Mill and Minsky on roads to speculation and crisis

Introduction J. S. Mill and H. Minsky saw speculation and bubbles in asset prices as an intrinsic phase of the business cycle. In their view the aftermath of such episodes leads to the collapse of accumulation. But while Mill linked this development to the decline in yield prospects caused by the growth of the capital stock, Minsky focused on the inevitable transition to Ponzi finance once increasing interest rates render the further growth of debt unsustainable. For our part, we seek to explore in this chapter the extent to which the secular trends in profitability, which in the 1920s led to the stock market collapse of 1929 and the Great Depression, shared similar trajectories with those that after the late 1980s opened the way to financial fragility and triggered the Great Recession of 2008.