ABSTRACT
This chapter traces the political and economic priorities of industrial state governments as they confronted, the effects of parameter shifts in reaction to both a changed international monetary regime and commodity supply shocks in the 1970s, and then growing worldwide economic disorder, brought on in part by rapid transformations in banking and finance. The activities of non-state actors as constraints on national policymaking are the story about financial innovation and the creation of new markets in response to state-imposed restrictions. The emphasis on the influence that marketplace arrangements have on political conflict and policy distinguishes this interpretation of industrial change from more conventional accounts that focus primarily on political actors and institutions. The intervention of political forces and institutions makes it necessary to replace arm’s-length market transactions with a negotiation process. Inflation is another way in which governments affect relative prices, and is a major source of political risk.
