods. Even after the neoclassical breakthrough, economic researchhas progressed in close contact with economic policy, though formalizedceteris paribus modelling peneterated the analysis. It lies in the natureof things that problems perceived to be important, and perhaps also ur-gent, are emphasized in publit debate and research.

This is basicly a good thing: a key motivation for all research is thatit is useful and serves as an aid to planning and governance. There is,however, a concealed danger in this. If research is overly concentratedon current social problems the result Will be a loss of proportion andtrue understanding of the social phenomenon seen from a wider - andespecially a longer - perspective. This is not to say that research onlonger term and more general social processes is in any way “better” ormore worthwhile than is research on current problems; both types ofresearch are important and they rather complement than exclude eachother.

47

Partial Theories on Multinationals.

One area of research, which without any doubts has been enrithed byt h e o r e t i c a l i n n o v a t i o n s during the last decades is firm inter-nationalisation and foreign direct investments. One does not have todvelve deeply into existing theories to be struck by the almost totalabsente of politital analysis, both with regard to causes and to effects.In his standard work Multinational Enteprise and Economic Analysis(1982 with many reprints), Richard Caves discusses different theories onmultinationals, why multiplant enterprises operate across nationalboundaries, and what effects their operations have on tompetition,resource allocation, technology diffusion and income distribution. Onlyin his last chapter, he briefly discusses policy issues, but only from thenormative publit policy-point of view: how should or rather should not- source-country and host-country governments interfere and regulatethe activities of multinationals to maximise the welfare of its citizens,and what are the differentes between global and national welfare.

In Caves’ way of dealing with the question why multinationalenterprises evolve, like in all attempts by trained economists to interpretthe existence of multinationals in terms of economic categories only,there is no analysis either of individual, politital or national prere-quisites for foreign investments. To get full understanding of theproblem, room must be made both for the individual case and howpolitital and social factors affect business internationalisation. Quiterightly, Charles Kindleberger, when summarizing a volume of empiritalstudies in interwar international corporate business, stresses the over-whelming importante of politital and social factors affecting the multi-national torporation, and the deep tensions between socio-politital andeconomic factors (Kindleberger 1989).

The most obvious reason for including the poltical and social aspectsin an analysis is that uncertainty increases substantially, when possiblefuture politital and social developments are considered in addition topurely economic considerations before binding up capita1 in productionin a distant, may be quite different cultural environment. This importantcultural dimension is fundamental to the so-talled “theory of direct

48

investments”, which Will be dealt with in detail in the next section of thispaper. There is considerable empirital evidente that the willingness tomake direct investments tends to decline with increasing geographic andcultural distance (DIRK 1983, p 70-71).

Stressing the importante of personal attitudes in individual cases, itis easy to show that differentes in way of thinking and behaving mayhave decisive influence on foreign investment decisions by differentactors, operating in identical institutional settings. It is quite obvious, forexample, that the Wallenberg group in interwar Sweden was consi-derably more concerned about the long-term politital riskirress offoreign investments than was the Kreuger group, which reflects thepersonal attitudes of the chief decision-makers of the two groups(Wikander 1979, Lindgren 1988).

On the theoretical level, the absente of politital analysis has, deliber-ately or not, limited the scope of the models. As is emphasized by BarrySupple, an analytical discrimination must be made between explanationsof the origin and growth of multinationals, and the effects of theexistence of multinational firms (Supple 1989). Even if we restrittourselves to the first problem, we Will find a number of theories,sometimes complementary, sometimes competitive, existing side by side.Thus it is possible to analyze the causes of foreign direct investmentwith theories of firm behaviour, of international capita1 movements, offoreign trade, of market imperfections, of oligopoly and product differ-entiation, of product life cycles, of competitive advantages and even ofcycles of competitive advantages, with theories of vertical integration,theories of “networks” and with a transactional approach (Dunning1974, Caves 1982, DIRK 1983).

The Theories of Direct Investments and Advantage Cycles Scrutinized.

These theoretical approaches have received a great deal of internationalattention. They are choosen here only to demonstrate limitations andshortcomings, which more or less occur in all deductively constructedtheories of multinational firms. Both approaches are based on the same

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set of concepts, which make a closer examination possible within theframework of this paper.

The theory of direct investment has its origin in the Americaneconomist Stephen Hymer’s 1960 thesis The IntemationaZ Operations ofNational Finns: A Study of Direct Investment. It was further developedby Charles Kindleberger in his essay “The Theory of Direct Investment”,published in 1969 in American Business Abroad: Six Lectures on DirectInvestment. In brief, the theory asserts that national boundariesconstitute linguistic and cultural barriers. Domestic firms have anadvantage over potential foreign entrants because of their stock ofexperience and knowledge of lotal economic, social, legal and polititalconditions. This gives them a cost advantage over foreign competitors,that is lower transaction costs. A foreign firm that nonetheless choosesto enter the lotal market must therefore possess some comparativeadvantage (“unique competence”), that compensates for the lotal firm’sinformational cost advantage. It is this competitive advantage thatexplains the occurrence of foreign investment.

A dynamit element has been added to the theory by some Swedishschalars, Peter Sanden, Jan-Erik Vahlne and Klaus Wohlert, who haveintroduced the concept of “advantage cycles”, first in a publication from1976 (Johansson i.a. 1976). By exploiting its original advantage, the firmcan successively develop new advantages, sometimes incorporated in theorganization as intangible assests, which in turn can explain furtherforeign involvement.

Theoretical objections to the so-talled direct investment andadvantage cycle theories can be raised on several levels. Strictlyspeaking, these concepts fail to meet the requirements normallyimposed to qualify generalizations of observed regularities as “theories”.Direct investment theory is supposed to say something about the mono-causal relationship between two variables, of which only the dependentvariable is well defined. Ceteris paribus, a change in the independentvariable (the development of relative advantages) should, with a highdegree of probability, result in a change in the dependent variable(foreign investment). Using the criterion of successful prediction, the

50

theory fails; the premise (the advantage) does not make the result(direct investment) likely.

This is the case because the theory does not distinguish betweennecessary and sufficient conditions. It is apparent that the “uniquecompetence” can not be a sufficient condition for foreign directinvestment. There must exist a multitude of firms that, relative to firmsin countries x, y and z, have relative advantages of one kind or another(both country and firm specific), but which still do not make directinvestments in those countries. It is, however, even debatable whethera unique competence is a necessary condition.

The great difficulty experienced in trying to utilize the directinvestment theory in a scientifically stringent way results from theimpresise definition of the advantages. That, in turn, limits the theory’sexplanatory power. First of all, the theory is partial and makes noattempts to raise the thing to be explained to a higher leve1 of abstrac-tion. Despite this the theory is so broadly formulated that it simul-taneously says everything and says nothing about the real@ it wishes ttoexplain. It is therefore not very illuminating and leads, finally, to thecircular argument that firms are successful because they are successful,a point also made by the late Swedish Parliamentary Report on DirectInvestments (DIRK 1983, p 72).

The circular argumentation is due to the fatt that the premise - theadvantages, the unique competence - is highly problematical. It doesnot discriminate between different types of advantages. Expost thesecan include everything from lower wages, a more skilled labour forte,or an undervalued currency (country specific advantages) to patents, amore efficient production and marketing organization or, simply, ablermanagement (firm specific advantages). The conclusion is that thepremise is too vaguely defined for the proposed explanation to achievethe status of a “theory”.

The multifaceted tontent of the concept of advantages in thisputative theory also reduces its empirkal testabilhy. In addition tomeasurreable, quantitative advantages there exist qualitative advantages- intangible assests - that are difficult to measure. When empiritallytested, these qualitative aspects tend to appear as residuals, thus

51

emphasizing the theory’s circularity. If an empirital test concludes thatthe measurable variables are without explanatory power, then thequalitative variables must be the explanation. After all, the theory positsthat some advantage must exist - otherwise the foreign investmentwould not have occurred. Investment decisions are taken by a manage-ment which thereby demonstrates its own superior compentence.

