Long-run Growth, Social Institutions and Living Standards

Long-run Growth, Social Institutions and Living Standards

Edited by Neri Salvadori and Arrigo Opocher

This engaging book contains a set of original contributions to the much-debated issues of long-run economic growth in relation to institutional and social progress.

Chapter 3: The Role of the Public Sector in the Thought of Hyman Minsky

Giuseppe Mastromatteo

Subjects: economics and finance, radical and feminist economics, social policy and sociology, economics of social policy

Extract

Giuseppe Mastromatteo 3.1. INTRODUCTION In considering the role of the public sector in the economy and society, economic theories have proposed a number of interpretations rooted in divergent and alternative approaches. In particular, Keynesian and postKeynesian theories have emphasized the decisive function of public sector intervention, although such theories have been compelled to assess the nontrivial problem of the institutional, financial and opportunity constraints involved. Among economists, Minsky was one of the scholars who most successfully provided insight into the role and limits of the State. Yet despite the relevance of his analysis of the public sector, his thought has been largely neglected and the Minskian contribution has mainly been seen as linked to the operation of the private sector, with focus on analysis of the macroeconomic effects of investment decisions.1 Only recently have some important studies begun to reflect on specific aspects of Minsky’s position, such as fiscal policy as a tool of macroeconomic intervention (Arestis and De Antoni, 2007), the financial fragility of the State and the issue of open economies integrated at the international level (Wray, 2006, 2007a), employment policy and the war on poverty as a means to achieve a fair society (Bell and Wray, 2004; Wray, 2007b). The aim of this chapter is to offer an interpretation of the role of the public sector in Minsky’s works. Starting from an attempt to identify a unifying analytical element in his treatment, attention is drawn to the originality of his thought on this subject, which distinguishes him...

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