Imperialism and Hegemony in Global Finance concentration led to the intensification of personal network ties for the determi- nation of credit,rentier investments in far-off lands occasionally relied on the 1sn6m threat of force in addition to surveillance.For example,the use of the imperial navy for 'gunboat diplomacy'to protect what were essentially private interests is now well known.While it would be an exaggeration to argue that such S6.20 threats were widespread,they provided an important normative force in the inter- national financial order in the absence of formal international financial regu- lation.52 This is particularly important given that there was much greater investment in what would now be called 'emerging market economies'(EMEs) compared to the contemporary period,and that the overwhelming bulk of English investment was in sectors (like government debt,railways,mining and metallurgy)where responsible governments could be punished via threats of blacklisting'53 Increasingly,English international financial capacity rested on 'superloyal schizoids'at home,since it relied on the suppression of social liberalism 益 desired by LIGs alongside heightened finance imperialism that imposed indirect costs on LIGs.54 As England now had a financial reform nexus with diminished social legitimacy,its means to cope with the financial shock of the Great War was much reduced as a result of its increasingly narrow and concentrated pool of capital.Given this,English primacy in the international financial order was dif- ficult to retain,especially given greater organisation and swiftly changing econ- omic and social conventions among LIGs,which provided a clear message to politicians that they wanted their expectations about how the economy should work met after the Great War. Social sources of the international creditor economy During the 1980s much of the debate within political economy was concerned with the USA's declining hegemony.s5 One key argument here,most eloquently and frequently put forward by Susan Strange,was that US hegemony had not declined, but rather the state had encouraged more market-based forms of power in the inter- national political economy.s6 Strange also argued that change within the inter- national political economy,especially in finance,was dependent on understanding domestic changes within the hegemon.57 Others have since argued that the USA relies on its international presence despite its weak state capacity at home.s8 Both views are absolutely correct,especially if we are looking for state intervention in the domestic economy in terms of public social welfare provision.9 My aim here is not to dispute these robust claims,but to iden- tify how changes to the US financial reform nexus for LIGs provide insight on the foundations of US hegemony in the international financial order of the late twen- tieth century. Let me be clear in that I do not view the US state as necessarily inclined to inter- vene positively in the economy on behalf of LIGs.Numerous studies of income inequality and social welfare have clearly demonstrated this to not be the case, with particularly devastating outcomes for the poor.I do wish to demonstrate that in the USA in the closing decades of the twentieth century there was increas- ing state intervention in the form of regulations supporting institutionalisation and 7Downloaded By: [University of Sydney] At: 02:46 7 August 2007 concentration led to the intensification of personal network ties for the determi￾nation of credit, rentier investments in far-off lands occasionally relied on the threat of force in addition to surveillance. For example, the use of the imperial navy for ‘gunboat diplomacy’ to protect what were essentially private interests is now well known. While it would be an exaggeration to argue that such threats were widespread, they provided an important normative force in the inter￾national financial order in the absence of formal international financial regu￾lation.52 This is particularly important given that there was much greater investment in what would now be called ‘emerging market economies’ (EMEs) compared to the contemporary period, and that the overwhelming bulk of English investment was in sectors (like government debt, railways, mining and metallurgy) where responsible governments could be punished via threats of ‘blacklisting’.53 Increasingly, English international financial capacity rested on ‘superloyal schizoids’ at home, since it relied on the suppression of social liberalism desired by LIGs alongside heightened finance imperialism that imposed indirect costs on LIGs.54 As England now had a financial reform nexus with diminished social legitimacy, its means to cope with the financial shock of the Great War was much reduced as a result of its increasingly narrow and concentrated pool of capital. Given this, English primacy in the international financial order was dif- ficult to retain, especially given greater organisation and swiftly changing econ￾omic and social conventions among LIGs, which provided a clear message to politicians that they wanted their expectations about how the economy should work met after the Great War. Social sources of the international creditor economy During the 1980s much of the debate within political economy was concerned with the USA’s declining hegemony.55 One key argument here, most eloquently and frequently put forward by Susan Strange, was that US hegemony had not declined, but rather the state had encouraged more market-based forms of power in the inter￾national political economy.56 Strange also argued that change within the inter￾national political economy, especially in finance, was dependent on understanding domestic changes within the hegemon.57 Others have since argued that the USA relies on its international presence despite its weak state capacity at home.58 Both views are absolutely correct, especially if we are looking for state intervention in the domestic economy in terms of public social welfare provision.59 My aim here is not to dispute these robust claims, but to iden￾tify how changes to the US financial reform nexus for LIGs provide insight on the foundations of US hegemony in the international financial order of the late twen￾tieth century. Let me be clear in that I do not view the US state as necessarily inclined to inter￾vene positively in the economy on behalf of LIGs. Numerous studies of income inequality and social welfare have clearly demonstrated this to not be the case, with particularly devastating outcomes for the poor.60 I do wish to demonstrate that in the USA in the closing decades of the twentieth century there was increas￾ing state intervention in the form of regulations supporting institutionalisation and Imperialism and Hegemony in Global Finance 7