Bankers' Alliances and Economic Policy Patterns

Abstract

This article suggests an organizational or institutional explanation of economic policy patterns which differs significantly from state- or society-centered explanations and those based on international factors. Bankers' alliances, defined as interest coalitions of public and private financiers, play an important role in shaping economic policy. The stronger the bankers' alliance, the more likely that long-run economic policy patterns will feature orthodox policies such as tight monetary policy and limited government intervention in financial or foreign exchange markets. The historical organization of state economic agencies, and of capital, create national environments more or less conducive to formation of strong bankers' alliances. The three key variables center on: (a) the timing and actors involved in central bank formation, (b) the relationship between the central bank and other state economic policy-making agencies, and (c) the extent of conglomeration between industrial and financial enterprises and its impact on state control of investment financing. Comparative history of the Mexican and Brazilian cases provides preliminary evidence with which to explore the proposed relationship between organizational features of the state and capital, the political influence of bankers' alliances, and economic policy patterns.