Explaining the Financial and Economic Crises
New Directions in Modern Economics series
Edited by Eckhard Hein, Daniel Detzer and Nina Dodig
Chapter 1: The transition towards finance-dominated capitalism: French Regulation School, Social Structures of Accumulation and post-Keynesian approaches compared
This chapter provides a comparative overview of some important literature on financial, economic and social systems with an eye towards explaining the tendencies towards finance-dominated capitalism or ‘financialization’, broadly understood as ‘the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies’ (Epstein 2005a, p. 3). The chapter focuses on important strands of the literature, the French Regulation School, the Social Structures of Accumulation approach, mainly generated in the USA, and the contributions by several post-Keynesian authors, with a focus on the long-run views contained in Hyman Minsky’s work, in particular. What these approaches have in common is the notion that capitalist development is embedded in social institutions and that there is a kind of interdependence between the set of institutions and economic development, each feeding back on the other. Therefore, in each of these approaches different stages of development, or different regimes, of modern capitalism can be distinguished, and some insights into the dynamics of these regimes can be obtained.