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Shares, Coalition Formation and Political Development: Evidence from Seventeenth Century England


  • Jha, Saumitra

    (Stanford U)


A key challenge for developing societies is to build coalitions across disparate interests in favour of beneficial policies. This paper documents the role of a financial innovation-- shares--in aligning disparate interests in favour of representative government during England's Civil War (1642-48). Using novel micro-data, the paper shows that shareholding was a major determinant of support for political reform by members of parliament. The paper suggests that shares allowed a broad spectrum of investors to benefit from new opportunities overseas. However, overseas rights belonged chiefly to the executive. Thus the introduction of shares aligned incentives in favour of political reforms and overseas policies crucial for growth.

Suggested Citation

  • Jha, Saumitra, 2008. "Shares, Coalition Formation and Political Development: Evidence from Seventeenth Century England," Research Papers 2005, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:2005

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    References listed on IDEAS

    1. Patrick K. O'Brien, 1988. "The political economy of British taxation, 1660-1815," Economic History Review, Economic History Society, vol. 41(1), pages 1-32, February.
    2. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    3. Rapp, Richard T., 1975. "The Unmaking of the Mediterranean Trade Hegemony: International Trade Rivalry and the Commercial Revolution," The Journal of Economic History, Cambridge University Press, vol. 35(03), pages 499-525, September.
    4. Abhijit Banerjee & Lakshmi Iyer & Rohini Somanathan, 2005. "History, Social Divisions, and Public Goods in Rural India," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 639-647, 04/05.
    5. Carlos, Ann M. & Key, Jennifer & Dupree, Jill L., 1998. "Learning and the Creation of Stock-Market Institutions: Evidence from the Royal African and Hudson's Bay Companies, 1670–1700," The Journal of Economic History, Cambridge University Press, vol. 58(02), pages 318-344, June.
    6. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
    7. Richard Grassby, 1970. "The Personal Wealth of the Business Community in Seventeenth-Century England," Economic History Review, Economic History Society, vol. 23(2), pages 220-234, August.
    8. Yadira Gonzalez de Lara & Avner Greif & Saumitra Jha, 2008. "The Administrative Foundations of Self-Enforcing Constitutions," American Economic Review, American Economic Association, vol. 98(2), pages 105-109, May.
    9. Sussman, Nathan & Yafeh, Yishay, 2004. "Constitutions and Commitment: Evidence on the Relation Between Institutions and the Cost of Capital," CEPR Discussion Papers 4404, C.E.P.R. Discussion Papers.
    10. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
    11. Quinn, Stephen, 2001. "The Glorious Revolution'S Effect On English Private Finance: A Microhistory, 1680 1705," The Journal of Economic History, Cambridge University Press, vol. 61(03), pages 593-615, September.
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    1. Capitalism - making life better
      by Nicholas Gruen in Club Troppo on 2009-02-09 18:22:33


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    Cited by:

    1. Menyashev, Rinat & Natkhov, Timur & Polishchuk, Leonid & Syunyaev, Georgiy, 2011. "New Institutional Economics: A state-of-the-art review for economic sociologists," economic sociology_the european electronic newsletter, Max Planck Institute for the Study of Societies, vol. 13(1), pages 12-21.
    2. Cox, Gary W., 2012. "Was the Glorious Revolution a Constitutional Watershed?," The Journal of Economic History, Cambridge University Press, vol. 72(03), pages 567-600, September.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P10 - Economic Systems - - Capitalist Systems - - - General

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