The Elgar Companion to John Maynard Keynes
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The Elgar Companion to John Maynard Keynes

Edited by Robert W. Dimand and Harald Hagemann

The most influential and controversial economist of the twentieth century, John Maynard Keynes was the leading founder of modern macroeconomics, and was also an important historical figure as a critic of the Versailles Peace Treaty after World War I and an architect of the Bretton Woods international monetary system after World War II. This comprehensive Companion elucidates his contributions, his significance, his historical context and his continuing legacy.
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Chapter 82: Hyman Minsky

L. Randall Wray

Abstract

This chapter provides an overview of the work of Hyman Minsky with an emphasis on his links to institutional economics. While Minsky is best known for his financial instability hypothesis – and for the recognition his work received during the Global Financial Crisis – Minsky’s contributions ranged far beyond that. He developed an institutionalist approach to Keynes’s General Theory, focusing on the importance of the financial structure of the economy. He argued that relevant theory requires close observation of the dominant institutions and insisted that capitalism is a financial system. Theory must be institutionally specific and must evolve as the structure of the economy evolves. He developed a stages approach to the study of capitalism, calling our current phase money manager capitalism (MMC). He argued that the MMC form of capitalism presents two significant challenges. First, it is financially unstable and makes “it” (another depression with a financial crash) likely to happen again – as the world discovered in 2007. Second, it does not promote the “capital development” of the economy. The entry concludes with a quick summary of some of Minsky’s proposals for reform.

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