Financial Fragility and Investment in the Capitalist Economy

Financial Fragility and Investment in the Capitalist Economy

The Economic Legacy of Hyman Minsky, Volume II

Edited by Riccardo Bellofiore and Piero Ferri

Hyman Minsky is renowned for his theoretical and empirical investigation of the capitalist economy. In this book, a distinguished group of contributors provides an authoritative account of his contribution to the analysis of capitalism and, more particularly, to the fields of monetary and post Keynesian economics.

Chapter 1: Minsky, Keynes and the structural instability of a sophisticated monetary economy

Alessandro Vercelli

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


Alessandro Vercelli 1 INTRODUCTION Minsky wrote that there is no way for a generation of economists to make obsolete the future generations of economists because the economic reality is evolutionary, so that sooner or later even the most profound theories worked out to understand and control it are made obsolete. We may add that, paradoxically, the sooner a great thinker is fully understood, the sooner he is made obsolete. In this case his name remains that of a founding father whose message is progressively refined and updated rather than serving as a direct inspiration for original work. Cases in point are Newton in physics and Walras in economics. As for Minsky himself, his important message on the financial instability of a sophisticated monetary economy, though quite influential, has not yet been sufficiently understood to make him obsolete. On the contrary, now, many decades after he published the first versions of his original ‘financial instability hypothesis’, his work is more up to date than ever. Recent financial crises, including that started in 1998 in Asia, are indeed very Minskyan in their origin and diffusion and could have been avoided, or at least mitigated, if Minsky’s message had been understood and taken into account. There is a famous forecaster in history who has never been made obsolete: Cassandra predicted the war of Troy and suggested how to avoid it, but unfortunately she was not taken seriously. We hope that a similar fate will not befall Minsky himself, to avoid...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information