In fatt, all attempts to estimate the combined value of a given “set ofadvantages” relative to alternate potential investors and to competitorsin the potential host country raises insuperable measurement problems.Various country and firm specific advantages, both qualitative andquantitative, must be combined to yield some kind of “net advantage”.How, for example, can one firm’s greater R&D efforts be weighedagainst another firm’s greater availability of risk capital? It would, ofcourse, be even more difficult to include immaterial assets such as amore highly skilled labour forte.

How then does the direct investment theory fare in an empirital test?Business history research has revealed a multitude of cases where theinvestor possessed some type of unique competence relative to hiscompetitors in the country where the investment occurred. To give someSwedish examples only: it is very likely that the knowledge of appliedtechnology and the experience of production and installation activity inmany different countries that LM Ericsson obtained early on, gave theSwedish cancern advantages over its competitors (DIRK 1981, p. 62-66).Similarly, obtaining the Alfa milk separator patent in 1889 must havecreated specific competitive advantages for the Separator Company(today Alfa Laval) that could be used to develop new advantages beforethe patent expired in 1903 (Wohlert 1981, p. 78-88).

It is equally clear, however, that there exists another multitude ofcases where it is difficult to maintain that the foreign investment wasthe result of some unique competence possessed by the investing firm.Indeed the desire to acquire advantages in the host country, or in thebought-up Company, seems to be a better explanation. The principalmotive for the Swedish Match Company obtaining a direct interest inAmerican match industry during the late 1920’s and early 1930’s was toobtain a better negotiating position vis a vis the leading American

5 2

Company, Diamond Match, rather than the possession of any apparentadvantage. On the contrary, the American match industry was manytimes more efficient than that of the rest of the world (Lindgren 1981,pp. 293-310, 341-348).

The strive for internalizing external advantages has also beenfundamental motives for foreign direct investments in other distinctlyoligopolistic industries. In high voltage electrical industry, the creationof foreign branthes and subsidiaries by the Swedish ASEA (today ABB)during the 1960’s and 1970’s was hardly the result of any observableadvantages vis a vis her principal competitors in Europe and USA(Siemens, AEG, Brown Boveri, Westinghouse, General Electric). Ratherit was motivated by a desire to obtain technological or marketingcompetence (Glete 1983, p. 262-271).

The direct investment theory can thus be criticized both on theoret-ical and on empirital grounds. The heart of my argument, however, isthat no attempt to construct a one variable explanation, whether cross-sectional or dynamit, of direct foreign investment Will ever be particular-ly successful. It inevitably misspecifies the problem. It is simply notapparent that the existence of national boundaries is a sufficientjustification for a separate theory for what is only a special case of firmgrowth and internationalization. Of course there must be some reasonwhy a firm chooses foreign production over other alternatives (exports,licensing, cartel cooperation, joint-ventures etc.). A deeper understan-ding of foreign investment, however, requires a higher leve1 of abstrac-tion and explanation in order to clarify what is a very complex causality.

The Historital Method.

It is important to demonstrate that the historital method contains morethan a study of long-term change - often referred to as a processanalysis - combined with scholarly source criticism. It is also a way oflook into reality, a methodological approach, the basic characteristics ofwhich are the unification of unique observations with general trendsunder permanent change.

53

The starting point is a theory of knowledge which is basicly material-istic in the sense that there is a realny which exists independent of ourown consciousness, of which it is possible to get objective knowledge.At the same time attitudes are important, because it is our conceptionof realny and how it is structured that determines our behaviour. Thusthe concepts and the theories which we use to describe and analyserealiv are decisive for the outcome of our analysis. The mere option ofchoice of analytical tools explains why even the most precise, ceterisparibus-analysis fundamentally is imprecise, and also why history areoften rewritten from one generation to the other.

In fatt an infinite number of concepts have been invented to describethe complicated realny of things. These categorisations, which havedimensions of both time and scope of generalization, are connected witheach other in complex causal relationships. To use a metaphor, realnycan be compared to cobwebs of nodes and lines, being structured bothhorizontally and vertically and integrated with other complex cobwebsin an infinite tunnel of time. And to make it still more absurd, in thisbadly arranged “system”, the nodes, being the concepts used to describethe phenomena, are not very clear and well-defined, partially coveringeach other and referring to different leveis of abstraction.

The problems of conceptualisation and the uniqueness of phenomenahas led to the somewhat exhausted feeling that “histoty undermines thedrive towards theory” (Supple 1989). In my view, however, this is nottrue. On the contrary, the insights in this field are fundamental to thehistorital method. They are indispensible to our efforts to form conceptscovering the scope of realny we want to explain and to create confor-mity between the thing to be explained and the explanation. Andmoreover, these insights are crucial to our attempts to structuralizerealny and to combine micro- and matrovariables in a logitally convin-ting way. In this way, the historital method gives us the tools to movebetween different levels of abstraction, to combine concepts and partialtheories of various broadness with each other. In specifying general andspecific causes, and the relationships between them, the historitalmethod permits an interplay between micro, meso and matro variables

54

in order to create both deeper and fuller understanding of a phenom-enon (“meso level”, see Scott 1979, p. 16).

Foreign Direct Investments and the Methodological Approach ofHistory.

The Matro Level: General Conditions of Business Intemationalisation.Historital studies indicate that capitalism, at least as far back ascapitalist institutions can be traced, has never accepted geographicallimitations. Within the possibilities of existing production and distribu-tion technology, capita1 has always searched for new areas to exploit.The broad advances of industrial capitalism during the 19th centurydecisively transformed the basis for international economic avtivity.Technological progress permitted mass production and rising realincomes - even if they were unequally distributed and progess wasinterrupted by crises - resulted in mass consumption. New transportand communications technology also contributed to market integration.

Lotal and regional monopolies crumbled as more and more peoplewere combined into the same markets. International trade expandedvigorously and international communications facilities were expanded atan accelerating rate. The economy were increasingly internationalizedand by the start of the 20th century there existed, in many regards, asingle world economy centered in Western Europe and the UnitedStates. Continuing developments during the 20th century have generallyworked to enforte these tendencies.

As a natural consequence of historital circumstances, the newindustrial society tame to be organized according to capitalist principles.Thus production and investment decisions were made within firms that,on the whole, were privately owned and which strove to produce aprofit for their owners. The activities of such firms involves varyingdegrees of risk. In any evaluation of the result of a decision, the riskinvolved must be weighed against the basic goal of maximizing profits.

Both the opportunities for profit and the degree ofrisk are affectedby competitive conditions in the firm’s market. Within existing con-

55

straints, however, they can also be influenced by the firm’s behaviour.How the firm acts to optimize its combination of profits and risk,therefore, Will be determined by how it perceives its competitivesituation. Thus market tompetition, which in reality is a tontest forproductive resources, production technology and markets, and whichhas little to do with the “pure” tompetition of micro economic theory,can be viewed as the principal determinant of firm behaviour (Dahmén1979). In this way the general concept of firm behaviour, whichencompasses a number of possible specific actions, is related to anotherabstract concept, murket tompetition, which also finds expression innumerous, concrete and perceptible phenomena.

In the tontest with other actual or potential producers, growth is onepossible strategy a firm might opt for to reduce transaction andproduction costs, to develop new resources (“advantages”) or to inreasethe market price of its products. Corporate growth and mergers, bygenerating increased efficiency in planning, production and distribution,yield economies of scale. Thus unit costs are likely to fall as firm sizeinreases. The mass production of standardized products in large seriesleads to technical economies of scale and allows fixed costs to be spreadover a larger output. Smilarly, marketing, product development andinformation costs can be spread more widely. Finally corporate growthtends to reduce the price of external capita1 and make acsess to the riskcapita1 market easier. As a result, corporate growth Will tend tocontinue up to the limits on optimal firm size, given the restrictions ofnot only economic variables like communications, technology andadministration, but also juridical, politital and social constraints in anyparticular historital situation.

The position of a single firm in relation to its competitors is to alarge degree dependent on the number of firms in the industrialnetwork. If corporate growth and mergers result in seller toncentrationthen the possibility of either temporary or permanent cooperationamong the remaining firms increases. In addition, growth results inconsiderable risk dimunition. Both vertical and horizontal integrationtend to replace uncontrollable market fortes by internal governance andcontracting, thereby economizing on transaction costs (Reve 1990).

