Rulers and Capital in Historical Perspectives: State Formation and Financial Development in India and the United States

This dissertation seeks to explain the process of the concomitant and interconnected emergence of ―public‖ finance and ―private‖ credit and money markets in the context of state formation in the eighteenth and nineteenth centuries. It seeks to explain the conditions under which such markets were either institutionalized or formalized thus achieving substantial proportions, or became stunted due to incomplete institutionalization. In addition, it explains two variations in banking structure or the money market in cases where such a market has already been institutionalized. These are, respectively, money markets with high barriers to entry, and markets with low entry barriers. Building on literatures on state formation, and financial market development in, the dissertation suggests that these variations can be conceived as the outcome of the power relationship between governing elites and capital holders in a society. Power is conceived of not as an attribute of an actor or a group of actors but as a property of the social relation under investigation; in this case between capital holders and rulers. The project uses the suggested theoretical framework to illuminate the effects of colonialism on state and market formation by comparing such relationships over time in the United States to those in India beginning with the second half of the eighteenth century.

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