Markets, Productivity, and Happiness in a Historical Perspective

The Process of Real Capital Formation

Murray Michael, Bemidji State University

Abstract: The present article couples Minsky’s (1954, 1990) analysis of innovation and business cycles and the Financial Instability Hypothesis (FIH) coupled with the structural analysis of Fritz Burchardt (1928) and Adolph Lowe (1952, 1976) and Schumpeter to delineate the process of real capital formation. The article will expand upon (by monetizing) the post-classical structural models of Burchardt/Lowe specifically to illustrate how real capital formation is dependent upon the acquisition of finance, and how this acquisition affects the innovation and investment process and the distribution of surplus between labor and capital.


Keywords: Adolph Lowe, Fritz Burchardt, Hyman Minsky, Circular Production Modeling, Vertical Production Modeling

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