Impunity and Capitalism

The Great Financial Crisis of 2008 resulted in a deep recession and millions of jobs lost, and, in some countries, the lost output has never been caught up. This was not the result of an extraneous event like a hurricane or an earthquake: It was manmade, with its epicenter in the banking sector and transmitted through financial markets. Our natural urge to deal with disasters assigns blame to human actors, and we may wish to punish them for the sake of justice or, less vengefully, deterrence. But should we, can we, and how do we hold accountable those responsible for financial crises with such large consequences? To answer these questions, we need to round up an economist, a lawyer, an accountant, and perhaps a philosopher. They might first say that such questions are not new, for neither are financial crises. What answers, if any, did our ancestors give? Now we need a historian, and we are looking at some fun interdisciplinary history.Finding a suitable analytical framework is difficult. First, what is a crisis? The book selects a few crises in France and Great Britain from the late seventeenth century to the early nineteenth century. The last, in 1825, is a financial crisis roughly similar to the one in 2008, but the French and British bubbles of 1720 were not only manmade but government made. As for the events of the French Revolution and the suspension of convertibility in England in 1797, they stretch the word crisis too far.Second, what is impunity? The word is used synonymously with immunity when applied to the state, but immunity is inherent to the state. As for individual actors, evaluating their impunity requires some framework to establish causality and adjudicate their guilt, and it is never clear if impunity is measured relative to the existing laws (which are not discussed in this book) or to our own judgments. The lack of framework leads to curious assertions of guilt, such as blaming Samuel Bernard’s bankruptcy in 1709 for a thousand deaths in Lyon, a rather bold causal statement. These interesting thoughts from the book’s introduction never reappear.The lack of a framework turns this book away from analysis into an extended and somewhat disjointed narrative. At the core of the book are several well-researched case studies based on primary sources: the bankruptcy of France’s biggest private banker in 1709, the bubble-riding activities of the duke of Chandos in the 1710s and 1720s, Étienne Clavière’s speculations in the 1780s, and the origins of the Banque de France. The remainder consists in exposition and interpretations of existing historiography. As the book develops, central banks become prominent; for example, John Law is presented as an early theorist of modern, powerful central banks, which is fair—but how does he fit into the question of impunity? The role of central banks in democratic societies is an important topic whose history merits analysis, but that history sits uneasily under the title of impunity. Perhaps another book is needed here.The specialists will regret omissions (such as the Bubble Act, the special tax on profiteers of the Mississippi bubble, and the Talhouët affair) and misreadings (the 1716 Chamber of Justice was not about justice but a coercive way to reduce the floating debt; the Visa of 1722 was not a form of “private administration” but the French equivalent of the British Parliament’s clean-up of the South Sea debacle). The interdisciplinarians may regret the dominance of profusely detailed narrative over broader perspective, but they will surely agree with the penultimate sentence of the book, which is that impunity has a history, and that they have been treated to a rich and tantalizing view of it

Capitalism · Economic history · Economics · Impunity · Keynesian economics · Law and economics · Political economy · Political science · Politics · Historical Economic and Social Studies · Law