Handbook of Critical Issues in Finance
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Handbook of Critical Issues in Finance

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.
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Chapter 15: Financial Keynesianism

Riccardo Bellofiore


In an interview for Challenge magazine in 1988, the American financial economist Hyman P. Minsky said that, before he was called a post-Keynesian, he would call himself a ‘financial Keynesian’, ‘a label that is more descriptive of the perspective I take in economic theory and policy’ (Minsky, 1988, p. 23). The term ‘financial Keynesianism’ is open to some ambiguity. This ambiguity refers, first of all, to the meaning of ‘finance’: it may be intended as the bank financing of capitalist production, or as the financing through securities on the stock markets. There is then a second issue about what is Keynes’s legacy as a monetary economist. In the Treatise on Money (1930), his argument was based on the former meaning of finance within a class capitalist economy. Banks advance credit to firms to pay the wage bill and start production, whether for consumption goods or investment goods, with the money supply fully endogenous. Thanks to this privilege in their access to money as purchasing power, entrepreneurs define the composition of output, irrespective of consumers’ sovereignty. In the General Theory (1936) the focus was on the latter meaning of finance.

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