5 6

From this perspective, the growth of international corporate businessand multinational firms becomes the logital consequence of horizontaland vertical integration and corporate expansion at the national level.The opportunities to establish foreign sales or production subsidiarieshave evolved out of rapid improvements in transport and communica-tions technology. Competitive conditions, being decisive to the contrac-ting and governance structures of various industries, have setved as theapproximate determinant of whether, and to what extent, such sub-sidiaries have in fatt been established. The principal differente betweenestablishing a production subsidiary abroad and establishing one athome is, indeed, that national boundaries also constitute linguistic, legaland cultural boundaries. These barriers are important; they tend tomake entry more difficult and thus impede such investement. Suchobstacles, however, are not different in kind from other barriers to entryand hardly justify the creation of a separate theory to explain in-vestments across national boundaries.

The Meso Level: Competitive Conditions Specific to the Industry.To move from the general and rather abstract conditions for firmgrowth and business internationalisation to the foreign direct investmentdecisions of a single firm, it is necessary to analyse carefully the specialcompetitive conditions that characterize the markets in which the firmis active. What is the precise meaning of the general and rather vagueterm “competivive conditions”? It must be conceptualized in a broad wayin order to include a lot of empirital categories. Methodologicallyspeaking, it is important to note that the competive conditions invarious markets tonsist of conditions specifc to each such market. Theyare economically, polititally, technologically and, not least, historitallydetermined, characterized not only by impersonal relationships throughmarkets but also by incomplete contracting and social relationships(Johanson-Mattsson 1988).

In the theory of industrial organization that has evolved out of thevarious interwar models of imperfect tompetition, the relationshipbetween firm behaviour and competive conditions in different markets,

5 7

the “market structure”, has been formulated more systematically (Bain1959, Caves 1964). The textbook theory, however, suffers from onegeneral shortcoming: it is too narrow to give a scientifically satisfactoryexplanation, even if we restritt ourselves to a mes0 level.

First, when explaining firm behaviour, it relies exclusively oneconomic variables and consequently, fails to include the broader, insti-tutional perspective (Hodgson 1988). Firm behaviour, in the presentcase decisions to establish or buy production capacity abroad, canhardly be analyzed solely in terms of the standard textbook variablessuch as seller toncentration, product differentiation and barriers toentry. Constraints, including both restrictions and opportunities, createdby the firm’s institutional environment, have played at least as importanta role. Changes in the institutional environment thus must be viewedboth as general conditions for business internationalisation - ideologiesand value systems influencing fundamental attitudes - and as con-straints that influence the meso-leve1 conditions in the specific industty.This role is played by economic policies and other government actions,by contracting relationships to various interest groups (not least ofwhich are the unions), and by historitally determined, so-talled“network” relations to other firms.

The Micro Level: Specific, Proximate Causes.From the historital methodological point of view there is also a setond,serious shortcoming in the textbook theory of industrial organization.No distiction is made between short and long run causal relationships,what is termed here as “conditions specific to the industry”, and“proximate causes”. To give a full causal explanation to the phenomenonof foreign direct investment, it is also necessary to recognize theproximate causes, which directly can be related to the specific in-vestment descision taken by the firm. The proximate causes are thosewhich give, so to say, the final “kick” to the descision to invest abroad,and Will usually be found to be conceptually subordinated to the moregeneral causes, characterizing the higher levels of abstraction.

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As is indicated with the two-way arrows in the schematized figure(below), the approach is dynamit. Staticly the micro behaviour at thefirm leve1 is related with matro tendencies and general developments,but a process analysis of the causes of an event can not be based on anassumed unchanging market structure or on constant norm systems.Even if the process is slow, the competitive conditions in the industry,just like the general economic conditions, Will change over time.Furthermore, firms are both influenced directly by the market structureand simultaneously contribute to its evolution. The collective effect ofindividual firm behaviour has a major effect on competitive conditions.Thus, firm behaviour and market structure must be viewed as simultane-ously determined (DIRK 1981, p. 10-16, DIRK 1982, p. 20-25, Lindgren1979, p. 27580).

To sum up, the historital method includes both traditional sourcecriticism, process analysis and attempts to connect unique observationswith general trends of development in a scientifically convincing way.This means that partial theories, with ambitions to be more or lessnarrow, may be - if they are found to have a convincing explanatorypower - included on different levels of realny as sections of theconstantly broadening perspective. The historital method requires thatbehavioural explanations successively are raised to higher and higherlevels of abstraction.

Neither individual actions nor unique events of the type “foreignsubsidiary X is created” occur in a socio-economical or politital vacuum.The direct motive for the action and the proximate cause of the event,in turn, are determined by an underlying causal structure. The furtherup the explanatory ladder we move, the broader the social realny thatis included in our explanation. The causal relationsships, however, areby no means undirectional. In realny they involve simultanous systemsand are also affected by other tangential causal relationships (Bunge1967, p. 325-27).

5 9

Figure.

The historital method applied on foreign direct investments.

MACRO LEVEL:General conditionsof business inter-nationalization

The rise of a world economy, transportand communications technology, interna-tional capita1 movements, ideologiesand norm systems (e.g. values on bene-fits and drawbacks of tompetition, onefficiency and equity of private owner-ship in business)

MES0 LEVEL:Competitive condi-tions specific toindustry

t

MICRO LEVEL:Specific, proxi-mate causes

Market struttural variables on bothproduct and factor markets (domesticas well as foreign): seller and buyertoncentration, network relationships,production technics, product differenti-ation and rate of substitution betweenproducts, barriers of entry etc.

Tariffs and other obstacles to trade,exchange rates and relative costs,taxation, credit facilities and capita1transfers, legislation on contracting,ownership, patents, licensing etc.

FOREIGN DIRECTINVESTMENT

The specific event or decision

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Every limitation of a problem means that some part of realny is tornloose from its socio-economical and politital tontext. It is important tonote, however, that the historital method advocated here does notnecessarily require the inclusion of all aspects of reality. On thecontrary, in order to increase precision it is mostly necessary to limit theinvestigation. The scientific method requires that the explanation mustbe relevant and testable. The hard core of the historital method is thelinking-up of the thing to be explained to more abstract concepts in adynamit analysis. Thus, the analytical delimitations should rather bemade in breath than in depth when approaching the complicated realny.

Business History as a Bridge-builder.

In the field of business history, the main interest is focused on thedecision-making in those organizations (or with a broader term“institutions”) which are talled firms. Decision-making is in itself aprocess, during which a lot of choices are made under constantlyaltering conditions, both internal and external to the organization. Thefirms - or rather the decision-makers within the firm - react onimpulses and signals. In dealing with exchange and transactions,neoclassical theory has isolated the price signals as the explainingvariable. In realny, however, the importante of price varies a lotbetween different markets; in industrial markets, for example, technical,operative and not least social impulses are shown to be of much greaterimportante than prices in explaining transactions (Håkansson 1982,Johanson-Mattsson 1988).

But the actors is also creating new firm-specific assets or inreasing thefirm’s command of existing resources in their struggle for survival andgrowth on more or less competitive markets. All these decisions on afirm leve1 have their implications on the overall social and economicorganization of society: on work organization, work tontent and workintensity, on efficiency in production and distribution, and on in-novations, industrial transformation and economic performance.

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In a decentralized market, a mimber decisions, sometimes reinforcingeach other and sometimes conflicting, are taken at the same time. Inour attempts to generalize and make conclusions on a matro level, it is,in these cases, the resultant of the field of forte which is relevant forabstractions. In the giant, international torporations of the modernworld firm decisions have immediate implications not only to micro ormeso leveis, but in defining the degree of national independence andthe framework for monetary and fistal policy on the national level.

