David:

There's a lot of endogeneity here, so I'm not sure I'd characterize things
the way you did. Take the South Sea/Mississippi bubble period. New notions
of credit and finance enabled the creation of new instruments in the
financial markets, and policy makers armed with new theoretical frameworks
(think John Law) reshaped the policy environment in which the financial
markets operated (not to mention the fact that decreased transportation
costs and changes in international politics allowed the financial markets in
England, France and the Netherlands to become somewhat more integrated). The
crashes of those bubbles led to efforts by some to go backwards (the French
opposition to paper money, for example, can be seen as a reaction to what
happened in the Mississippi scheme), but they also led to reforms that
allowed financial markets to continue expanding. So were the ideas the
source of the financial reforms and crises, or were new ideas the results of
the crises? The answer seems to be both!

Ross Emmett