Financial Instability and Economic Crises: Lessons from Minsky[Финансовая Нестабильность И Экономические Кризисы: Уроки Мински]

The article is based upon the discussion materials from the presentation of the Russian translation of Hyman Minsky’s seminal book “Stabilizing an Unstable Economy”. The theoretical heritage of one of the most prolific and remarkable representatives of Post-Keynesian economics is examined from different, partly opposite positions. Many concepts elaborated in the monograph, namely causes of financial crashes, sources of permanent instability of modern market economies, and ways of coping with crises, are of special interest with regard to the Great Recession of 2007–2009. The authors vindicate the relevance of the book’s key thesis, but at the same time point to the necessity of modification, updating and even revision of some of them. The article reflects the following aspects of Minsky’s theory: the relation between exogenous and endogenous money supply, tendencies of financialization and growing systemic financial fragility, tools for reducing financial instability and mitigating the credit cycle. Special attention is paid to the barriers for the creation of financial and labor markets’ mega-regulators — Big Bank and Big Government. A separate section of the article is devoted to the Minskian lender of last resort concept and its meaning for the current monetary policy practices of the leading central banks. It is stressed that some elements of Minsky’s approach are integrated today into the most advanced macroeconomic research undertaken at universities and under the auspices of the International Monetary Fund, the Bank for International Settlements etc. The authors also compare the methodological settings of Minsky and contemporary mainstream macroeconomics represented by the New Neoclassical Synthesis, with an emphasis on economic policy recipes.