The main theories concerning the public financial system

Introduction

Published in Bucharest in 2005 at the Academy of Economic Studies’ publishing house, the book “Istoria economiei europene – de la revolutia industriala la Uniunea Europeana” is written by Maria Muresan and Andrei Josan and presents the key moments of the modern European economy’s evolution up to beginning of the 2000s. I read the book because I wanted to know more about the economical, political and social evolution of the European space.

The book is structured around four chapters in which the two authors points out the development in time and space of economic activities, inputs and economic relations ,of the production itself, politically, socially, economically, and technically speaking.

Chapter I

In the first chapter, “Revolutia industriala si industrializarea pe plan european in secolul al XIX-lea” is pointed the impact of industrialization on the European economy. The industrial revolution was a jump in many domains. The politics in this period, for example, is characterized by a process of reconstruction and centralization of some monarchic countries and through a permanently war’s situation. Economically the period after the industrial revolution was characterized by oversized costs, so by inflation and high taxes.

Because of the industrial revolution, the international trade with finished products and raw materials developed more and Europe dominated it. For example U.K, Germany and France had 44% of the total international trade. After the developing of trade in many countries appeared more and more the term of economic growth and the GNP/inhabitant indicates that. But this happened because the European power had some strong pillars like:

• A big population and work force. In the 19th century the European population increased with almost 250%;

• The industrial power at the end of the 18th century because of the industrial revolution. For example, the coal-bearing industry developed because of the spread of the machines with fumes and the big quantity of coal, made the world production of coal to increase from 16 millions tones in 1800 to 800 millions tones at the end of the century;

• The incontestable monetary supremacy through the Gold Standard, a monetary system which was functioned in practice for the important European coins which could be converted into gold, especially the pound sterling. The industrial revolution and the economy development had determined the increase of the coin’s role in economy. At the beginning of the 19th century the monetary system was based on a single coin, silver, but after a period of great discoveries the coin was the gold and Europe was practicing a monetary supremacy through The Gold Standard;

• The economic politics was based on protectionism which is supposed to be inaugurated by Germany.

Chapter II

The title of the second chapter is “Economia europeana interbelica”. By reading the title we can understand what we can learn if we read the whole chapter: the European economy between the two World Wars.

After the First World War, one of the most important specific features of Europe was its instability, politically, economically, socially and diplomatically speaking. The main feature of the interwar period was the effort of expansion for developed countries and the effort of defence for the countries which produced raw materials.

The war had generated changes on the frontiers, some of them unbelievable before. After the AUSTRO-UNGAR Empire crumbled, some parts of Germany and Russia became components of the new European states.