ABSTRACT
The relation between the theories of Marx and Minsky has been a topic of interest among heterodox economists in recent years (Crotty (1986, 1990), Pollin (1983, 1997), Dymski and Pollin (1992), Wolfson (1994) and Arnon (1994)). Crotty has argued that Minsky’s theory of financial crises is compatible with Marx’s theory of crises, but Minsky’s theory is one-sided and focuses almost entirely on the financial sector of the economy, and ignores the real sector. Therefore, Crotty argues that Minsky’s theory of financial crises should be combined with Marx’s theory of crises in the real sector, in order to provide a more comprehensive theory of crises in capitalism. This chapter explores further the compatibility – of lack thereof – of Marx’s theory and Minsky’s theory, by means of an examination of Crotty’s 1986 paper. The first section discusses the theories of crises presented by Marx and Minsky, and the second section discusses the conclusions of these two theories regarding the effectiveness of government policies to overcome capitalism’s tendency toward crises.
