From Marx to the Keynesian revolution: the key role of finance

The Companies Acts of the 1860s initiated a major structural transformation in capitalism. This was noted, but not developed into a theory of the capitalist economy, by Marx. That development subsequently came in the work of Veblen, Hilferding and his critics Lederer and (implicitly) Kalecki, Keynes, Steindl and Minsky. The paper argues that the Great Schism in economic theory is not between Keynes and 'the Classics', as argued by Keynes; or Keynes and the Neoclassical Synthesis, as contended by Joan Robinson and Richard Kahn; nor even between monetary production and barter exchange, as maintained by post-Keynesian writers; still less between political economists and apologetic theorists, as argued by Marxists. The key distinction in economic theory is between those who recognise the central role of long-term finance in the capitalist economy, and those theorists for whom finance is merely 'savings' or another form of credit.