Product Description

With today's financial market turmoil rocking investments around the globe, market watchers say we're in a “Minsky moment,” where financial crisis is inevitable. Stabilizing an Unstable Economy is now accessible to all money managers, traders, and economists in this new edition.

Product Details

• Amazon Sales Rank: #35340 in Books
• Published on: 2008-05-01
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 350 pages

From the Back Cover

Praise for the prescient work of Hyman P. Minsky

“Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze.”
--John Cassidy, The New Yorker

“The journey from subprime mortgages to a major credit crisis, a weak economy and broken business models in finance could all have been foreseen through Hyman Minsky’s perspectives. His work remains essential to understanding the ground beneath us and the path ahead.”
—-George Magnus, Senior Economic Adviser, UBS Investment Bank

“It is time to revive an old issue: Just how inherently unstable are economies? But instead of getting much guidance these days from contemporary economists, we need to turn to some of the giants from the past. The work of Hyman Minsky . . . is especially on the mark.”
--Jeff Madrick, The New York Times

“Hyman Minsky's work has never been more valuable. His financial instability hypothesis, complete with hedge, speculative and ponzi units, has played out to a T in the U.S. property and mortgage markets over the last half decade.”
--Paul McCulley, Managing Director, PIMCO

“As it happens, Minsky is enjoying something of a revival. Two of his books, John Maynard Keynes, and Stabilizing an Unstable Economy were just republished by McGraw-Hill, and his contention that stability is inherently unstable seems more relevant than ever in the aftermath of the period of low market volatility that ended in the current crisis.

"In the latter of those books, published in 1986, Minsky wrote, 'If the institutions responsible for the lender-of-last resort function stand aside and allow market forces to operate, then the decline in asset values relative to current output prices will be larger than with intervention; investment and debt financed consumption will fall by larger amounts; and the decline in income, employment and profits will be greater.' In other words, without government bailouts, there can be a downward spiral.”
--The New York Times

About the Author

Hyman P. Minsky, Ph.D., was an American economist who studied under Joseph Schumpeter and Wassily Leontief. He taught economics at Washington University, University of California--Berkeley, Brown University, and Harvard University. Minsky joined the Jerome Levy Economics Institute of Bard College as a distinguished scholar in 1990, where he continued his research and writing until a few months before his death in October, 1996. His two seminal books were Stabilizing an Unstable Economy and John Maynard Keynes.

Customer Reviews

Brilliant study of a failed system
This classic work of political economy, first published in 1986, has valuable lessons for us today. Minsky studies the recessions of 1975 and 1982, economic theory, institutions, particularly banks, and finally presents an agenda for reform.

Financial traumas have led to ever-worse recessions, in 1970, 1975, 1979-80, 1982, 1987, 2002 and the present. As he notes, "the normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment, and poverty in the midst of what could be virtually universal affluence - in short, .. financially complex capitalism is inherently flawed." Yet he believes, "the collapse of aggregate demand and profits, such as occasionally occurred and often threatened to occur in pre-1933 small government capitalism, is never a clear and present danger in a Big Government capitalism such as has ruled since World War Two." Life is disproving this hope.

What causes these recessions? Minsky writes, "the Wall Streets of the world are important; they generate destabilizing forces. ... This instability is not due to external shocks or to the incompetence or ignorance of policy makers. Instability is due to the internal processes of our type of economy. The dynamics of a capitalist economy which has complex, sophisticated, and evolving financial structures leads to the development of conditions conducive to incoherence - to runaway inflations or deep depressions." Strangely, capitalism can't handle capital: "capitalism is flawed precisely because it cannot readily assimilate productive processes that use large-scale capital assets."

What is to be done? He warns, "Meaningful reforms cannot be put over by an advisory and administrative elite that is itself the architect of the existing situation." Then he stresses, "The emphasis on investment and `economic growth' rather than on employment as a policy objective is a mistake. A full-employment economy is bound to expand, whereas an economy that aims at accelerating growth through devices that induce capital-intensive private investment not only may not grow, but may be increasingly inequitable in its income distribution, inefficient in its choices of techniques and unstable in its overall performance." But, as Minsky acknowledges, capitalism cannot deliver full employment: "Capitalist market mechanisms cannot lead to a sustained, stable-price, full-employment equilibrium."

He proposes, "Public control, if not out-and-out public ownership, of large-scale capital-intensive production units is essential." He suggests nationalising the railroads and the nuclear power industry, as private enterprise runs both so poorly.

He also notes capitalism's other failures: "the market mechanism ... cannot and should not be relied upon for important, big matters such as the distribution of income, the maintenance of economic stability, the capital development of the economy, and the education and training of the young." It seems we can't rely on capitalism for anything.