Thus firm decisions on what often is refered to as the “micro” leve1have an immediate bearing on the “matro” organization of society. Thekey role, however, of business history is to increase our understandingof the process of economic and social change, in which business firmsplay a vital part. In exposing the premises of firm decision-making andthe effects of Company behaviour, business history bestows greaterrealism on aggregates and general assumptions. It renders the necessarymicro-foundation to matro theory (Dahmén 1988). By focusing on thedynamits of struttural change, it Will contribute to the development ofnew theories of “growth”, rooted in the traditions of institutionaleconomics and based on disequilibrium in stead of equilibrium analysis.

The important task to att as a bridge-builder between economics andhistory is a challenge to business history. If business historians are readyto meet this challenge is another question. New interdisciplinaryresearch groups have to be created, as well as institutions acting asintermediaries between business and research. If business history is tofulfil its mission as a bridge-builder, a comparative, problem-orientatedbusiness history approach is indispensable, and should be exploitedmuch more systematically than mostly is done. Business history is toooften identified with the manufacture of case studies, giving the fullretord of the development of single firms. My experience is, thatbusiness history Will not win full scientific respect, until its practitionersgain the opportunny to work in interdisciplinary groups, brought to-gether by interest in projects on specific, clearly defined researchproblems. And the problems should of course be formulated by theresearchers, not by the granting authorities or financiers.

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The EHF at the Stockholm School of Economics, with its creativeinterdisciplinary organization, is a good example of far-sighted planningto push business history in the front line of research. The EHF-institute,organizing economic, historital and social research with specialreference to business and industry and its role in society sinte the indus-trial revolution, was formed in 1976. It is now ready not orrly to parti-cipate in the growing international network of business history, but alsoto accept the challenge of reorientation in economic theory, which inev-itably leads away from neoclassical equilibrium analysis towards histori-ca1 economics.

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Dahmén, Erik (1988) “Entrepreneurial Activity, Banking snd Finante.Theoretical and Historital Aspects”.

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Johanson, Jan - Mattsson, Lars-Gunnar - Sanden, Peter - Vahlne,Jan-Erik (1976), “The Role of Knowledge in the Internationalization ofBusiness”, Faculty of Social Sciences at Uppsala University 500 Years(Uppsala, Acta Universitatis Uppsaliensis).

Johanson, Jan - Mattsson, Lars-Gunnar (1988), “Internationalisationin Industrial Systems - A Network Approach” in Hood, N. - Vahlne,J-E (eds), Strategies in Global Competition (New York: Croom Helm).

Kindleberger, Charles P (1969) Amen’can Business Abroad: SU: Lectureson Direct Investment (New Haven, CT: Yale University Press).

Kindleberger, Charles P (1989), “Summary: Reflections on the papersand the debate on multinational enterprise: international finante,markels and governments in the twentieth century”, in Teichova, A. -Lévy-Leboyer, M. - Nussbaum, H. (eds), Historital Studies in Znter-national Cotporate Business (Cambridge: Cambridge University Press).

Lindgren, Håkan (1979), Corporate Growth. The Swedish Match Industryin its Global Setting (Stockholm: Liber).

Lindgren, Håkan (1988), Bank, investmentbolag, bankirfirma. StockholmsEnskilda Bank 1924-1945 (Stockholm: EHF).

McCloskey, Donald N (1976), “Does the past have useful economics?“,Journal of Economic Literature, vol. 14, pp. 434-61.

Reve, Torger (1990), “The Firm as a Nexus of Internal and ExternalConiracts”, in Aoki, M. - Gustafsson, B. - Williamson O.E. (eds), TheFinn as a Nexus of Treaties (London: Sage Publications).

Scott, John (1979), Corporations, Classes and Capitalism (London:Hutchinson).

Supple, Barry (1989), “Introduction: multinational enterprise”, inTeichova, A. - L&y-Leboyer, M. - Nussbaum, H. (eds), HistoritalStudies in International Cotporate Business (Cambridge: CambridgeUniversity Press).

Wikander, Ulla (1979) Kreuger’s Match Monopolies, 19251930. CaseStudies in Market Control through Publit Monopolies (Stockholm: Liber).

Banking and Institutional Theory

Jan Ottosson and Hans Sjögren

Introduction

Interest in institutional theory among economic historians has steadilyincreased during the last decade. Business historians, in particular, haveutilized various analytical tools from transactions costs theory as well asfrom the theories of contracts and networks (Jones, 1990, Lindgren,1990, Ottosson, 1990 and Sjögren, 1990). Moreover, the roots of thisanalytical tradition, especially the works of Hilferding and Schumpeter,recently have been rediscovered.

Institutional theory has a very broad sweep. A number of differentstrands of analysis can be encompassed within the theory. One generaldefinition that has been suggested by Agnete Raaschou-Nielsen is basedon the notion that institutions can be seen “... as ‘restrictions onbehaviour’ affecting human beings as economic agents” (Raaschou-Nielsen, 1988, p. viii).

This paper presents a brief historie overview of the development ofinstitutional theory sinte the beginning of this century. It begins with thestandard works of Hilferding, Gerschenkron, Cameron, Schumpeter,Veblen, Coase and Commons. All represent an early version ofinstitutional theory. In the next section, the modern approach isdiscussed, with emphasis on game theory, contract theory, the exit/voicemodel, network theory and transaction cost theory.

The principle aim of this survey is to show how different “institution-alists” have dealt with questions of bank-industty relations. One broadissue is how they have viewed the role of banks during the process ofindustrialisation. Another theme of this paper is to distinguish amongthese authors on the basis of the analytical questions posed, the leve1

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of analysis (micro or matro) and their choice of methodologicalapproach. It is important to distuss the results emerging from differentinstitutionslists according to their use of analytical tools and leve1 ofanalysis. Geoffrey M Hodgson illuminates the question of the relationbetween reality and analytical tools as follows: “... no observation ofrealny is free of theories or concepts” (Hodgson, 1988, p. 22). Theunderlying model determines the questions posed and answers obtained.

European Classical Institutional Theory

From Finante Capita1 to Organked Capitalism’

“Finante capita1 does not want liberation, it wants domination.”

This is a famous quotation from the standard work by Rudolf Hilfer-ding; “Finante Capital”. The main theme of this work is that thereoccurs an “inevitable fusion” between bank capita1 and industrial capita1into a third form of capital: finante capital. Problems concerning therole of credit and the domination of industry by banks are linked to thistheme. Another key question is the economic and politital consequen-tes of the division between production and control as well as thatbetween management and ownership.

These problems were tackled on a matro level. From that perspec-tive, Hilferding tried to explain the total impact of finante capital,economic and politital. Hilferding argued that entrepreneurs graduallywere being displaced as a result of the toncentration and centralisationwhich resulted from the growth of torporations, cartels and trusts. Heargued that this toncentration of capita1 is a natural process, graduallyresulting in the fusion of banking and industrial capita1 throughout theindustrial society. Examples were taken from bank-industry relations inboth the Austrian-Hungarian and the German economies during theindustrialisation process. This theory, however, was not limited to strictlyeconomic outcomes, it also had more distinctly politital implications.

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‘Even today, taking possesion of six large Berlin banks would meantaking possesion of the most important spheres of large-scaleindustry, and would greatly facilitate the initial phases of socialistpolicy during the transition period, when capitalist accountingmight still prove useful’ (Hilferding, 198.5, p. 386).

From Hilferding’s point of view, the domination of industry by bankscreated an opportun@ for the nationalisation of industry. Sinte thebanks already owned the industrial companies, the nationalisation ofbanks could have such a result. As the national economy tame to bedominated by finante capita], the state interest merged with that ofcapitalism. The logital extension of finante capitalism seemed to beHilferding’s notion of “organised capitalism”.’

Although the notion of finante capita], as well as that of organisedcapitalism, is a broad abstraction, Hilferding has definitely giveneconomic historians a good reason for studying various aspects of bank-industry relations during the twentieth century. He directly initiated animportant research field as well as implicitly promoting the search forrelevant empirital evidente.

