Financial Fragility and Investment in the Capitalist Economy The Economic Legacy of Hyman Minsky, Volume II
The Economic Legacy of Hyman Minsky, Volume II
Edited by Riccardo Bellofiore and Piero Ferri
Chapter 4: Minsky's financial fragility hypothesis: a missing macroeconomic link?
4. Minsky’s ﬁnancial fragility hypothesis: a missing macroeconomic link? Marc Lavoie and Mario Seccareccia* There is no doubt that the work of Hyman Minsky has inﬂuenced a complete generation, especially of North American heterodox economists of postKeynesian, institutionalist and Marxian perspectives and has spawned a tradition that has been appropriately dubbed ‘Monetary Keynesianism’ because of its direct afﬁnity with critical aspects of Keynes’s monetary thought. Our own personal research over the last two decades has been strongly inspired by many of the concerns raised by Minsky’s work. Whether it be his work on investment and ﬁnance, on prices and proﬁts in a capitalist economy, or his views on banking and central bank behaviour, all have conditioned our basic thinking and have served, for heuristic reasons, in furthering our own research agenda. Though our connection with Minsky’s work goes back over twenty years, it was perhaps his special lecture that he gave in Ottawa at the Economic Council of Canada in the spring of 1980 that left the most lasting impression on both of us. At that lecture, he revealed to us not only his profound understanding of the complexities of ﬁnancial markets and institutions but, most importantly, he imparted his distinct metaphor of modern capitalism that still today remains embedded deep in our intellect. This pertains to his famous distinction between the neoclassical ‘village-fair’ image of capitalism as a coordinated exchange system in which Patinkinesque ‘manna’ money emerges to grease the wheels of trade and his particular...
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