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Я ж вам казав! Сучасна економіка за Гайманом Мінськи
Мабуть, жоден економіст не отримав такого визнання внаслідок глобальної фінансової кризи, як Гайман Мінськи. Хоч і кілька дослідників били на сполох про можливість кризи іще на початку 2000-х, — застереження Мінськи з’явилися на півстоліття раніше. Завдяки застосуванню альтернативного підходу до економічної теорії він побачив вразливість фінансової системи тоді, коли мейнстрімні економісти ще не відчували жодної загрози. Основна ідея Мінськи полягає в тому, що «стабільність дестабілізує». Щойно система досягає рівноваги, поведінка людей, економічна політика та й власне бізнес — усе починає змінюватися. Унаслідок цього система стає слабкою та нестабільною.
288 pages, Hardcover
First published November 10, 2015
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November 4, 2019
The late Hyman Minsky once said, "[A] fundamental flaw exists in an economy with capitalist financial institutions, for no matter how ingenious and perceptive Central Bankers may be, the speculative and innovative elements of capitalism will eventually lead to financial usages and relations that are conducive to instability". It were these very speculative and innovative elements of capitalism that ran riot in 2007 before unleashing upon an unsuspecting world, the biggest Global Financial Crisis since the Great Depression of 1929. When the calamitous winds of the Recession began to buffet the world, many Economists claimed that this was a "Minsky Moment". In this authentically interesting book, Randall Wray brings to light the prescience and philosophy of Hyman Minsky, a maverick Economist whose postulations were lost on the world before resurrecting with great vigour and relevance, courtesy the Global Financial Crisis.
Wray, who at one point was a Teaching Assistant of Hyman Minsky, elaborates in a very clear, lucid and understandable language, the key postulates of Minsky who argued that if ever the advocates of Adam Smith's 'Invisible Hand' were to be successful in achieving equilibrium, those internal dynamics that worked to bring about such an equilibrium would push the economy away towards a state of destabilization. In other words stability is destabilizing! The primary trigger for an equilibrium to disintegrate according to Minsky was a tendency to adopt reckless behaviour and engage in dangerous risky transactions. This tendency is further bolstered by the assurance that the Government would stand behind the Too Big To Fail institutions thereby establishing an insidious element of moral hazard.
Wray also interprets for the reader, Minsky's famous Financial Instability Hypothesis ("FIH") where Minsky adds the "financial theory of investment" to John Maynard Keynes' "investment theory of the cycle". However the most important and engaging aspect of the book is the chapter where Wray elucidates Minsky's notion of the Government acting as an Employer of Last Resort in the same manner as the Central Bank chooses to execute its role as a Lender of Last Resort. Minsky's views on employment creation first took shape and root when he was at Berkeley and Minsky's opinion was an alternative to the War On Poverty ("WOP") measures initiated by both the Kennedy and Johnson Administrations. Minsky advocated maintenance of full employment and reduction of poverty rather than introducing schemes up-scaling skills and training aspirants to assimilate more complicated and sophisticated technical practices.
Minsky also famously reiterated that there were 57 different forms of capitalism. The capitalism that was prevalent when the Global Financial Crisis rolled over us was the money manager capitalism, a capitalism that lead to 'financialisation' and layering of debt on debt on debt. As one more of Minsky's bold utterances go, "anything that can be securitized will be securitized". Minsky was more a fan of relationship banking rather than the mushrooming growth and permeation of shadow banking. In a prescient tone, Minsky warned the regulators about the dangerously disturbing trend of deregulation and non supervision of the balance sheets of behemoth banks. This timely warning that went unheeded, consequently resulted in banks accumulating esoteric 'trash' assets on their balance sheets, packaging them into further tradeable securities and passing over the liabilities to numerous other financial institutions. When as a result of the sub prime mortgage crisis, the initial defaults materialised, there arose the inevitable domino effect which brought the world's financial machinery to a chillingly abrupt halt.
