Financial Factors in the Economics of Capitalism

  • Hyman P. Minsky
Part of the Financial and Monetary Policy Studies book series (FMPS, volume 30)


The conference’s title, “Coping with Financial Fragility: a Global Perspective,” implies that financial fragility is a meaningful economic concept. Its existence, not always but from time to time, is accepted as an attribute of capitalist economies. However the structure of the dominant macro-and microeconomic theories of our time, which are built upon the modern version of Walrasian general equilibrium theory, ignores the financial dimensions of capitalist economies.1 If economic theory is to be relevant, for the intensely financial world in which we live, then an economic theory which fully incorporates financial factors into the determination of the behavior in the economy is needed. Such a theory should not hold that financial factors are “exogenous shocks” to the economy or explain whatever malfunctioning of the economy that takes place as the result of the incompetence of central bankers.2


Interest Rate Cash Flow Risk Aversion Financial Institution Balance Sheet 
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Copyright information

© Springer Science+Business Media New York 1995

Authors and Affiliations

  • Hyman P. Minsky
    • 1
  1. 1.The Jerome Levy Economics Institute of Bard CollegeBlithewood, Annandale-on-HudsonUSA

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