The Role of Entrepreneurs and Bank Credit in Economic Progress”The setond corner-stone of this approach to economic history - thatprovided by J. A. Schumpeter - also emerged from an Austrianintellectual background. Schumpeter was trained as a neo-classical,general equilibrium economist, but in his work “The Theory ofEconomic Development” he criticized traditional economic theory forits failure to explain the process of economic growth. In tontrast toclassical theory, he argued that the banks played a key role in thegrowth process. This contribution was achieved mainly through theprovision of loans to entrepreneurs. Schumpeter showed that theinnovative entrepreneur was the most typical borrower.

‘He becomes a debtor in consequence of the logit of the processof development, or, to put it in still another way, his becomminga debtor arises from the necessity of the case and is not something

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abnormal, an accidental event to be explained by particularcircumstances. What he first wants is credit. Before he requiresany goods whatever, he requires purchasing power. He is thetypical debtor in capitalist society’ (Schumpeter, 1934, p. 102).

Through loans, the banks provide the entrepreneur with the purchasingpower needed to achieve new combinations of both old and newresources. Although the role of the entrepreneur is the principal subjettof “The Theory of Economic Development”, it is readily apparent thatSchumpeter put great emphasis on the role of the banks. Like Hilfer-ding, he maintained that the banks are of great importante for thedevelopment of an industrial society.

According to Schumpeter, the banks, and the credits they provideserve as a bridge between the entrepreneur’s ideas and his markets. Aslong as new resources are to be combined, new markets developed ornew organisations created, there Will be a strong demand fromentrepreneurs for bank loans. Therefore the process of credit grantingis on-going.

The Schumpeterian approach, in particular, stimulated the study ofbank-industry relations on a micro level. Case-studies of entrepreneursmight explain how banking services support the development of smalland medium sized firms. Moreover, broader questions, such as thoseconcerning bank dominante models versus competitive marketoutcomes, could be illuminated by this approach.4

Relative Backwardness and the Role of Banking’The presentation of the Gerschenkron hypothesis in the 1960s gaverenewed life to the debate concerning the role of banking in industrialdevelopment. As a former student of Hilferding, Gerschenkron, notsurprisingly, assigned the banks a key role in the emergence ofEuropean industrial societies.

Briefly, he correlated the role of banks with the degree of relativebackwardness in different countries at the time of their industrial break-through. One of his conclusions was that the more backward the

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economy is, “the greater . . . [is] the part played by special institutionalfactors designed to increase supply of capita1 to the nascent industriesand, in addition, to provide them with less decentralized and betterinformed entrepreneurial guidante” (Gerschenkron, 1962, p. 353).

This conclusion was based on several national matro studies of bank-industry relations. In Gerschenkron’s view there were three represen-tative cases; 1) England, the first industrialiser, where the banks onlyplayed a modest role, 2) Germany, a relatively more backward country,where the banks played a major role, and, 3) Russia, an extremelybackward country, where the state setved as the major source ofindustrial capita1 .

For countries that were late-tomers in the process of industrial-isation, that is all countries except England, banks were expected to playa crucial role in the development of a internationally competitiveindustrial sector. The “industrial spurt” seemed to have occured later forcountries with a higher degree of backwardness, than for those thatwere less backward.

These were the main points of the Gerschenkronian framework. Theysought to answer the question of why the banks in some countries weremore finantially active than those in other countries. A number ofschalars were stimulated to undertake empirital work on indivdiualcountries, testing Gerschenkrons hypothesis.

In the distinguished work “Banking and Economic Development”,edited by Rondo Cameron, case studies from countries like Austria,Italy, Serbia, Japan and the United States were presented. Cameron’sclose personal relationsship to Gerschenkron, who had been one of hisformer teachers, did not prevent him from rejecting the Gerschenkronframework.6 Cameron concluded that “no single model of the bankingsystems is appropriate for all economies” (Cameron, 1972, p. 318).Different countries displayed very disparate and complex relationshipsthat could not be encompassed in Gerschenkrons general theory. Thus,for example, Cameron stressed that the speed of the industrial spurt intwo relative late-tomers, Austria and Germany, differed drastically.Furthermore, he argued that the low leve1 of bank activity in England

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was more the result of restrictive bank legislation in England than of alack of demand for bank credit by the industrial sector.

American Classical Institutionalism

The classical institutional analysis in America principally made itsbreakthrough during the first decades of the 20th century. Majorcontributions were made by economists, prominently including Knight,Mitchell, Veblen and Commons. Here, the views on banking held byVeblen and Commons Will be discussed briefly. Both of them analysedthe credit system and the role of the banks, as part of more generalanalytical framework. Although Veblen and Commons held differentviews on the nature of institutions, they both espoused dynamiteconomic systems which had been influenced by the theory of evolu-tion.7

Veblen’s View on CreditWhen trying to analyse the process of economic change, Veblen stressedthe importante of habits in the relation between institutions andindividuals.8 He argued that credit was crucial for the control ofproduction. Credit made it possible for borrowers to bid against eachother for the control and use of resources. However, according toVeblen, credit did not add anything to the productive capacity ofindustry as a whole; “... taken in the aggregate, they (credits) are purelyfictitious items” (Veblen, 1904, 1932, p. 104). Overall, the cumulativecharacter of credit expansion is analysed in terms of the discrepancybetween business capita1 (credits) and industrial capital. When recessionsets in, and bankruptcies spread, creditors take over and become theowners of industrial capital. Veblens’s attitude towards credit isnegative; it does not have any productive value, it reduces the profitsof industry, and, in fatt, the extension of credit is an abnormalphenomena. Especially the overvaluation of collateral leads to excessivecredit provision. The combination of such overborrowing with a

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recession Will lead to a major redistribution of ownership to theadvantage of creditors.

Not only the role of regular loans was analyzed by Veblen, but alsothe role of investment banking, the financing of debentures, the coor-dinating of mergers and the strategic use of credit in reorganizing largeindustrial cancerns were analyzed - and critized. A new form ofindustrial capita1 was seen to evolve, where the boundaries betweendifferent sources of capita1 and ownership of the Company becameunclear. As Veblen put it; “... capita1 and credit expansion are notalways distinguishable . ..“. The effects of a merger, or trust, process andof a period of liquadation in the economy are, according to Veblen,essentially the same; a redistribution of ownership towards creditors.’

Commons’ I/iew on Banks and Credits”Commons’ main focus was on various types of transactions. He was alsointerested in the evolution of various collective organisations and howthey achieved workable, if less than optimal, solutions to conflicts(Commons, 1950). Commons believed that, because of its largeimportante in bargaining, the credit system was the foundation ofmodern capitalism. In “The Economics of Collective Action”, which hecompleted in 1944/45 and published in 1950, Commons characterized20th century capitalism as “Banker Capitalism”. The banking systemfunctioned as an intermediary between savings and investment:

The main characteristic of this twentieth century economics andthe reasons why it can be distinguished as banker capitalism arethe large amounts of savings of millions of investors that must bebrought together in order to finante these huge aggregations ofmachinery, and armies of employees, made feasible by science,invention, and world-wide markets. (Commons, 1950, p. 68).

Commons then discussed the relationsship between monetary institu-tions and the other principal institutions of modern capitalism;

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. . . the “institutional” economics of torporations, unions andpolitital parties...turn on the institution of money controlled bybankers rather than on the production of wealth created by labor,the transition is also made from the creation of wealth measuredby man-hours to the accumulation of assets measured by dollars.(Commons, 1950, p. 68)

Through the use of holding companies, investment bankers played asignificant role in the financing of large torporations engaged in massproduction. Commons’view on banks, and the relationsship between thebanking system and politital institutions, was in many respects influ-enced by the crisis of the 1930’s. To sum up; Commons considered, forgood or evil, that banks were an important, integrated part of modernsociety, and that they setved as a precondition for the functioning of theeconomy.

Coase and the Theory of the FirmAlthough it was published in 1937, and did not explicitly refer tobanking, Coase’s classic “Economica” article on why firms exist playeda significant role in the development of institutional theory. OlderAmerican institutionslists had analyzed the entire modern capitalistsociety within a broad framework with large companies and banks at thecenter. Coase analyzed the emergence of the firm from another angle,namely, the costs of market transactions. From the perspective of thissurvey, the Coase theorem is interesting particularly because it can beput in a less general form; why do banks exist?

