Minsky's Analysis of Financial Capitalism

The Jerome Levy Economics Institute Working Paper No. 275

15 Pages Posted: 15 Dec 1999

See all articles by Dimitri B. Papadimitriou

Dimitri B. Papadimitriou

Bard College - Levy Economics Institute

L. Randall Wray

University of Missouri at Kansas City; Bard College - The Levy Economics Institute

Date Written: July 1999

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 Minksy, 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.

JEL Classification: B22

Suggested Citation

Papadimitriou, Dimitri B. and Wray, L. Randall, Minsky's Analysis of Financial Capitalism (July 1999). The Jerome Levy Economics Institute Working Paper No. 275, Available at SSRN: https://ssrn.com/abstract=180071 or http://dx.doi.org/10.2139/ssrn.180071

Dimitri B. Papadimitriou (Contact Author)

Bard College - Levy Economics Institute ( email )

Blithewood
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United States
845-758 7711 (Phone)
845-758 9424 (Fax)

L. Randall Wray

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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