Development and Underdevelopment in the History of Economic Thought

Minsky meets Porter: Evolutionary Traces of a Mainstream Concept?

Erkut Burak, BAU Cyprus & IREF

In this article, I will be taking a look at Minsky’s finance-driven theory of capitalist development. Minsky focused on four stages of capitalist development – commercial, financial, managerial and money manager capitalism. These four stages of the capitalist evolution give us an explanatory model of the development of the US-American economy until the 1990s, and in particular, the fourth stage of the capitalist development (money manager capitalism) deserves a close attention. This is the stage at which money managers aim to maximize the value of assets that are given to their trust – and where things become fragile and sensitive to short-term profits (Whalen, 2010). Without focusing on a one-to-one matching, I will be bringing together this fourth stage of capitalist development due to Minsky (1990, 1993) with that of Porter’s model on competitive advantage of nations (1990). Published around the same time as Minsky’s, Porter’s views are highly rational, accepting strategy as something that is precisely plannable (Clegg et al, 2017). According to Porter (1990), we can identify four stages of economic development for a country: factor-driven stage, investment-driven stage, innovation-driven stage and wealth-driven stage. Whereas the first three stages are about gaining competitive advantages, the fourth stage (that has been neglected by the research to a large extent) is that of an ultimate decline. Interestingly, one of the countries which is categorized by Porter as a wealth-driven country is USA, the very same country that has been on the focus of Minsky’s approach. In my research, I will be discussing to what extent we can see the traces of Minsky’s “money manager capitalism” in Porter’s “wealth-driven stage of economic growth”. In order to discuss this research question, I will be focusing on the epistemic, ontologic and and ethic-politic status of these theories, with a comparative background in evolutionary versus mainstream economics.


Keywords: History of economic thought, Minsky, Porter, competitive advantage