There were very few people who were able to predict the impact of imprudent banking practices upon the global economy. A handful of those who voiced their concern were ignored as insignificant Prophets of Doom. Hyman Minsky was a level above even such Prophets. He was a visionary who foresaw greed overtaking generosity and unscrupulous practices trump utilitarianism. He was also a brilliant Economist whose value (as is usually the case) was realised and appreciated much too later in hindsight.
Wray, who at one point was a Teaching Assistant of Hyman Minsky, elaborates in a very clear, lucid and understandable language, the key postulates of Minsky who argued that if ever the advocates of Adam Smith's 'Invisible Hand' were to be successful in achieving equilibrium, those internal dynamics that worked to bring about such an equilibrium would push the economy away towards a state of destabilization. In other words stability is destabilizing! The primary trigger for an equilibrium to disintegrate according to Minsky was a tendency to adopt reckless behaviour and engage in dangerous risky transactions. This tendency is further bolstered by the assurance that the Government would stand behind the Too Big To Fail institutions thereby establishing an insidious element of moral hazard.
Wray also interprets for the reader, Minsky's famous Financial Instability Hypothesis ("FIH") where Minsky adds the "financial theory of investment" to John Maynard Keynes' "investment theory of the cycle". However the most important and engaging aspect of the book is the chapter where Wray elucidates Minsky's notion of the Government acting as an Employer of Last Resort in the same manner as the Central Bank chooses to execute its role as a Lender of Last Resort. Minsky's views on employment creation first took shape and root when he was at Berkeley and Minsky's opinion was an alternative to the War On Poverty ("WOP") measures initiated by both the Kennedy and Johnson Administrations. Minsky advocated maintenance of full employment and reduction of poverty rather than introducing schemes up-scaling skills and training aspirants to assimilate more complicated and sophisticated technical practices.
Minsky also famously reiterated that there were 57 different forms of capitalism. The capitalism that was prevalent when the Global Financial Crisis rolled over us was the money manager capitalism, a capitalism that lead to 'financialisation' and layering of debt on debt on debt. As one more of Minsky's bold utterances go, "anything that can be securitized will be securitized". Minsky was more a fan of relationship banking rather than the mushrooming growth and permeation of shadow banking. In a prescient tone, Minsky warned the regulators about the dangerously disturbing trend of deregulation and non supervision of the balance sheets of behemoth banks. This timely warning that went unheeded, consequently resulted in banks accumulating esoteric 'trash' assets on their balance sheets, packaging them into further tradeable securities and passing over the liabilities to numerous other financial institutions. When as a result of the sub prime mortgage crisis, the initial defaults materialised, there arose the inevitable domino effect which brought the world's financial machinery to a chillingly abrupt halt.
There were very few people who were able to predict the impact of imprudent banking practices upon the global economy. A handful of those who voiced their concern were ignored as insignificant Prophets of Doom. Hyman Minsky was a level above even such Prophets. He was a visionary who foresaw greed overtaking generosity and unscrupulous practices trump utilitarianism. He was also a brilliant Economist whose value (as is usually the case) was realised and appreciated much too later in hindsight.
April 20, 2016
This book is extremely repetitive--it could be half as long and cover the same things. The introduction is very weak--it's standard anti-mainstream econ stuff with too much editorializing (this is true throughout the text). Wray's language is very stylized. His arguments need more empirical facts and legal detail.
The most helpful part of the book is his explanation of Keynes. Wray is far weaker on modern macroeconomics, and seems almost entirely unfamiliar with developments since 1980. The key claim: instability is endogenous to the business cycle because stability reduces preferences for margin of safety. He does not have a theory of preference drift--he largely waves his hands about it, treating it as exogenous.
Contrary to its repeated claims, the book does not bolster the assertion that Minsky saw the Great Recession coming; it only shows that Minsky thought financial crises were possible, which is true of most macroeconomists. There are no specific predictions to be found, which puts him in the company of Ron Paul and others who always see a crisis around the corner. I think Wray does Minsky a disservice in this regard.