New Institutional Theory

Transaction Costs EconomicsBased on Commons’ insight that transactions matter, and Coase’sfundamental question of why firms exist, Williamson argued thattransactions are costly, and that contracts are important. He then addedbehavioural assumptions. (Williamson, 1985 and Aoki, Gustafsson,Williamson, (eds), 1990). The efficient governance structure is deter-

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mined by the properties of the transaction. Torger Reve has summedup the core of transaction cost economics: “Transaction costs arisebecause of contractual hazards between opportunistic actors underuncertainty, bounded rationality, small numbers, information impacted-ness and asset specificity.” (Reve, 1990, p. 134). From the perspectiveof the firm, creditors and banks are seen as external contracting parties.Williamson points out the difficulty and the importante of monitoringfirms with large debt-equity ratios. (Williamson, 1985, p. 304 and 307).He discusses the conditions for opportunism - what makes the bank-industry relationship inefficient. His approach, which emphasizes thatthe nature of contracts is a consequence of different types of transac-tion governance, is a part of transaction cost analysis. This approach isparticularly useful for studies of the organisation and the internalizationof transactions between banks and industry.

The transaction cost approach has not yet been applied explicitly tothe role and function of banks, but the focus on contractual relationswith given behavioural assumptions is important as a framework and asan analytical instrument for the study of banking.

Bank-Industry Relations as Incomplete ContractsFrom contract theory, it is known that a contract is necessarily“incomplete” sinte it does not specify the parties’ obligations underevery conceivable contingency. (Berglöf, 1990, p. 240)

A bank can only partially anticipate the future behaviour of aborrower. To reduce the resulting risk, the bank Will demand anelement of control over the firm’s behaviour through demanding moreinformation, interlocking directors and/or partial ownership. Especiallyownership can be used as a complement to the credit contract in thebank? attempt to retain control over situations that the contract cannotinclude.

The existence of contracts also can result from oligopolistic bankbehaviour. The tompetition between different institutions on the capita1market fortes the banks to create groups of companies under theirinfluence, often firms operating in the same branch of industry. In this

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process, long established contractual relationships play an important rolein restritting tompetition.

Questions such as who controls whom and under what circumstancesthe control shifts from the entrepreneur to the bank, or vice versa, areof great importante for this approach. In the short term, it seems as ifindustry was independent of the banks. Once the loan has been granted,the bank does not know what the borrower Will do, or even if he ishonest. Assuming that the borrower opts for a very risky project, thanthe lender can not, once having issued the loan, fully observe or controlthe operations of the borrower. Thus, particularly in the short term, theproblem of “moral hazard” arises. If the project fails, the bank may stillcontinue in the medium long term to extend new credit to the firm.Because of “asymmetric information”, there is an inequality between themarginal return from the company’s project and the market interestrate. (Crawford, 1989). Therefore, in spite of failure, the bank Will still,in the short term, have the same claims on the Company as it had beforethe crisis (that is the same leve1 of repayment and the same interestrate).

Viewing credit contracting in the lorigg term, it seems as if bankscontrol industry. In a crisis, the creditor can put pressure on the debtorby dictating harsh conditions. Thus the risk of “opportunism” and “lock-in effects” are obvious (Williamson, 1985, pp. 47-9 and Farrell &Shapiro, 1989). Only a “complete contract” could solve all problems dueto these complications. Unfortunately, it does not exist. Instead, in acrisis the lender typically has a self serving incentive to demand a higherinterest rate or better collateral than would be efficient in a competitivemarket situation.

Schalars have illuminated numerous problems concerning creditcontracts. The problems of moral hazard, of lock-in effects and ofasymmetric information have been discussed by a number of economists,especially 0. Hart, J. Stiglitz and D. M Jaffee.”

Obviously, contract theory can contribute to the science of economichistory. This theory yields new important insights into phenomenapreviously often ignored. However, instead of nying to build a new andbetter econometric model of such extremely complex relationships, the

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theory should be developed in a less abstract matmer. As we know fromthe Swedish experience, in most cases there were neither bank-controlled firms nor firm-controlled banks, but many symbiotic bank-industry relationships (Lindgren, 1990 and Sjögren, 1990). The empiritaltesting of this hypothesis, utilizing analytical tools from contract theory,and employing business retords, should be a major priority for the newinstitutionslists.

Game theoryThe application of game theory to the social sciences is an interestingfield within modern institutionalism. Hodgson points to the work ofAndrew Schotter as being promising in that it develops the study ofnorms and institutions from a game theoretic perspective. The focus ison “recurrent supergames”, that is, repeatedly played games. In thesegames, vital information is supplied by institutions and routines. Thisinformation is essential for other agents in the market if they are to playa supergame.”

Applications of game theory to other related fields of study havemade possible the use of the concept of a power index, which is a morecoherent approach to the question of bank power, particurlarly in termsof ownership. It is now possible to measure ownership and concen-tration with a stringent set of tools (see The Swedish Investigation ofPower, 1990, pp 131). Especially the theory of oceanic games, a modelof the distribution of power among shareholders, is an interestingapproach to the problem of ownership and control in companies.13Another possible area for further applications is bank and tustomerinvolvment in a contractual relationship. Here institutions and normsprovide important information to the players, making it possible forthem to choose among different strategies. Still, despite the greatprogress already made, much work remains to be done on the ap-plication and relevante of game theory to institutional economics.

ExitlvoiceHirschmans’ exit/voice model gives more dimensions to the analysis ofthe market for ownership and control. Owners can use their voices, as

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well as selling their shares, when they are not satisfied with theperformance of the firm. Furthermore, their voices can be used inseveral different ways, e.g. the board of directors. Various types ofowners can be expected to utilize voice, exit or a combination of thetwo (Hirschmann, 1970). The model has interesting implications as aclassification scheme in the area of bank-industry relations. It can serveas a preliminary sorting mechanism when different owner strategies arebeing identified and analyzed. It adds a new dimension to the problemof owner strategies.

Network AnalysisNetwork analysis can be viewed from two angles. First of all, during thelast decade, the term network has been applied to the study ofindustrial markets. In a recent publication, Engwall and Johanssonparticularly discussed the role of banks within industrial networks.Banks are seen as parts of such networks, connecting depositors andborrowers. In addition, relations with other banks and companies areviewed as important for the functioning of the banks within thenetworks. In this field of study, important concepts are relationships,connections, dependencies and positions in the network. The inter-dependence among banks and clients is stressed, as well as the dynamitcharacter of the network (Engwall, Johansson, 1989, p. 12). This areaof research can be compared with that part of contract theory, whichconcentrates on “relations contract”. Relations contracts tries to explainthe existence of long lasting relationships and emphasizes “... roleintegrity, trust, preservation of relation, conflict resolution and supra-contract norms.” (Reve, 1990, p. 153)

From another angle, network analysis has dealt with questions relatedto social relations, particularly using parts of graph theory together withmatrices for the study of large networks. This has resulted in aconsiderable conceptual clarification.14 During 1980s research onvarious applications of network theory in the social sciences hasattracted increased interest.” The network approach, for example, hasopened up possibilities for the systematic study of relations betweenorganizations in large samples. The struttural patterns and changes,

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both in the network as a whole, and in the units within the network, canbe analyzed (Berkowitz, 1982, p. 2). Terms used in the industrialnetwork approach, like centralny and subgroups, were developed inearly social network studies based on graph theory. The case ofinterlocking directors in bank-industry networks is one example of theapplication of social network analysis to research on bank-industryrelations.16 Network analysis makes it possible to stringently analyzeinterlocking directorships on various levels, such as individual actors,various subgroups and the network as a whole.

Conclusion

Schumpeter, Hilferding and the American institutional economistsVeblen and Commons all stressed the importante of institutions, and allfour viewed the economy as an evolutionary system. Although they haddifferent starting points, and differed in their approaches, they stillshared a number of concepts. They all emphazised the role of banksand of credit, but with different arguments. Hilferding placed the banksin the most central position in the economy, pointing at the power ofthe banks. Schumpeter focused on the entrepreneur, but the role ofcredit was emphasized. Without credit, entreprenuerial activity wouldhave encountered severe difficulties. Veblen’s views on credit had somesimilarities with those of Hilferding, especially in stressing that access tocapita1 also meant the possibility of power and control.

