 Mechanisms of Financial Crises in Growth and Collapse: Hammurabi, Schumpeter, Perez, and MinskyErik Reinert () Jurnal Ekonomi Malaysia, 2012, vol. 46, issue 1, 85-100 Abstract: This article provides a historical and theoretical overview of the mechanisms leading up to financial crises and financial bubbles. It suggests that the potentially explosive growth of the financial sector at the expense of the real economy fed by compound interest has - since before Ancient Mesopotamia under the rule of Hammurabi - represented a real threat for such crises. A more modern and additional factor that builds up crises is Joseph Schumpeter’s observation of the clustering of innovations. Carlota Perez has more recently developed Schumpeter’s vision into a theory of techno-economic paradigms which - about midway in their trajectory - produce a build-up to financial crises. The theories of Schumpeterian economist Hyman Minsky, which describe the mechanisms leading to the collapse of financial bubbles, complete the overview. The article ends with recommendations to bring the West out of the present crisis by -once again - putting the real economy, rather than the financial economy, in the driver’s seat of capitalism. Keywords: Carlota Perez; Hammurabi; Hyman Minsky; John Maynard Keynes; Joseph Schumpeter; financial crises; innovations (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ukm:jlekon:v:46:y:2012:i:1:p:85-100 Access Statistics for this article More articles in Jurnal Ekonomi Malaysia from Faculty of Economics and Business, Universiti Kebangsaan Malaysia Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.