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The Economic Contributions of Hyman Minsky: Varieties of Capitalism and Institutional Reform

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  • Dimitri B. Papadimitriou

    (The Jerome Levy Economics Institute)

  • L. Randall Wray

    (The Jerome Levy Economics Institute)

Abstract

Hyman Minsky's work represents one of the most important links between Post Keynesians and Institutionalists. We begin, in this essay, with a brief summary of some of his earlier work, including his well-known "financial instability hypothesis" and his policy proposals that were designed to reform the financial system, but pay more attention to his writings that explore other analysis and policy proposals that are less well known. These have been for the most part developed in the later years, after the publication of his Stabilizing an Unstable Economy (1986) book, and during his association with the Levy Institute. Minsky always insisted that theory must be institution-specific. Because there are a variety of possible types of economies, and even "fifty seven" varieties of capitalism, theory must be appropriate to the specific economy under analysis. His analysis concerned an evolving, developed, big-government capitalist economy with complex and long-lived financial arrangements. His policy recommendations were designed to promote a successful, democratic form of capitalism given these financial arrangements. These policies would have to "constrain" instability through creation of institutional "ceilings and floors" while at the same time they would have to address the behavioral changes induced by reduction of instability. The policies would also have to promote rising living standards, expansion of democratic principles, and enhancement of security for the average household. Thus, his proposals go far beyond "invisible handwaves" of free market idealogues, but also well beyond macroeconomic tinkering normally associated with "Keynesians" to take into consideration the required institutional change that would promote the sort of society he desired. In this sense, we think it is accurate to claim that Minsky successfully integrated "Post" (or, better, "financial") Keynesian theory with an institutionalist appreciation for the varieties of past, current, and feasible future economic arrangements.

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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 9802018.

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Length: 51 pages
Date of creation: 11 Feb 1998
Date of revision:
Handle: RePEc:wpa:wuwpma:9802018

Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on PostScript; pages: 51; figures: included
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Web page: http://128.118.178.162

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Blog mentions

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  1. Gordon Brown: a defence
    by chris dillow in Stumbling and Mumbling on 2009-03-04 12:13:56
  2. Marx: less relevant
    by chris dillow in Stumbling and Mumbling on 2008-10-21 11:44:15
  3. $945bn - what problem?
    by chris dillow in Stumbling and Mumbling on 2008-04-09 09:18:01
  4. Financial Instability
    by L. Randall Wray in New Economic Perspectives on 2008-09-15 12:00:00
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Cited by:
  1. Mehrling, Perry, 1999. "The vision of Hyman P. Minsky," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 129-158, June.
  2. Georgios Argitis & Stella Michopoulou, 2011. "Are Full Employment and Social Cohesion Possible Under Financialization?," Forum for Social Economics, Springer, vol. 40(2), pages 139-155, July.
  3. Christine Sinapi, 2011. "Institutional Prerequisites of Financial Fragility within Minsky's Financial Instability Hypothesis: A Proposal in Terms of 'Institutional Fragility'," Economics Working Paper Archive wp_674, Levy Economics Institute, The.
  4. Iancu, Aurel, 2011. "Models of Financial System Fragility," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 230-256, March.
  5. Bruno Bonizzi, 2013. "Capital Flows to Emerging Markets: An alternative Theoretical Framework," Working Papers 186, Department of Economics, SOAS, University of London, UK.
  6. Yilmaz Akyuz, 2008. "Managing Financial Instability in Emerging Markets: A Keynesian Perspective," Working Papers 2008/4, Turkish Economic Association.
  7. L. Randall Wray, 2011. "Minsky Crisis," Economics Working Paper Archive wp_659, Levy Economics Institute, The.
  8. L. Randall Wray, 2011. "The Dismal State of Macroeconomics and the Opportunity for a New Beginning," Economics Working Paper Archive wp_652, Levy Economics Institute, The.
  9. L. Randall Wray, 2008. "Financial Markets Meltdown: What Can We Learn from Minsky," Economics Public Policy Brief Archive ppb_94, Levy Economics Institute, The.
  10. L. Randall Wray, 2011. "Minsky's Money Manager Capitalism and the Global Financial Crisis," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 40(2), pages 5-20, July.
  11. L. Randall Wray, 2012. "Global Financial Crisis: A Minskyan Interpretation of the Causes, the Fed's Bailout, and the Future," Economics Working Paper Archive wp_711, Levy Economics Institute, The.
  12. Leszek Kąsek & Marek Lubiński, 2010. "hyman," Contemporary Economics, University of Finance and Management in Warsaw, vol. 4(1), March.
  13. Hyman P. Minsky & L. Randall Wray, 2008. "Securitization," Economics Policy Note Archive 08-2, Levy Economics Institute, The.
  14. L. Randall Wray, 2011. "Financial Keynesianism and Market Instability," Economics Working Paper Archive wp_653, Levy Economics Institute, The.
  15. L. Randall Wray, 2011. "Lessons We Should Have Learned from the Global Financial Crisis but Didn't," Economics Working Paper Archive wp_681, Levy Economics Institute, The.

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