I came out of this book believing that Minsky does matter and can provide important insights, but it wasn't worth the read.
The most helpful part of the book is his explanation of Keynes. Wray is far weaker on modern macroeconomics, and seems almost entirely unfamiliar with developments since 1980. The key claim: instability is endogenous to the business cycle because stability reduces preferences for margin of safety. He does not have a theory of preference drift--he largely waves his hands about it, treating it as exogenous.
Contrary to its repeated claims, the book does not bolster the assertion that Minsky saw the Great Recession coming; it only shows that Minsky thought financial crises were possible, which is true of most macroeconomists. There are no specific predictions to be found, which puts him in the company of Ron Paul and others who always see a crisis around the corner. I think Wray does Minsky a disservice in this regard.
I came out of this book believing that Minsky does matter and can provide important insights, but it wasn't worth the read.
April 4, 2016
An excellent and highly-recommended introduction to Minsky's work. Should be of interest to all economists and anyone who wants to better understand the financial crisis and the role of finance in the economy. I'd also add that the material on poverty, unemployment, and a guaranteed jobs policy are quite valuable as well, and are consistently overlooked by reviewers.
May 14, 2021
А ось і спеціалізована література під'їхала. Справді, текст цієї книжки буде занадто нудним і складним для розуміння для тих людей, які не проходили хоча би базовий курс з економічної теорії в університеті. Але якщо вас уже посвятили в економісти, книга того варта.
Її формат такий: один учений-економіст переказує ідеї іншого видатного економіста - Гаймана Мінськи, який, хоч і помер ще 25 років тому, більшою мірою передбачив усі пороки американської економіки, що призвели до фінансової кризи, ще коли вона здавалася всім повністю здоровим організмом. Мало хто чув про такого, і, напевно, справа в тому, що його ідеї, хоч і не зовсім радикальні, але все ж трохи виходили за рамки традиційної економічної думки.
Якщо розглядати дві основні парадигми в макроекономіці, то ідеї Мінськи однозначно більше стосуються кейнсіанського підходу. Він підтримує використання держбюджету для контрциклічного регулювання, але й визнає існування небажаних ефектів, що виникають унаслідок цього. Справа в "гіпотезі фінансової нестабільності". Коротко кажучи, здорова економіка породжує впевненість, бажання ризикувати та брати в борг; борги породжують дефолти, що за ефектом доміно ведуть до рецесій; рецесії породжують обережність і зменшення заборгованості; зменшення боргів оздоровлює економіку - коло замикається. Тобто сама природа капіталізму є циклічною, а типові економічні моделі рівноваги трохи вводять в оману.
Чи можна виправити це? Повністю - ні, але згладити кути варто. Ось ще кілька цінних ідей із книги:
- Не потрібно заохочувати великі банки рости ще більше. Краще створити мережу універсальних регіональних банків, які би краще вплинули на розвиток громад та малого бізнесу;
- Центральний Банк повинен надавати кредити не через операції на відкритому ринку, а методом дисконтного вікна, докладно вивчаючи активи банків. Таким чином, він залишатиметься в курсі стану здоров'я фінансової системи;
- Дефіцит приватного сектору, що спричиняє зростання його заборгованості й кризи, "лікується" підтриманням постійного дефіциту державного бюджету. Але фінансовані державою програми повинні мати цільовий характер.
- Уряд повинен виступити в ролі "роботодавця останньої інстанції". Потрібно створити такі проекти розвитку у всіх куточках країни, щоб абсолютно кожен бажаючий міг знайти роботу на час кризи за визначену мінімальну платню, а в разі пожвавлення економіки - без проблем повернутися до більш оплачуваного приватного сектору. Той, хто може працювати - хай працює. Субсидії лише для непрацездатних та людей похилого віку.
