Published by EH.Net (June 2019)

Youssef Cassis and Giuseppe Telesca, editors, Financial Elites and European Banking: Historical Perspectives. New York: Oxford University Press, 2018. xiv + 259 pp. $80 (hardcover), ISBN: 978-0-19-878279-7.

Reviewed for EH.Net by Stefano Ugolini, Institute of Political Studies, University of Toulouse.

There was a time when elites used to be a very popular topic among economic historians. Under the indirect impulse of (and often, in opposition to) Marxist ideology, an impressive historiographic effort was consecrated, during the 1970s and 1980s, to the study of elites and their role in the working of capitalism. The topic fell out of favor with the crumbling of the Berlin Wall, as economic historians’ focus rapidly shifted to parallel questions such as culture, public choice, or the quality of institutions. This detachment was also partially motivated by growing methodological doubts about the relevance and usefulness of the very concept of “elite” as a historiographical tool.

Naturally, the crisis of 2008 aroused the general public’s interest around the power of the “Masters of the Universe” who had made such a big mess possible. Might this have opened a window of opportunity for revitalizing the historical literature on financial elites? Such is the bet made by the editors of this volume, Youssef Cassis and Giuseppe Telesca — the former of whom contributed substantially to the “old” literature on elites with his celebrated 1984 study of City bankers in Edwardian Britain. The result of the endeavor is a collection of nine diverse studies by economic, business and legal historians, many of whom are directly or indirectly linked to the European University Institute of Florence.

The first chapter, written by the editors, promises to develop the original intuition of the volume by performing a comparative analysis of realities and discourses about financial elites’ responsibilities during the Great Depression and during the Great Recession. The promise is not really fulfilled, as the chapter does not actually address the issue in a truly systematic way. Cassis and Telesca want to suggest that, paradoxically, bankers were less responsible for the economic slump in the 1930s than in the 2010s, yet they paid a much higher price then than now. Of course, the question at stake is so complex (and so difficult to substantiate) that it would deserve several books in itself: indeed, it would be unfair to expect a single chapter to answer it in a fully satisfactory way.

Chapter 2, by Niccolò Valmori, is rather remote from the rest of the volume from a chronological viewpoint, as it deals with the French Revolution. The idea is to try to understand how financial elites manage to deal with major political instability. Building on some business correspondences, Valmori reconstructs the trajectories of three foreign Paris-based bankers throughout the revolutionary period, showing that volatility put financial elites into a situation of net dependence on political elites. While this chapter is concerned with the short-term impact of political shocks on individual financiers, the following one, by Giandomenico Piluso, focuses on the long term — on how the systemic fracture set in motion by World War One triggered the gradual substitution of one elite with another one in Italy. Piluso shows how the challenges of the Interwar led to the birth of Italy’s “technocracy,” a hybrid elite within which the boundaries between finance and politics became impossible to disentangle. The qualitative narrative of Chapter 3 is nicely complemented by the quantitative investigation of Chapter 4, by Alberto Rinaldi and Michelangelo Vasta, which illustrates with network analysis the evolution of Italy’s economic elite throughout the twentieth century. Looking at interlocking directorates in top Italian joint-stock companies, Rinaldi and Vasta are able to document the rise of “technocrats” since the 1920s but also their fall since the 1980s, when direct state intervention in the economy started to falter. These conclusions are contrasted by those of Chapter 5 by Laure Quennouëlle-Corre, which deals with “technocracy” in postwar France. As the chapter suggests, the French experience clearly decoupled from the Italian one in the 1980s, as in Paris “technocrats” managed to maintain their grip on the financial system and acted as the true engines of its liberalization.

In a sort of chronological rollercoaster, Chapter 6, by Leslie Hannah, takes us back to Victorian Britain. The focus here is on the regulation of corporate issuance: building on his extensive historical expertise, Hannah argues that agency theory cannot explain how the London Stock Exchange managed to limit misbehavior. Also Chapter 7, by T.T. Arvind, Joanna Gray, and Sarah Wilson, deals with rules and practices in Victorian Britain, arguing that the thick strata of social norms that characterized the nineteenth-century “gentlemanly capitalism” made it very different from today. Albeit interesting, these two chapters appear to be only loosely connected to the rest of the volume.

The last two chapters bring us forward to the late twentieth century. Chapter 8, by Mikael Wendschlag, analyses the professional backgrounds of a sample of Western central bankers, to show that these changed almost every decade according to the general political context: civil servants dominated in the 1960s, politicians in the 1970s, financiers in the 1980s, and academics in the 1990s. A similar exercise is performed in Chapter 9, by Alexis-Frédéric Drach, for the members of the Basel Committee on Banking Supervision: also in this case, a discontinuity is actually found in the 1980s.

To sum up, Financial Elites and European Banking bundles together nine studies of diverse nature, approach, breadth, and quality. One might regret that the many interesting perspectives opened by the contributors (especially in terms of political economy) were not actually funneled into a broadly consistent analytical framework. Elites could indeed return to be a fashionable topic for economic historians, but the new methodologies through which their study might be revitalized still remain to be clarified.

Stefano Ugolini is an associate professor of economics at Sciences Po Toulouse and a researcher at LEREPS (University of Toulouse). He has published extensively on the history of money and finance, including in journals such as the Economic History Review, the European Review of Economic History, Business History, the Financial History Review, and the Journal of Monetary Economics. He is also the author of The Evolution of Central Banking: Theory and History (Palgrave Macmillan, 2017).

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