The rise and fall of money manager capitalism: a Minskian approach

Wray, L. Randall

doi:10.1093/cje/bep024

Cited by 187 publications

(105 citation statements)

References 4 publications

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“…and short-term debt (Note 12). By re-channeling credit/money through this unregulated -shadow banking‖ towards financial, instead of real, investments and capital formation, the vitality of capitalism is undermined (Wray, 2009).…”

Section: The Neoclassical Model Wrongly Assumes Bank Leverage Throughmentioning

confidence: 99%

The On-Going Price of Perceiving Money as a Veil

Phillips¹

2017

IJEF

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Until macroeconomic theory rebuffs the nature of finance, which is leverage (debt claims and credit instruments above current GDP output), shadow-banking will continue to lure capital into the financial sector, lower institutional banking interest rates, and de-incentivize commercial lending from the real sector, even at competitive risk-adjusted rates. This institutionalized misallocation of credit undermines the tidy neoclassical -circular flow‖ apparatus where savings and earnings are allegedly pooled and then recycled through financial intermediaries into dynamic investment.Despite the mathematical complexity of DSGE models, the last financial crisis and its aftermath exposed the models' inadequacy for forecasting or even fully capturing economic reality. With no dynamic function for money, incorporating credit into the theoretical mindset of mainstream economics, including both neoliberal and (Post)-Keynesian traditions, has proven as yet unattainable. Holding fast to a (barter-like) Walrasian worldview, wherein the neutrality of money in the long-run, has meant debt does not exist and credit aggregates are not considered due to an a-historical mis-conceptualization of money/credit. As long as money, credit and debt are not accorded special roles, a bloated financial sector may well contribute to the suboptimal allocation of talents. This Article shows how by design, DSGE models do not recognize either credit's beneficent growth properties, or credit's aptitude to precipitate crisis by augmenting, largely non-GDP financial income, while in the long-run simultaneously reducing earned income (GDP recognized).

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Section: The Neoclassical Model Wrongly Assumes Bank Leverage Throughmentioning

confidence: 99%

The On-Going Price of Perceiving Money as a Veil

Phillips¹

2017

IJEF

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“…However, recent evidence has suggested that the rapid flourishing of the finance industry could have a negative effect on the economic system (Arcand et al 2011). The fast expansion of the financial sector in the last decades, therefore, has been associated with an increased economic instability and fragility and with a higher systemic vulnerability (Wray 2009;Tridico 2012). In this respect, the European Central Bank (ECB) itself is worried about the fact the tools currently available to monitor financial systems are insufficient (see Trichet 2010).…”

Section: Introductionmentioning

confidence: 99%

From banks' strategies to financial (in)stability

Berardi

Tedeschi

2017

International Review of Economics & Finance

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This paper aims to shed light on the emergence of systemic risk in credit systems. By developing an interbank market with heterogeneous financial institutions granting loans on different network structures, we investigate which market architecture is more resilient to liquidity shocks and how the risk spreads over the modeled system. In our model, credit linkages evolve endogenously via a fitness measure based on different banks' strategies. Each financial institution, in fact, applies a strategy based on a low interest rate, a high supply of liquidity or a combination of them. Interestingly, the choice of the strategy influences both the banks' performance and the network topology. In this way, we are able to identify the most effective tactics adapt to contain contagion and the corresponding network topology. Our analysis shows that, when financial institutions combine the two strategies, the interbank network does not condense and this generates the most efficient scenario in case of shocks.

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“…obsession with growth (Jackson and Victor, 2011), exploitation of nature, dominance of financial capitalism (Wray, 2009) and debt-fuelled consumption. In this interpretation, modern societies have entered a special historical era in which financial, socio-economic and environmental problems converge into a 'triple crisis'.…”

Section: Introductionmentioning

confidence: 99%

The impact of the financial–economic crisis on sustainability transitions: Financial investment, governance and public discourse

Geels

2013

Environmental Innovation and Societal Transitions

223

141

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may WWWforEurope Best Paper AwardThe WWWforEurope Best Paper Award for research papers on the theoretical and empirical foundations for dynamic, socially inclusive and ecologically sustainable growth in Europe has been awarded to Frank W. Geels, University of Manchester. Frank W. Geels has received the prize for his research on the effects of the financial crisis on the sustainability of growth in Europe, titled "The Impact of the Financial-economic Crisis on Sustainability Transitions: Financial Investment, Governance and Public Discourse".In his paper, which appeared in the renowned journal "Environmental Innovation and Societal Transitions", Frank W. Geels analyses the various effects of the financial and economic crisis on the probability of the implementation of ecological reforms in Europe. His empirical research shows that immediately after the start of the crisis, the economic stimulus plans initiated in many countries caused a significant rise of green investments, but with the implementation of austerity programmes since 2010 environmental and climate policy goals have been neglected.The international jury has based its choice on the innovative, interdisciplinary and empirical character of Frank W. Geels' paper on the interrelations between public attention and opinion, governance and business investment. Its method should find a broad field of application in other sustainability-related research. Tables Table 1 Changes in market share for organic food in selected European countries (per cent) 7 Table 2 Share of renewables in gross inland energy consumption, EU and EU countries, 2009 (%) 8 Table 3 Global trends in renewable energy investment data, $billion 16 Table 4 New investment by geography 17 The impact of the financial-economic crisis on sustainability transitions: Financial investment, governance and public discourse Abstract:The paper distinguishes four views on the impact of the financial-economic crisis on sustainability transitions (operationalized as diffusion of green niche-innovations). The first three views highlight the possibility of positive impacts of the financial-economic crisis on sustainability transitions and joint solutions: a) a comprehensive transformation of the capitalist system, b) a green Industrial Revolution, linked to a sixth green Kondratieff wave, c) green growth. The fourth view perceives the impact as mainly negative, because the financialeconomic crisis weakens publi...

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The rise and fall of money manager capitalism: a Minskian approach

Cited by 187 publications

References 4 publications

The On-Going Price of Perceiving Money as a Veil

The On-Going Price of Perceiving Money as a Veil

From banks' strategies to financial (in)stability

The impact of the financial–economic crisis on sustainability transitions: Financial investment, governance and public discourse

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