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Schumpeter vs. Minsky on the Evolution of Capitalism and Entrepreneurship

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Abstract

Joseph Schumpeter and Hyman Minsky have devoloped, during their lives, both a theory of the business cycles and a theory of capitalist development. Minsky was influenced by Schumpeter during the period he spent at Harvard University in 1942 and he thought that Schumpeter vision of the capitalist process required an integration of financial markets and investment behaviour: roughtly speaking, Minsky’s financial keynesianism was what Schumpeter needed to complete his own theory of the devoloping of a capitalist economy. Minsky explored an even broader historical framework during the last decade of his life: the theory of capitalist development along the idea that there are many types of capitalism. As pointed out by Whalen (2001) to analyse each stage of capitalist development following Minsky’s perspective, one should ask what is the distinctive activity being financed, what is the pivotal source of financing, and what is the balance of economic power between those in business and in banking/finance activity. Capitalist development is shaped by the institutional structure, but this structure is always evolving in response to profit-seeking activity. The financial system takes on special importance in this theory not only because finance exerts a strong influence on business activity but also because this system is particularly prone to innovation. In this paper, I shall focus particularly on this analysis trying to up-date his taxonomy, taking into account the process of global financialisation, and comparing it with Schumpeter’s previous scrutinity on the evolution of capitalism.

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  • Sau, Lino, 2019. "Schumpeter vs. Minsky on the Evolution of Capitalism and Entrepreneurship," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201923, University of Turin.
    • Handle: RePEc:uto:dipeco:201923
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    JEL classification:

    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises

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