Keynes and the cotton industry: a reappraisal

David Higgins, Steven Toms and Igor Filatotchev

No 29, The York Management School Working Papers from The York Management School, University of York

Abstract: The paper reinterprets Keynes’s analysis of the crisis in the Lancashire cotton industry in the 1920s. It presents empirical evidence showing that syndicates of local shareholders, but not the banks, were an important brake on firms exiting, at a time when exit barriers were otherwise unproblematic in this competitive industry. Moreover, syndicates milked firms of any profits through dividends, thereby limiting reinvestment and re-equipment possibilities. The case shows that where laissez-faire fails in response to a crisis, the associated response may need to assess both ownership structure and its relationship to competitive industry structure.

Pages: 26 pages
Date: 2007
New Economics Papers: this item is included in nep-his, nep-mkt and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:wrc:ymswp1:29

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