Room to Groove? Standards of Civilization in the Development of International Financial Orders

The use of a `standard of civilization', a preferred form of socio-political organization, in global capital markets presents both constraints and opportunities for creditors and borrowers. When imposed, civilizing standards may change how a borrower would prefer to conduct their affairs. Creditors, after all, do not have the time and money to check every little detail and want clear performance benchmarks in economic life. At the same time, borrowers may present themselves as conforming to a civilizing standard to access capital and give themselves a greater capacity to conduct their own affairs. As long as they stay within the parameters of legitimate financial practice to signal institutional isomorphism, the `groove', creditors may well allow borrowers room for change in self-determined ways. This paper maps out the historical and conceptual terrain concerning civilizing ideas about the legitimacy of financial practices within global capital markets, and investigates relationships between Western `civilizers' and Emerging Market Economies during the last two periods of financial globalization, the late-nineteenth/ early-twentieth centuries and the late-twentieth century.