Картина, змальована Мінськи, мені досить подобається. Проте, коли дуже акцентуєш на одному питанні, то нехтуєш усіма іншими тонкощами. Мінськи так зосередився на проблемі приватного боргу, що зовсім не вбачав небезпеки в наростанні державного боргу, сплата відсотків із якого може почати тиснути на бюджет держави також. Навіть якщо мова йде про внутрішні запозичення, а не зовнішні, як у випадку нещасної Греції. Але не дивно: усі його ідеї створені виключно для американської економіки. Навряд чи вони прижилися би в країні з меншою зовнішньою могутністю та світовим попитом на національну валюту.
І взагалі, у самої книги дивна структура, і це вже претензія саме до оповідача - Рендала Рея. Здавалося би, є логічний розподіл на огляд економічного розвитку США, опис ідеальної економічної системи та рекомендації, як цього досягти. Але кожен розділ має всього потрошки і дублює всю інформацію, сказану в попередньому. Це, звичайно, добре вплинуло на запам'ятовування основних ідей книги, але почало доволі набридати під кінець.
Усе ж є над цим задуматися, чи не так?
Її формат такий: один учений-економіст переказує ідеї іншого видатного економіста - Гаймана Мінськи, який, хоч і помер ще 25 років тому, більшою мірою передбачив усі пороки американської економіки, що призвели до фінансової кризи, ще коли вона здавалася всім повністю здоровим організмом. Мало хто чув про такого, і, напевно, справа в тому, що його ідеї, хоч і не зовсім радикальні, але все ж трохи виходили за рамки традиційної економічної думки.
Якщо розглядати дві основні парадигми в макроекономіці, то ідеї Мінськи однозначно більше стосуються кейнсіанського підходу. Він підтримує використання держбюджету для контрциклічного регулювання, але й визнає існування небажаних ефектів, що виникають унаслідок цього. Справа в "гіпотезі фінансової нестабільності". Коротко кажучи, здорова економіка породжує впевненість, бажання ризикувати та брати в борг; борги породжують дефолти, що за ефектом доміно ведуть до рецесій; рецесії породжують обережність і зменшення заборгованості; зменшення боргів оздоровлює економіку - коло замикається. Тобто сама природа капіталізму є циклічною, а типові економічні моделі рівноваги трохи вводять в оману.
Чи можна виправити це? Повністю - ні, але згладити кути варто. Ось ще кілька цінних ідей із книги:
- Не потрібно заохочувати великі банки рости ще більше. Краще створити мережу універсальних регіональних банків, які би краще вплинули на розвиток громад та малого бізнесу;
- Центральний Банк повинен надавати кредити не через операції на відкритому ринку, а методом дисконтного вікна, докладно вивчаючи активи банків. Таким чином, він залишатиметься в курсі стану здоров'я фінансової системи;
- Дефіцит приватного сектору, що спричиняє зростання його заборгованості й кризи, "лікується" підтриманням постійного дефіциту державного бюджету. Але фінансовані державою програми повинні мати цільовий характер.
- Уряд повинен виступити в ролі "роботодавця останньої інстанції". Потрібно створити такі проекти розвитку у всіх куточках країни, щоб абсолютно кожен бажаючий міг знайти роботу на час кризи за визначену мінімальну платню, а в разі пожвавлення економіки - без проблем повернутися до більш оплачуваного приватного сектору. Той, хто може працювати - хай працює. Субсидії лише для непрацездатних та людей похилого віку.
Картина, змальована Мінськи, мені досить подобається. Проте, коли дуже акцентуєш на одному питанні, то нехтуєш усіма іншими тонкощами. Мінськи так зосередився на проблемі приватного боргу, що зовсім не вбачав небезпеки в наростанні державного боргу, сплата відсотків із якого може почати тиснути на бюджет держави також. Навіть якщо мова йде про внутрішні запозичення, а не зовнішні, як у випадку нещасної Греції. Але не дивно: усі його ідеї створені виключно для американської економіки. Навряд чи вони прижилися би в країні з меншою зовнішньою могутністю та світовим попитом на національну валюту.
