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Will History Rhyme? The Past as Financial Future

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  • William Goetzmann

Abstract

History demonstrates that global capital markets can contract as well as expand. A long-term view of finance suggests that we should prepare for periodic segmentation as well as integration of markets in the 21st Century. Anti-capitalist ideologies have historically been the vectors of attack on the cross-border flow of capital, however the fundamental cause may actually be domestic hostility towards foreign ownership and control. The roots of the conflict between domestic interests and foreign investors may be inherent in global equilibrium models. In a frictionless capital market, foreigners will always own a greater proportion of a small economy's assets. By the same token, domestic investors in small economies will always seek to export most of their capital. This equilibrium is at odds with a stable condition of national ownership and control of assets.

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  • William Goetzmann, 2004. "Will History Rhyme? The Past as Financial Future," Yale School of Management Working Papers ysm455, Yale School of Management, revised 01 Jul 2004.
    • Handle: RePEc:ysm:somwrk:ysm455
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    File URL: http://icfpub.som.yale.edu/publications/2423
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    References listed on IDEAS

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    1. Raghuram G. Rajan & Luigi Zingales, 2000. "The Great Reversals: The Politics of Financial Development in the 20th Century," OECD Economics Department Working Papers 265, OECD Publishing.
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    3. Michael D. Bordo & Alan M. Taylor & Jeffrey G. Williamson, 2003. "Introduction to "Globalization in Historical Perspective"," NBER Chapters, in: Globalization in Historical Perspective, pages 1-10, National Bureau of Economic Research, Inc.
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    Keywords

    Imperialism; International Finance; Diversification;
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