The browser you are using is not supported by this website. All versions of Internet Explorer are no longer supported, either by us or Microsoft (read more here: https://www.microsoft.com/en-us/microsoft-365/windows/end-of-ie-support).

Please use a modern browser to fully experience our website, such as the newest versions of Edge, Chrome, Firefox or Safari etc.

How economists understand (or not) the relationship between the real and financial economy

På svenska

Author

  • Kenneth Hermele

Summary, in English

Economists' attempts to understand the relationship between the real and the financial eocnomy, and the impact of the latter on the former, go back to the origins of economics but they have gained renewed strength with the financial crisis of 2008 and the resulting economic crisis. The relationship real-finance is variously portrayed as being non-important, mutually beneficial, or destructive, real economic activities losing out to pure speculation and wasteful consumption patterns. The various economics traditions' takes concerning the pro- and cons of the rise of finance capital is discussed, and summarized in a table. In the process, classical and neo-classical, as well as Marxist, Neo-Schumpeterian and Ecological perspectives are discussed (and summarized in the Appendix). Three levels of the economy are investigated: the financial, the real (where production of goods and services take place) and the real-real, where the physical pre-conditions for the other two are located.

The conclusion is that the various sectors cannot be understood in isolation from each other, and that some of the recipes for a resumption of a healthy balance between finance and the real economy forget to anchor this vision in a clear understanding of the limits to growth suplied by Ecological Economics.

Department/s

Publishing year

2015

Language

English

Publication/Series

Fessud Working Paper Series

Document type

Report

Publisher

Fessud, University of Leeds

Topic

  • Social and Economic Geography

Keywords

  • Real economy
  • real-real economy
  • fictitious capital
  • productive capital
  • neutrality of money
  • veil of money
  • financial euphoria.

Status

Published

Report number

82

ISBN/ISSN/Other

  • ISSN: 2052-8035