І взагалі, у самої книги дивна структура, і це вже претензія саме до оповідача - Рендала Рея. Здавалося би, є логічний розподіл на огляд економічного розвитку США, опис ідеальної економічної системи та рекомендації, як цього досягти. Але кожен розділ має всього потрошки і дублює всю інформацію, сказану в попередньому. Це, звичайно, добре вплинуло на запам'ятовування основних ідей книги, але почало доволі набридати під кінець.
Усе ж є над цим задуматися, чи не так?
January 21, 2016
This book was not a particularly easy or enjoyable read, but I wanted to know more about Minsky’s ideas. Minsky is known for arguing that the modern economic system is inherently unstable and prone to crash periodically. Many economist believe that with the “correct” policies the economy can be put on a relatively smooth path of self-regulating continued growth. The “correct” policies differ by a great deal depending on which school of thought you follow. I agree with Minsky’s main premise. From the very early 1800’s on there have been “panics”, recessions, or depressions about every 10 years. Each period of growth eventually leads to some financial excess, which eventually leads to some collapse. If the collapse is severe and prolonged the collapse may led to better methods of containing the prior bad excesses (as occurred after the great depression, but unfortunately not so much after the great recession). But eventually the old lessons seem un-important and dated, new methods of gaming the system are invented, and we are set for a new crises.
Minsky had some ideas for mitigating this cycle and a number of them appeared logical to me, but the key one did not seem practical. He focused (correctly in my opinion) on the fact the job market has been too weak for most of the last 40 years. He believed that training and education programs were ineffective and people that need jobs should be hired as they were, where they were, by the government, and on-the-job training should be key. I agree with the idea that the job should come first and training later, but I don’t think his key proposal made sense. Minsky thought the government should be employer of last resort. The government would employ people to do needed community work at a minimum wage in order to keep unemployment to 2.5%. When the economy boomed these people trained to do useful work would then be lured into the private sector by higher wages and the public sector would shrink. In recessions laid off workers could move back into the public sector. His proposal lacked the invisible hand direction of the market place, would create second class government jobs, and just seem like a bad idea that is not likely to go anywhere soon. I think it would be more practical to develop public/private partnerships where private companies are subsidized to have a small part of their staff hired from the unemployed and given greater incentives to train lower skilled workers. The subsidies and incentives should go up automatically in recessions and back down in boom times.
Minsky also had ideas about banking. Some of these ideas (like regulating entities that act like banks as banks) seemed obviously positive. Some of his other ideas (like encouraging small full service local banks) seemed less convincing.
I think Minsky got the analysis of the inherent problems of the economy correct. How to mitigate those problems is the far tougher task and Minsky had some good and not so good ideas that are worth reading. However, I haven’t seen anyone with solutions to the economic cycle that I find credible.
Minsky had some ideas for mitigating this cycle and a number of them appeared logical to me, but the key one did not seem practical. He focused (correctly in my opinion) on the fact the job market has been too weak for most of the last 40 years. He believed that training and education programs were ineffective and people that need jobs should be hired as they were, where they were, by the government, and on-the-job training should be key. I agree with the idea that the job should come first and training later, but I don’t think his key proposal made sense. Minsky thought the government should be employer of last resort. The government would employ people to do needed community work at a minimum wage in order to keep unemployment to 2.5%. When the economy boomed these people trained to do useful work would then be lured into the private sector by higher wages and the public sector would shrink. In recessions laid off workers could move back into the public sector. His proposal lacked the invisible hand direction of the market place, would create second class government jobs, and just seem like a bad idea that is not likely to go anywhere soon. I think it would be more practical to develop public/private partnerships where private companies are subsidized to have a small part of their staff hired from the unemployed and given greater incentives to train lower skilled workers. The subsidies and incentives should go up automatically in recessions and back down in boom times.
