Mechanisms of Financial Crises in Growth and Collapse: Hammurabi, Schumpeter, Perez, and Minsky

Erik Reinert ()

The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics from TUT Ragnar Nurkse Department of Innovation and Governance

Abstract: This paper 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 Schumpeterÿs observation of the clustering of innovations. Carlota Perez has more recently developed Schumpeterÿs vision into a theory of techno-economic paradigms which . about midway in their trajectory . produce the build-up to financial crises. The theories of Schumpeterian economist Hyman Minsky, describing the mechanisms producing the collapse of financial bubbles complete the overview. The paper 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 driverÿs seat of capitalism.

Pages: 33 pages
Date: 2012-04
New Economics Papers: this item is included in nep-cba, nep-his, nep-hme, nep-hpe and nep-pke
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hum.ttu.ee/wp/paper39.pdf (application/pdf)

Related works:
Journal Article: Mechanisms of Financial Crises in Growth and Collapse: Hammurabi, Schumpeter, Perez, and Minsky (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tth:wpaper:39

Access Statistics for this paper

More papers in The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics from TUT Ragnar Nurkse Department of Innovation and Governance Contact information at EDIRC.
Bibliographic data for series maintained by Shobhit Shakya ().