Veblen and Commons did point at the same phenomena in bankingand from the same leve1 of analysis. They differed about the normativevalue of banks in modern society, but they both saw the emergence ofbanks and the increasing importante of the credit system as inevitable.The role of various institutions was important for both authors.Commons pointed explicitly at the increasing importante of legalinstitutions, with the experiences of the 1930’s in mind.

Just like American schalars, the early European institutionslists, withthe single exception of Joseph Schumpeter, discussed the role of thebanks and their function in capitalist society on a matro level. They all

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analyzed the role of the banks from a broad perspective, includingseveral socio-economic factors in their analysis. Schumpeter andGerschenkron put relatively more emphasis on the market modelapproach, while Veblen, Commons and Hilferding, to varying degrees,emphasize the power of the banks and of the credit system as a whole.

From an analytical perspective, the problem is that the olderinstitutionslist school did not provide a consistent framework for furtheranalysis. Their concepts were often blurred, and the system of causalrelations, especially the factors relating to the role and function of thebanks, were implicitly presented.

The new institutionslists, here represented by several differentstrands of analysis, have a more comprehensive and analytically morerefined set of tools for analyzing problems related to the role of thebanks. All of them help to explain different phenomena at various levelsof analysis. A general, broad framework, however, is missing. The roleand functioning of banks needs to further exploration.

More emphasis must be placed on discussing the pros and tons ofthe old and the new institutionalism in relation to a classical question:what is the role and function of the banks in the 20th century? Such anapproach, in turn, Will permit a more explicit investigation of thedifferent currently available sets of analytical tools and their ability toprovide an improved understanding of the history of banking.

Notes:

1. This section is based on Hilferding (1985, first published 1911).

2. The rediscovery of the concept of organised capitalism in the 1970shas resulted in a number of studies by schalars such as J. Kocka, H. A.Winkler, Wehler, Medick, A. Teichova, C. H. Hermansson and R.Torstendahl. In addition, one recent dissertation from University ofBielefeld examine the existence of organised capitalism in differentGerman companies and branthes.

3. This section is based on Schumpeter (1934, first published 1911).

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4. So far, the Schumpeterian approach has resulted in at least oneclassic work on Swedish industrial development, that by Dahmén (1950).For an example of an important influence on Dahmén, see Åkerman(1950).

5. This section is mainly based on Gerschenkron (1965) and Cameron(1972).

6. Relatively recently, other schalars such as R. Goldsmith and A.Teichova have produced studies of several late-tomers. Goldsmithconcludes that other factors, outside the finantial sector, principallydetermine the role of banks.

7. Hodgson (1988), p. 20. Among other things, the two authors haddiffered on the relationship between agent and institutions. Collin(1990) argues that Veblen was more determenistic, compared toCommons, which, according to Collin, gave the individual a moreprominent role. See also Giddens (1987). For a recent discussion of therelationship among institutions and individuals and of the role of habits,see Hodgson (1988), p. 57.

8. Hodgson (1988) p. 10, 23. See also Collin (1990), p. 68.

9. Veblen (1904, 1932), pp. 93, quotation from p. 131. See also Veblen(1903).

10. This section is based on Commons (1950), p. 53-69.

11. For a summary of recent work, see Crawford (1990).

12. Hodgson (1988), p. 191, quotation from the same page. Hodgsonviews game theory with some sceptisism, but he does not want to“underestimate the collective significance of...gametheoretic develop-ments” (Hodgson (1988), p. 194.) See also Aoki (1984, 1986), for anapplication of game theory to the theory of the firm.

13. The theory of oceanic games is based on the cooperative game-model developed by Shapley and Banzhof, which was applied to thedistribution of power among shareholders by Milnor and Shapley in1961. The term oceanic games refers to the power distribution at astockholders’ meeting involving a small number of large, and a infinitenumber of small shareholders. See Rydqvist (1987), for a detaileddiscussion.

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14. The introduction of graph theory into network analysis has beendescribed in Barnes, J.A, Harary, F. (1983) pp. 235-244 and Berkowitz,S., D., Wellman, B. (1988), p. 23.

1.5. Several examples from different areas of research are contained inSocial Stmctures, a Network Approach, ed. by Wellman, Barry andBerkowitz S.D, Cambridge University Press 1988.

16. See Ottosson (1990) for a survey of questions related to thisproblem and for references to other studies.

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Ottosson, J. (1990) .“Network Analysis and Interlocking Directors inInterwar Sweden”, in: Lindgren, H., Cottrell, P., Teichova, A. (eds.),European Industry and Banking 1920-39. A Review of Bank-IndustryRelations. Leicester University Press, forthcoming.

Raaschou-Nielsen, A. (1988) Institutionel aendring og okonomisk teori.Okonomisk Institut, Köpenhamns universitet, Licentiatavhandling nr 33,Röd serie nr 18, 1988, (Köpenhamn).

Reve, Torget-, “The Firm as a Nexus of Internal and External Con-tratts”, in: Aoki, M., Gustafsson, B., Williamson, 0. E. (eds) (1990), TheFirm as a Nexus of Treaties, SCASSS. (Sage, London).

83

Rydqvist, K. (1987), The Pricing of Shares with Different Voting Powerand the Theory of Oceanic Games. Stockholm School of Economics, EFI,(Stockholm).

Schumpeter, J. A. (1911, 1934), The Theory of Economic Development.An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle.(Cambridge, Mass).

Sjögren, H. (1990), “Long-Term Contracts in the Swedish Bank-Orientated Finantial System”, in: G. Jones (ed.), Special Issue onInternational and Comparative Banking, Business History (forthcoming).

The Swedish Investigation of Power, (1990), SOU 1990:44, “Demokratioch makt i Sverige. Maktutredningens huvudbetänkande, (Göteborg).

Veblen, T. (1903), Loan Credit in Modem Business. The DecennialPublications, (University of Chicago Press, Chicago).

Veblen, T. (1904, 1932) The Theory of Business Enterprise. (CharlesSchreibner’s Sons, New York).

Williamson, 0. E. (1985) The Economic Institutions of Cupitalism. (FreePress, New York).

Åkerman, J. (1950) “Institutionalism”, Ekonomisk Tidskrift. (Stockholm).

Ragnhild Lundström: A Bibliography

Compiled by Sven Lundström and Hans Sjögren

Publication concerning preindustrial society

Article

Den ekonomiska bakgrunden till 1600-talets kulturella utveckling -Lundström, Sven (red), Gustav II Adolf och Uppsala Universitet.Uppsala 1982.

Publications in business history

Books

Alfred Nobel som internationell företagare. Den nobelska sprängäm-nesindustrin 1864-1886. Uppsala Studies in Economic History 10 -Acta Universitatis Upsaliensis 1974.

Bank och utlandsaffärer. Stockholms Enskilda bankForthcoming.

1910-1924.

Articles

Alfred Nobels förmögenhet - Ur ekonomisk-historisk synvinkel.Festskrift tillägnad professor Karl-Gustaf Hildebrand 25.4 1971.Ekonomisk-historiska studier 7 - Scandinavian University Books.Stockholm 1971.

Utdelningspolitik och tillväxt, Historisk Tidskrift. Utgiven av SvenskaHistoriska Föreningen. 1979:3. Stockholm 1979.

Swedish Multinational Growth before 1930 - Hertner, P - Jones, G.(eds), Multinational: Theory and History. European Science Foun-dation. Gower 1985.

85

Banks and Early Swedish Multinationals - Teichova, A. - Lévy-Leboyer, M. - Nussbaum, H. (eds), Multinational Enterprise inHistorital Perspective, (Ninth International Economic History,Congress,A-theme). Cambridge University Press, Cambridge 1986. L’Edition dela Maison des Hornmes. Paris 1986.