Minsky also had ideas about banking. Some of these ideas (like regulating entities that act like banks as banks) seemed obviously positive. Some of his other ideas (like encouraging small full service local banks) seemed less convincing.
I think Minsky got the analysis of the inherent problems of the economy correct. How to mitigate those problems is the far tougher task and Minsky had some good and not so good ideas that are worth reading. However, I haven’t seen anyone with solutions to the economic cycle that I find credible.
November 8, 2016
Insightful summary of the contributions of Hyman Minsky to financial theory.
November 18, 2016
high level but also high quality.
August 20, 2018
After the financial crisis a lot fewer need to be convinced that Minsky does matter. This is a short overview of the academic working life of the late Neo-Keynesian economist Hyman Minsky written by his apprentice, the University of Missouri professor in economics, Randall Wray. After the carnage of the GFC there was a search for improved explanatory models and many found one in Minsky’s Financial Instability Hypothesis. It even became fashionable to make use of the expression “Minsky moment” among financial market actors. In this book we get a broader understanding of the theories of an unconventional economist.
Minsky’s writings centered on financial instability, on employment, inequality and poverty and finally on how to reform capitalism since it is instable in its present form. I will focus more on the financial parts. Underlying his work was the view that economists - Keynesian and neoclassical alike - has it wrong; market processes are not stabilizing around an equilibrium to which they according to conventional thought are supposed to return after being exposed to external shocks.
Minsky’s claim that all his academic colleagues were wrong combined with an impermeable writing style full of self-invented Wall Street-like expressions made him an outsider during a career that spanned from the 1950s to the 1990s. Minsky’s background was indeed eclectic as he was a devoted Keynesian who also had had the great Joseph Schumpeter as his dissertation advisor. Minsky, as his starting point for economic models, focused on the investment of the entrepreneur and the financing of that investment – similarly to the Austrian business cycle or J. M. Keynes himself, but not the Keynesians or neoclassicists. In addition to his radical political views he sat on the board of a bank and befriended people like Salomon Brothers’ investment strategist Henry Kaufman and famed investor Leon Levy.
An important contribution of Minsky is that he adds the functionality of financial markets to the core of macroeconomic models – something that mainstream economics still fail to do. With regards to the financial system Minsky’s key idea is that “stability is destabilizing”, i.e. periods of calm change the psychology of the market, making participants take on more risk, which in the end leads to a crisis that ends the calm. There can be no stable equilibrium as the stability of such a state changes behaviors, policies, and business practices in a way that in the end prevents it.
A key part of this pendulum motion between stability and disturbance is the use of leverage and the pro-cyclical behavior of both lenders and borrowers. Minsky developed a classification for financial fragility where “hedge finance” described a situation where the income of a borrower is sufficient to pay both interest and principal, in a “speculative position” only the interest payments are covered and in a “Ponzi position” the obligor will even have to borrow additional funds to finance his interest payments and he can only continue his operations as long as the lender allows the loan balance to grow. Loan growth chases asset values in an upwards spiral until it doesn’t. Profit maximizing banks provide liquidity and leverage through financial innovation until they don’t. The Minsky moment, a concept that was minted by Paul McCulley at PIMCO after Minsky’s death, is the tipping point in time where the spiral goes from positive to negative.
The above cycles and the rejection of equilibrium resonate with most people active on financial markets. However, even though the diagnosis is well executed, I’m not sure all in the financial markets would appreciate the recipe that Minsky prescribed. He was a Keynesian with a belief that the enlightened governing of the big state and the wise handling of central banks could right the inherent wrongs of capitalism as diagnosed.
Wray guides us through the opaque writings of his master. At times it is slightly hard to distinguish the views of the author from those of Minsky but overall this is an important job well done.
