Handbook of Critical Issues in Finance

Handbook of Critical Issues in Finance

Elgar original reference

Edited by Jan Toporowski and Jo Michell

This vital new Handbook is an authoritative volume presenting key issues in finance that have been widely discussed in the financial markets but have been neglected in textbooks and the usual compilations of conventional academic wisdom.

Chapter 34: Money manager capitalism

Charles J. Whalen

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

Extract

Money manager capitalism is the name Hyman P. Minsky (1919–96) assigned to the current economic era in his historical analysis of US capitalist development. This era emerged in the 1980s as institutional investors – holders of the largest share of corporate stocks and bonds by the end of that decade – began to exert their influence on financial markets and business enterprises. The study of money manager capitalism was the main focus of Minsky’s attention during the final decade of his life. CAREER CONTEXT Minsky’s career can be divided into four periods. After earning his PhD from Harvard University in 1954, Minsky devoted two decades to various explorations of the impact of financial and business institutions on economic performance. Then, in 1975, publication of John Maynard Keynes (Minsky, 1975) signaled the start of a period focusing on macro-financial cycles, the centerpiece of whichwas his ‘financial instability hypothesis’. In the first half of the 1980s, Minsky’s attention shifted to the problem of increasing US economic instability, culminating in Stabilizing an Unstable Economy (Minsky, 1986a).

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