Why Minsky Matters: An Introduction to the Work of a Maverick Economist

Victoria Bateman has a review of Randall Wray’s new book “Why Minsky Matters: An Introduction to the Work of a Maverick Economist” over at Times Higher Education. You can read the review here.

4 Responses to Why Minsky Matters: An Introduction to the Work of a Maverick Economist

  1. The review contains a famously wrong bit of Wall Street propaganda, that «The benefits of finance are, of course, difficult to deny, in allowing businesses to access funds that permit the economy to develop and grow.».

    A very good, even great, book demonstrates compellingly that such a statement is entirely baseless, at least for many recent decades.

    The book is “Wall Street: The Book” and it also contains excellent overviews of the importance of the insights of H Minsky (and JM Keynes) on the role of finance and balance sheet effects in macroeconomic affairs.

    The magnificent book is “Wall Street: The Book” by Doug Hendon (1998), which is available now for free download (but please make donations to the author) from:

    http://www.wallstreetthebook.com/

    The relevant sections are around pages 219 (H Minsky) and 187 (JM Keynes).

    BTW I am surely going to buy LR Wray’s book, as the topic is interesting and I like his insights.

  2. Can’t wait. Wray has been a great source for me and I am grateful for his personal experience with Minsky, since the BEST I got in an econ class was a random drop of his name, or the book by Mishkin which had a nice theory of financial crises that seemed to me a ripoff of Minksy… (well except he largely excluded private debt, shocker shocker). Kind of sad I had a more realistic grasp of economics from online blogs, videos and published papers I read than anything taught at class. Keep up the good work everyone.

    Also fascinating background on Wray in the article. I always am interested in that stuff, since it can provide greater depth and insight to a person, and I think it does in this case certainly. Just glad I’m not alone after all in entering economics from a different background and thinking none of this stuff makes any sense

  3. BTW I got my copy and already read a good chunk of it. A good exposition, if of familiar topics. There are some details on JM Keynes that I would disagree with, for example the common misconception that his policy recommendation for ending “general gluts” was to boost investment.

    His argument was that the chief stabilizer is wages, and that recoveries should be wage led, just like H Minsky; and that one politically acceptable way of doing that indirectly was to boost investment, even “pointless” investment, as long as it boosted employment and wages and thus effective sales.

    However it occurs to me now that a standard conservative argument, which is very Minskian, is that government “employer of last resort” full employment is itself destabilizing, as it leads workers to lose discipline and make excessive demands, just as the original Minskian argument that government “greater fool of last resort” abolition of capital losses leads speculators to lose discipline and take excessive risk.

    I reckon that both arguments are valid, and this makes my position a very strange Mellonian-Minskian one: a “safety net” liquidationist, because I think that liquidation of losing positions in either labour or capital is essential, but so is maintaining a floor of wages to prevent poverty among workers and to put a floor under effective sales to prevent excessive disinvestment.

    Thus I liked very much the point that Minsky unlike most other Economists appreciated the importance of bankruptcy (and balance sheets of course).

    I think that an efficient bankruptcy regime is the central institution that distinguishes economies that work well, not markets, not capitalism, not even (but close) the industrial system of production. “Validating” bankrupts is in my view (but of course not Wall Street’s) a very grave mistake.

    So the target of policy should be to balance the need for bankruptcy with putting a floor to effective sales and the living standards of wage earners.

    Because without bankruptcy there is too much stability, which is destabilizing.