Minsky’s writings centered on financial instability, on employment, inequality and poverty and finally on how to reform capitalism since it is instable in its present form. I will focus more on the financial parts. Underlying his work was the view that economists - Keynesian and neoclassical alike - has it wrong; market processes are not stabilizing around an equilibrium to which they according to conventional thought are supposed to return after being exposed to external shocks.
Minsky’s claim that all his academic colleagues were wrong combined with an impermeable writing style full of self-invented Wall Street-like expressions made him an outsider during a career that spanned from the 1950s to the 1990s. Minsky’s background was indeed eclectic as he was a devoted Keynesian who also had had the great Joseph Schumpeter as his dissertation advisor. Minsky, as his starting point for economic models, focused on the investment of the entrepreneur and the financing of that investment – similarly to the Austrian business cycle or J. M. Keynes himself, but not the Keynesians or neoclassicists. In addition to his radical political views he sat on the board of a bank and befriended people like Salomon Brothers’ investment strategist Henry Kaufman and famed investor Leon Levy.
An important contribution of Minsky is that he adds the functionality of financial markets to the core of macroeconomic models – something that mainstream economics still fail to do. With regards to the financial system Minsky’s key idea is that “stability is destabilizing”, i.e. periods of calm change the psychology of the market, making participants take on more risk, which in the end leads to a crisis that ends the calm. There can be no stable equilibrium as the stability of such a state changes behaviors, policies, and business practices in a way that in the end prevents it.
A key part of this pendulum motion between stability and disturbance is the use of leverage and the pro-cyclical behavior of both lenders and borrowers. Minsky developed a classification for financial fragility where “hedge finance” described a situation where the income of a borrower is sufficient to pay both interest and principal, in a “speculative position” only the interest payments are covered and in a “Ponzi position” the obligor will even have to borrow additional funds to finance his interest payments and he can only continue his operations as long as the lender allows the loan balance to grow. Loan growth chases asset values in an upwards spiral until it doesn’t. Profit maximizing banks provide liquidity and leverage through financial innovation until they don’t. The Minsky moment, a concept that was minted by Paul McCulley at PIMCO after Minsky’s death, is the tipping point in time where the spiral goes from positive to negative.
The above cycles and the rejection of equilibrium resonate with most people active on financial markets. However, even though the diagnosis is well executed, I’m not sure all in the financial markets would appreciate the recipe that Minsky prescribed. He was a Keynesian with a belief that the enlightened governing of the big state and the wise handling of central banks could right the inherent wrongs of capitalism as diagnosed.
Wray guides us through the opaque writings of his master. At times it is slightly hard to distinguish the views of the author from those of Minsky but overall this is an important job well done.
April 13, 2021
Good read by the Levy Economics Institute's L. Randall Wray on Hyman Minsky's life's work, and a great primer to Minsky's theorizing on the investment cycle -- his financial instability hypothesis -- which traces instability in an economy to private sector debt accumulation progressing through degrees of safety margins (ranging from hedge to speculative to Ponzi positions), everyone thinks asset prices will continue to soar and optimism wins the day...until the bubble bursts.
Equally fascinating is his "longue durée" theorizing of capitalism's stages, from commercial capitalism in the 19th century with commercial banks primarily financing production and lending to firms to accomplish such, to the finance capitalism described by Rudolf Hilferding (Minister of Finance in the Weimar Republic; you might recognize Hilferding's work which V.I. Lenin cites in "Imperialism: The Highest Stage of Capitalism") and the domination of investment banks in financing high-risk speculative activities leading to the Great Depression, followed by managerial-welfare state capitalism with considerable more interventionist measures by the Federal Reserve and Treasury Dept. post-New Deal reforms, culminating where we are at now, money manager capitalism with the rise of shadow banking, non-bank actors that essentially serve banking functions but are not subject to the same regulations chartered banking institutions are (e.g. sovereign wealth funds, hedge funds, corporate treasuries) that played a significant role in Great Recession a decade ago.
