Abstract
Stability is destabilizing. Those three words capture in a concise manner the insight that underlies Minsky’s analysis of the transformation of the economy over the entire post-war period. The basic thesis is that the dynamic forces of the capitalist economy are explosive so that they must be contained by institutional ceilings and floors—part of the ‘safety net’. However, to the extent that the constraints successfully achieve some semblance of stability, that will change behaviour in such a manner that the ceiling will be breached in an unsustainable speculative euphoria. If the inevitable crash is cushioned by the institutional floors, the risky behaviour that caused the boom will be rewarded. Another boom will build, and its crash will again test the safety net. Over time, the crises become increasingly frequent and severe until finally ‘it’ (a great depression with a debt deflation) becomes possible.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Bibliography
Bernanke, B.S. 2004. The Great Moderation. Speech given at the meetings of the Eastern Economics Association, Washington DC, 20 February. Available at http://www.federalreserve.gov/ Boarddocs/Speeches/2004/20040220/default/htm. Accessed 12 May 2009.
Bhaduri, A. 2005. Development With Dignity: a Case for Full Employment. National Book Trust, India.
Cassidy, J. 2008. The Minsky moment. The New Yorker, 4 February. http://www.newyorker.com/. Accessed 29 January 2008.
Cassidy, J. 2009. How Markets Fail: the Logic of Economic Calamities. Picador, New York.
Chancellor, E. 2007. Ponzi Nation. Institutional Investor, 7 February.
Felipe, J., Mitchell, W. and Wray, L.R. 2009. A reinterpretation of Pakistan’s ‘economic crisis’ and options for policymakers. Manuscript, Asian Development Bank.
Hirway, I. 2006. Enhancing livelihood security through the National Employment Guarantee Act: toward effective implementation of the Act. The Levy Economics Institute Working Paper No. 437. http://www.levy.org/.
McCulley, P. 2007. The plankton theory meets Minsky. Global Central Bank Focus, March. PIMCO Bonds: http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/1999-2001/FF_01_2001.htm. Accessed 8 March 2007.
Minsky, H.P. 1957. Central banking and money market changes. Quarterly Journal of Economics, 71(2), 171.
Minsky, H.P. 1965. The role of employment policy. In: Poverty in America (ed. M.S. Gordon). Chandler Publishing Company, San Francisco, CA.
Minsky, H.P. 1975. John Maynard Keynes. Columbia University Press, New York.
Minsky, H.P. 1982. Can it Happen Again? M.E. Sharpe, Armonk, NY.
Minsky, H.P. 1986. Stabilizing an Unstable Economy. Yale University Press, New Haven and London.
Minsky, H.P. 1996. Uncertainty and the Institutional Structure of Capitalist Economies. The Levy Economics Institute of Bard College, Working Paper No. 155.
Minsky, H.P. 2008 (1987). Securitization. Levy Economics Institute of Bard College, Policy Note No. 2, 12 May.
Mitchell, W.F. and Wray, L.R.2005. In defense of employer of last resort: a response to Malcolm Sawyer. Journal of Economic Issues, 39(1), 235–245.
Nersisyan, Y. and Wray, L.R. 2010. Transformation of the financial system: financialization, concentration, and the shift to shadow banking. In: Minsky, Crisis and Development (eds. D. Tavasci and J. Toporowski), pp. 32–49. Palgrave Macmillan, Basingstoke.
Papadimitriou, D.B. and Wray, L.R. 1998. The economic contributions of Hyman Minsky: varieties of capitalism and institutional reform. Review of Political Economy, 10(2), 199–225.
Tcherneva, P.R. and Wray, L.R. 2007. Public employment and women: the impact of Argentina’s Jefes Program on female heads of poor households. Levy Economics Institute Working Paper No. 519. http://www.levyinstitute.org/publications/?docid=965.
Whalen, C. 2007. The U.S. credit crunch of 2007: a Minsky moment. Levy Economics Institute Public Policy Brief, No. 92. http://www.levy.org/.
Wray, L.R. 2000. A new economic reality: penal Keynesianism. Challenge, September-October, 31–59.
Wray, L.R. 2005. The ownership society: social security is only the beginning. Levy Economics Institute Public Policy Brief, No. 82. http://www.levy.org/.
Wray, L.R. 2007. The employer of last resort programme: could it work for developing countries? Economic and Labour Market Papers, 2007/5, International Labour Office, Geneva.
Wray, L.R. 2008. The commodities market bubble: money manager capitalism and the financialization of commodities. Levy Economics Institute Public Policy Brief, No. 96. http://www.levy.org/.
Wray, L.R. 2009. The rise and fall of money manager capitalism: a Minskian approach. Cambridge Journal of Economics, 33(4), 807–828.
Editor information
Editors and Affiliations
Copyright information
© 2016 The Editor(s)
About this chapter
Cite this chapter
Wray, L.R. (2016). Minsky crisis. In: Jones, G. (eds) Banking Crises. Palgrave Macmillan, London. https://doi.org/10.1057/9781137553799_25
Download citation
DOI: https://doi.org/10.1057/9781137553799_25
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-55412-6
Online ISBN: 978-1-137-55379-9
eBook Packages: Economics and FinanceEconomics and Finance (R0)