The Nobel Dynamite Companies, Multinational Enterprise of TheirTime - and Ours? - Uppsala Papers in Economic History, ResearchReport No 12. Uppsala 1986.

Bank Ownership and Ownership of Banks, Uppsala Papers in EconomicHistory, Working Report No 5. Uppsala 1989.

Publications on industrialisation and industrial society

Artides

Kring industrialismens genombrott i Sverige. Ed och förord. Wahlström& Widstrand. Stockholm 1966. (Also as a talking book 1969).

International Factors in Swedish Banking 1870-1914 - Bovykin, V -Cameron, R. (eds), Banks and International Finante. CambridgeUniversity Press 1990.

Svenskar på Eirekanalen - “Och somt föll på vägen . ..“. Festskrifttillägnad Karl-Gustaf Hildebrand 25/4 1961. Uppsala 1961.

Other subjetts

Artides

Ekonomisk utveckling 1900-1945, Graninger, G. - Tägil, S. (eds.),Historia i centrum och periferi, del 3, Esselte Studium. Stockholm 1973.

USA-historiker om USA-historia, Historisk Tidskrift 1964. Stockholm1965.

8 6

In Svenskt biografiskt lexikon, 1990, about;

Immanuel NobelRobert NobelLudwig NobelAlfred NobelEmanuel Nobel

Reviews

Assar Lindbeck, Svensk ekonomisk politik, Problem och teorier underefterkrigstiden, Svensk Sparbankstidskrift 6/1968.

Bo Södersten, Den hierarkiska välfärden, Svensk Sparbankstidskrift811968.

Bo Gustafsson m. fl., U-hjälp i utveckling, Svensk Sparbankstidskrift411969.

Unpublished - various subjetts

Konkurrens mellan vattenvägar och järnvägar i amerikansk in-rikeshandel 1830-1860. Lic-avhandling 1962.

Market and Market Shares for Nitro Explosives in Great Britain, 1975.

Growth of Nobel% Explosives, Components, and Financing, 1976.

Uppsala Papers in Economic History consists of the following series:

RESEARCH REPORTS

1. Bo Gustafsson:

2. Mats Essemyr:

3. Göran Rydén:

4. Alf Johansson:

5. Lena Sommestad:

6. Li Bennich-Björkman:

7. Håkan Lindgren:

8. Alice Teichova:

9. Lynn Karlsson &Ulla Wikander:

The Causes of the Expansion of the Pub-lic Sector in Sweden during the 20th Cen-tury. 1983.

Food Consumption and Standard of Liv-ing: Studies on Food Consumptionamong Different Strata of the SwedishPopulation 1686-1933. 1983.

Gammelstilla stångjärnssmedja - en ma-nufakturindustri. 1984.

Market, Nature and Work: The basics ofwork organization in a nineteenth-centu-ry export sawmill. 1984.

Strukturomvandling och yrkessamman-sättning: Ala sågverk under mellankrigs-tiden. 1985.

Nationalekonomi och ekonomisk histo-ria. Inställningen hos nationalekonomertill ämnet ekonomisk historia 1929-1947.1985.

International Firms and the Need for anHistorital Perspective. 1985.

Economic Policies in Interwar EastEurope: Freedom and Constraints of Ac-tion. 1985.

Kvinnoarbete och könssegregering isvensk industri 1870-1950: Tre uppsatser.1985.

10. Bo Gustafsson:

11. Mats Morell:

Det antika slaveriets nedgång: En ekono-misk teori. 1985.

Eli E Heckscher, utspisningsstaterna ochden svenska livsmedelskonsumtionenfrån 1500-talet till 1800-talet. Samman-fattning och komplettering av en lång de-batt. 1986.

12. Ragnhild Lundström & Methodological Problems in BusinessKersti Ullenhag: History: Two Papers. 1986.

13. Kersti Ullenhag (editor): Books and Articles from the Departmentof Economic History at Uppsala Univer-sity. 1986.

14. Georg Péteri: The Role of State and Market in theRegulation of Capita1 Imports: Hungary1924-1931.1987.

15. Håkan Lindgren:

16. Mats Morell:

17. Juergen Salay:

18. Göran B. Nilsson:

Banking Group Investments in SwedishIndustry: On the emergence of banks andassociated holding companies exercisingshareholder influence on Swedish indu-stry in the first half of the 20th century.1987.

Om mått- och viktsystemens utveckling iSverige sedan 1500-talet. Vikt- och rymd-mått fram till metersystemets införande.1988.

The Soviet Union River Diversion Pro-jett. From Plan to Cancellation 1976-1986.1988.

Kreditens jättekraft. Svenskt bankväsen-de i brytningstid och genombrottstid vid1800-talets mitt. 1988.

19. Maurits Nyström: En spegel av ett sekel. Riksdagens resor iNorrbotten 1880-1988. 1988.

20. Lars Magnusson: Korruption och borgerlig ordning - na-turrätt och ekonomisk diskurs i Sverigeunder Frihetstiden. 1989.

21. Hans Sjögren: Kreditförbindelser under mellankrigs-tiden. Krediter i svenska affärsbanker1924-1944 fördelade på ekonomiska sek-torer och regioner. 1989.

22. Eskil Ekstedt: Knowledge Renewal and KnowledgeCompanies. 1989.

23. Karl-Gustaf Hildebrand: Om företagshistoria. 1989.

24. Gert Nylander: Företagsarkiv och företagshistoriskforskning. 1990.

25. Bo Gustafsson: Gunnar Myrdal 1898-1987. Liv och verk.1990

WORKING PAPERS

1. Alice Teichova: Rivals and Partners. Banking and Indus-try in Europe in the First Decades of theTwentieth Century. (Reportffom the Vien-na Banking - Industry Symposium 1988.)1988.

2. Fritz/Kastner/Larsson: Banking and Bank Legislation in Europe1880-1970. (Report from the ViennaBanking-Industry Symposium 1988.)1989.

3. Elizabeth A Boross & Bank-Industry Connections in HungaryHåkan Lindgren: and Sweden. Two Studies. (Report from

4. Volker Wellhöner &Harald Wixforth:

5. Ragnhild Lundström &Jan Ottosson:

6. Agnes Pogany &György Kövér:

7. Ulla Wikander (ed.):

8. Agneta Emanuelsson,Lynn Karlsson,Ulla Wikander &Ingrid Åberg (red.):

9. The Banking Project:

BASIC READINGS

1. Håkan Lindgren &Kersti Ullenhag (eds.):

2. Britta Jonell-Ericsson:

the Vienna Banking-Industry Symposium1988.) 1989.

Bank-Industry Relations in Theory andPractise. Two Studies. (Report ffom theVienna Banking-Industry Symposium1988.) 1989.

Bank-Industry Relations in Sweden:Ownership and Interlocking Director-ates. (Reports ffom the Vienna Banting -Industry Symposium 1988.) 1989.

Banking and Industry In Hungary. (Re-portsffom the Vienna Banking - IndustrySymposium 1988.) 1989.

The Sexual Division of Labour, 19th &20th Centuries. Six essays presented atthe Ninth International Economic Hist-ory Congress, Berne 1986. 1989.

Kvinnohistoria i teoretiskt perspektiv.Konferensrapport från det tredje nordis-ka kvinnohistorikermötet. 13 -16 april1989.1990

The Network of Finantial Capital: Essaysin Honour of Ragnhild Lundström.

Teorier och teoretisk tillämpning i före-tagshistorisk forskning. Med bidrag avHerman Daems, Erik Dahmén, HåkanLindgren och Kersti Ullenhag. 1985.

Skinnare i Malung. 1987.

3. Håkan Lindgren &Hans Modig:

The Swedish Match Company in the In-terwar Years. An International Perspec-tive. 1987.

4. Bo Gustafsson: Den ekonomiska vetenskapens utveck-ling. Del 1: Från Aristoteles till AdamSmith. 1988.

5. Bob Engelbertsson & Seminarieuppsatsen. En genomgång avLynn Karlsson: formella krav. 1989.

6. Mats Larsson &Håkan Lindgren:

Risktagandets gränser. Utvecklingen avdet svenska bankväsendet 1850-1980.1989.