1 - Historical background for the rise of financial capitalism: commercial revolution, rise of nation-states, and capital markets

Summary

The decade of the 1980s saw the emergence of international capital movement as a dominant feature of the economic relations among nation-states. The resulting pressures on exchange rates, balances of payments, and trade patterns have disconcerted all participants – those who make national economic policy, as well as international financiers and ordinary citizens. Perhaps the most striking episode was the collapse of the world's stock markets during the week of 19 October 1987, the suddenness, sharpness, and inclusiveness of which took all observers by surprise. Some, trying to determine if computer-driven sales in New York or in Tokyo had led to the collapse of international stock markets in 1987, were disoriented on finding that Tokyo prices for 20 October preceded, rather than followed, New York quotes for 19 October. They were forced by this circumstance to confront once again the mystery of the international date line, a phenomenon first detected by the chronicler of Magellan's voyage to circle the earth.

Antonio Pigafetta recorded his amazement that, according to the Portuguese inhabitants of the Cape Verde Islands, it was Thursday, 10 July 1522, when his ship returned to the European settlement there, not Wednesday, 9 July, as indicated in his diary. He finally reasoned correctly what had happened, but nearly two centuries later the English buccaneer and explorer William Dampier remarked on the discrepancy of dates in East Asia. The Portuguese, Dutch, and English who settled in the Pacific islands by going east from Asia were a day ahead of the Spanish settlers who arrived by going west from the Americas.