A Keynesian-Minskian Perspective on the Transformation of Industrial into Financial Capitalism

Abstract

The capitalism John Maynard Keynes struggled to analyse was clearly an industrial capitalism in which the investor used physical capital only to end up with more money than he started with. It is particularly the post Keynesian school of ‘monetary or fundamentalist Keynesianism' which elaborated Keynes's monetary theory of production into an alternative economic paradigm that replaces the exchange ontology with an ontology based on nominal obligations. As economic history reports a higher speed of financial than real asset accumulation over the past half a century - a process often dubbed 'financialisation' -, doubts have been raised as to whether this transformation of industrial capitalism into financialised capitalism demands for a new macroeconomic approach. 'Financialisation', however, may mean different things: We have to distinguish between a mere enlargement of the financial sector due to an increase in financial intermediation on the one hand and a structural change of investment motives on the other hand. While the former may leave the central mechanics of accumulation and growth unchanged, the latter may impact on the process of social provisioning (resource management) in a monetary production economy as described by monetary Keynesianism. In this paper, we will elaborate in a very preliminary way whether the process of financialisation will amend the economics of monetary production as put forward by Keynes in his General Theory, elaborated by monetary Keynesianism and extended by Hyman Minsky's financial instability hypothesis and trace on these theoretical grounds the transition from industrial capitalism into financial capitalism.