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Minsky's Analysis of Financial Capitalism

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  • Dimitri B. Papadimitriou
  • L. Randall Wray

Abstract

In this paper, the authors discuss Minsky's analysis of the evolution of one variety of capitalism--financial capitalism--which developed at the end of the nineteenth century and was the dominant form of capitalism in the developed countries after World War II. Minsky's approach, like those of Schumpeter and Veblen, emphasized the importance of market power in this stage of capitalism. According to Minsky, modern capitalism requires expensive and long-lived capital assets, which, in turn, necessitate financing of positions in these assets as well as market power in order to gain access to financial markets. It is the relation between finance and investment that creates instability in the modern capitalist economy. Financial capitalism emerged from World War II with an array of new institutions that made it stronger than ever before. As the economy evolved, it moved from this more successful form of financial capitalism to the fragile form of capitalism that exists today.

Suggested Citation

  • Dimitri B. Papadimitriou & L. Randall Wray, 1999. "Minsky's Analysis of Financial Capitalism," Economics Working Paper Archive wp_275, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_275
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    References listed on IDEAS

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    1. Domenico Delli Gatti & Mauro Gallegati & Hyman P. Minsky, 1994. "Financial Institutions, Economic Policy, and the Dynamic Behavior of the Economy," Economics Working Paper Archive wp_126, Levy Economics Institute.
    2. John F. Henry & L. Randall Wray, 1998. "Economic Time," Macroeconomics 9811004, University Library of Munich, Germany.
    3. Ferri, Piero & Minsky, Hyman P., 1992. "Market processes and thwarting systems," Structural Change and Economic Dynamics, Elsevier, vol. 3(1), pages 79-91, June.
    4. Frank Hahn, 1985. "Money and Inflation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262580624, April.
    5. Kregel, J A, 1995. "Neoclassical Price Theory, Institutions, and the Evolution of Securities Market Organisation," Economic Journal, Royal Economic Society, vol. 105(429), pages 459-470, March.
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    1. Real personal income and depression
      by Dirk in econoblog101 on 2012-09-13 14:08:30

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    1. James K. Galbraith & Daniel Munevar Sastre, 2010. "The Generalized ‘Minsky Moment’," Chapters, in: Dimitri B. Papadimitriou & L. Randall Wray (ed.), The Elgar Companion to Hyman Minsky, chapter 14, Edward Elgar Publishing.
    2. Dimitri B. Papadimitriou & L. Randall Wray (ed.), 2010. "The Elgar Companion to Hyman Minsky," Books, Edward Elgar Publishing, number 13122.
    3. Lakshmi, Geeta, 2018. "Gekko and black swans: Finance theory in UK undergraduate curricula," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 52(C), pages 35-47.
    4. Jan Toporowski, 2013. "The Elgar Companion to Hyman Minsky," Review of Political Economy, Taylor & Francis Journals, vol. 25(1), pages 175-177, January.
    5. Leszek Kąsek & Marek Lubiński, 2010. "Hyman Minsky – wczoraj i dziś," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 4(1), March.
    6. L. Randall Wray, 2007. "Endogenous Money: Structuralist and Horizontalist," Economics Working Paper Archive wp_512, Levy Economics Institute.
    7. Mirakhor, Abbas & Krichene, Noureddine, 2009. "The Recent Crisis: Lessons for Islamic Finance," MPRA Paper 56022, University Library of Munich, Germany.
    8. Yeva Nersisyan & L. Randall Wray, 2010. "The Trouble with Pensions: Toward an Alternative Public Policy to Support Retirement," Economics Public Policy Brief Archive ppb_109, Levy Economics Institute.

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