Understanding

Financialization: Standing
on the Shoulders of Minsky

Charles J. Whalen
Baldy Center for Law & Social Policy
SUNY University at Buffalo, USA

Financialization Conference, June 9, 2017, Rzeszow, Poland

 

“The time has come…to speak of many things!”



Main Points

• Hyman Minsky Offered Penetrating

Observations on Money Manager Capitalism
• He also Sketched a Powerful Analytical
Framework, Yielding a Theory of US
Capitalist Development
• Minsky’s Observations & Framework
Represent a Major Contribution to the
Financialization Literature
Observations on Money Manager
Capitalism

• Emerged in the Early 1980s

• Money Managers Replaced Corporate
Managers as ‘Masters of the Economy’
• Consequences & Dangers
 Consequences of Money
Manager Capitalism

• The Short View Replaced the Long View

• Financial Innovation (Securitization, etc.)
• Further Globalization
Dangers of Money Manager
Capitalism

• Slower Technological Progress

• Greater Economic Instability
• Increased Worker Insecurity
• Sharper Income Inequality
 The Continuing Relevance of
Money Manager Capitalism
The New York Times
BUSINESS DAY

Route to Air Travel Discomfort Starts

on Wall Street
By NELSON D. SCHWARTZ MAY 28, 2017
Minsky’s Theory of US Capitalist
Development
• Foundation: Evolutionary and Institutionally
Oriented View of the Economy (Rooted in
Schumpeter & Keynes)
• Finance: A Key Role in Economic Life
• Focus: The Interaction of Finance & Industry
• Money Manager Capitalism: The Latest Stage
• Some Dimensions: Activity & Entity Financed;
Financing Source; Locus of Power
Extending Minsky’s Theory
Understanding Financialization
• Shareholder Value
• Money Managers and Trading
• Evolution of Banking and Finance
• Regime of Accumulation
• And More….
‘Economic systems are not natural systems…
The task confronting economics today may
be characterized as a need to integrate the
insights of Schumpeter and Keynes.’

— Minsky (1986)