Theories of Financial Disturbance
Show Less

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.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 7: John Maynard Keynes’s Financial Theory of Under-Investment I: Towards Doubt

Jan Toporowski


As an exponent of critical finance John Maynard Keynes requires a degree of reinterpretation. Hyman P. Minsky recognised that Keynes’s analysis of how finance disturbs the capitalist economy needs to be retrieved from the neoclassical makeover of his views that appears in economics textbooks. (For example, in the Hicks–Hansen IS/LM system, finance is reduced to the money markets of an economy.) On closer examination, it turns out that his views may not have been evolving in quite the direction which Minsky perceived in them.1 The interpretation given in this and the following chapter is perhaps more consistent with that of Keynes’s contemporaries, most notably his friend, rival and correspondent on monetary and policy issues, Ralph Hawtrey.2 Keynes’s purpose, as he made clear in the closing paragraphs of his General Theory, beginning with the question ‘is the fulfilment of these ideas a visionary hope?’ (and continuing ‘the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas … it is ideas, not vested interests, which are dangerous for good or evil’3), was to change the ideas of policy-makers, academics, and the educated public. This rhetorical, ad hominem aspect of his exposition accounts for much of the incoherence which his critics observed, and continue to find, in his analysis. His style, his championing at various times of ideas which were not necessarily consistent with each other, and his own notorious apostasy from views previously advocated, make Keynesian exegesis a particularly fruitful, if treacherous, endeavour and afford a...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.