Financial Keynesianism and Market Instability

Levy Economics Institute Working Papers Series No. 653

28 Pages Posted: 18 Mar 2011

See all articles by L. Randall Wray

L. Randall Wray

University of Missouri at Kansas City; Bard College - The Levy Economics Institute

Date Written: March 14, 2011

Abstract

In this paper I will follow Hyman Minsky in arguing that the postwar period has seen a slow transformation of the economy from a structure that could be characterized as "robust" to one that is "fragile." While many economists and policymakers have argued that "no one saw it coming," Minsky and his followers certainly did! While some of the details might have surprised Minsky, certainly the general contours of this crisis were foreseen by him a half century ago. I will focus on two main points: first, the past four decades have seen the return of "finance capitalism"; and second, the collapse that began two years ago is a classic “Fisher-Minsky” debt deflation. The appropriate way to analyze this transformation and collapse is from the perspective of what Minsky called "financial Keynesianism" - a label he preferred over Post Keynesian because it emphasized the financial nature of the capitalist economy he analyzed.

Keywords: Hyman Minsky, Fisher-Minsky Debt Deflation, Hilferding, Finance Capitalism, Money Manager Capitalism, Financial Keynesian

JEL Classification: B25, B26, B52, E02, E11, E12, E44, G01, G18, G20, G21

Suggested Citation

Wray, L. Randall, Financial Keynesianism and Market Instability (March 14, 2011). Levy Economics Institute Working Papers Series No. 653, Available at SSRN: https://ssrn.com/abstract=1785651 or http://dx.doi.org/10.2139/ssrn.1785651

L. Randall Wray (Contact Author)

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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