John Howard Brown's post in which he made the clear distinction
between "creative destruction" and bubbles was on the mark. As for the
circular flow which Robin Neill describes in his last post has a
direct lineage to Schumpeter's theory of economic development. From
memory, I can say that it was the starting point of his analysis of
the capitalist system which breaks out periodically in a dynamic
trajectory because of technological change and innovations. He
ascribed an important positive role to the banker as the "ephor"
capitalist growth, or financial institutions as mentioned by Robin.
Then there is still the need to distinguish bubbles from booms.
Institutional factors may be necessary to explain that.

Sumitra Shah
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