Financial Keynesianism and Market Instability

Financial Keynesianism and Market Instability

The Economic Legacy of Hyman Minsky, Volume I

Edited by Riccardo Bellofiore and Piero Ferri

During his lifetime Hyman Minsky made a seminal contribution to the development of financial Keynesianism. In this book, leading academics celebrate his work and explore his economic legacy. Special attention is paid to his work on contemporary economic method, the Great Depression, the European single currency and the global financial system and recent banking and financial crises – in particular the crisis in Asia. An attempt is made to categorise Minsky’s brand of post Keynesianism and to compare his work with the Keynesian and Marxian traditions.

Chapter 6: Minsky's thesis: Keynesian or Marxian?

Steve Keen

Subjects: economics and finance, economic psychology, financial economics and regulation, history of economic thought, post-keynesian economics


6. Minsky’s thesis: Keynesian or Marxian? Steve Keen I expect that most contributors to these volumes share my belief that Minsky was the most significant economist of the last forty years – perhaps as significant in our time as Keynes was in his. It follows that most of us hope to see economics undergo a Minskian revolution, as it once underwent a Keynesian one. However, we are all aware of the fate which befell Keynes’s contribution, as his revolutionary insights were buried beneath the weight of conventional and banal interpretations. As Minsky’s heirs, I believe we have a responsibility to ensure that his Hamlet is not similarly rewritten to remove the Prince. A key reason why Keynes could be so readily misinterpreted was that, as he himself acknowledged, the process of writing the General Theory was ‘a long process of escape from habitual modes of thought and expression’ (Keynes, 1936, p. viii), and he did not succeed in completely casting off the old way of thinking. It was then a relatively easy matter for those he termed ‘classical economists’ (and whom we these days call neoclassical) to construct a ‘neoclassical Keynes’, by marrying this incompletely discarded skin with some fragments of the vibrant phoenix to which Keynes had hoped to give birth. Sixty years later, this process has culminated in a dominant macroeconomics whose policy conclusions are indistinguishable from ‘the Treasury View’ of the 1930s, and which, in laughable sophistry, claims to have introduced the consideration of expectations into...

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