Theories of Financial Disturbance

Theories of Financial Disturbance

An Examination of Critical Theories of Finance from Adam Smith to the Present Day

Jan Toporowski

Theories of Financial Disturbance examines how the operations of market-driven finance may initiate and transmit disturbances to the economy at large, by looking in detail at how various economists envisaged such disturbances occurring.

Chapter 9: The Principle of Increasing Risk I: Marek Breit

Jan Toporowski

Subjects: economics and finance, financial economics and regulation, post-keynesian economics


The working lives of Marek Breit, Michal Kalecki and Josef Steindl spanned the middle decades of the twentieth century, from the 1930s up to the 1980s. Marek Breit was a Polish economist, too briefly active in his profession during the 1930s, who was tragically killed during the German occupation of his country. Josef Steindl, an Austrian economist, worked in Britain during the Second World War, and continued to write until 1990. They had in common the experience of working with the Polish economist Michal Kalecki, and their shared commitment to what the latter enunciated as the principle of increasing risk. 1. FROM FREE BANKING The idea behind the principle originates in the work of Marek Breit. He came from a Jewish background in Cracow, and studied at the Jagiellonian University in his home town. His only book, Stopa Procentowa w Polsce (The Rate of Interest in Poland), published in Cracow in 1933, has all the appearance of a doctoral thesis. Given his background, Breit could hardly have aspired to appointment in Poland’s notoriously conservative universities. In the year of the book’s publication he moved to Warsaw, where Edward Lipi´ ski later recruited him to the Institute for Research in Business Cycles n and Prices (Instytut Badania Konjunktur Gospodarczych i Cen). Kalecki was already working at the Institute. Breit’s main task was writing reports on credit markets in Poland. But the development of his ideas at this time clearly shows the influence of Kalecki’s monetary and business cycle theories. In 1936,...

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