And beyond that: a good primer to an economic framework that doesn't casually dismiss tangible analysis of institutions (private sector finance and banking, Federal Reserve and U.S. Treasury operations) and money, all of which critical to understanding how the contemporary capitalist system is mechanically constructed and operates in function -- one critical mistake of many of the economics orthodoxy that causes it to be so blind to the state of what's really going on.
Equally fascinating is his "longue durée" theorizing of capitalism's stages, from commercial capitalism in the 19th century with commercial banks primarily financing production and lending to firms to accomplish such, to the finance capitalism described by Rudolf Hilferding (Minister of Finance in the Weimar Republic; you might recognize Hilferding's work which V.I. Lenin cites in "Imperialism: The Highest Stage of Capitalism") and the domination of investment banks in financing high-risk speculative activities leading to the Great Depression, followed by managerial-welfare state capitalism with considerable more interventionist measures by the Federal Reserve and Treasury Dept. post-New Deal reforms, culminating where we are at now, money manager capitalism with the rise of shadow banking, non-bank actors that essentially serve banking functions but are not subject to the same regulations chartered banking institutions are (e.g. sovereign wealth funds, hedge funds, corporate treasuries) that played a significant role in Great Recession a decade ago.
And beyond that: a good primer to an economic framework that doesn't casually dismiss tangible analysis of institutions (private sector finance and banking, Federal Reserve and U.S. Treasury operations) and money, all of which critical to understanding how the contemporary capitalist system is mechanically constructed and operates in function -- one critical mistake of many of the economics orthodoxy that causes it to be so blind to the state of what's really going on.
October 23, 2018
I had already encountered the ideas of Minsky in the past so it was not really that new to me. Nevertheless if someone is wholly ignorant of Minsky this is where they should start to learn him. Now is he worth learning? Not really
I do not find these ideas compelling, indeed it seems to me like economists like Minsky are just making up stories to go along with their narrative. I have very little sympathy for people who don't want to put their views up to empirical scrutiny and it almost by definition when you advocate for big government, you are preventing experimentation. This book made it clear to me why it is that big government people MUST ignore the micro for the macro to get the conclusions they want, they must create their own categories of the economy and then claim those categories require "stabilization". These theories are by definition irrefutable, is it possible to refute the instability hypothesis? Not really...
I do not find these ideas compelling, indeed it seems to me like economists like Minsky are just making up stories to go along with their narrative. I have very little sympathy for people who don't want to put their views up to empirical scrutiny and it almost by definition when you advocate for big government, you are preventing experimentation. This book made it clear to me why it is that big government people MUST ignore the micro for the macro to get the conclusions they want, they must create their own categories of the economy and then claim those categories require "stabilization". These theories are by definition irrefutable, is it possible to refute the instability hypothesis? Not really...
July 5, 2019
While the author must be applauded for distilling Minsky’s works into a more compact and accessible form, I take some issues with the book’s content. First off, the book was a good insight into the broad framework that Minsky believed in (much beyond the more popular “Minsky moment”). I really liked the ideas presented with regards to the financial system and its issues and possible solutions; about the relevance of private vs public sector debt, monetary vs fiscal policy, etc. The insights were great and, as I mentioned, accessible.
My issue was that the book was extremely one-sided. I appreciate that there was no attempt to try and conceal this in some mumbo-jumbo, but the fact remains. Not much credit was given to pretty much any other opinion, except Minsky’s. It also became quite repetitive about halfway-in.
Overall, a good book to skim through once, if you’re interested in macro-economics, the role of government in markets, and especially our financial system.
My issue was that the book was extremely one-sided. I appreciate that there was no attempt to try and conceal this in some mumbo-jumbo, but the fact remains. Not much credit was given to pretty much any other opinion, except Minsky’s. It also became quite repetitive about halfway-in.
Overall, a good book to skim through once, if you’re interested in macro-economics, the role of government in markets, and especially our financial system.
January 3, 2021
A lot better than Kelton's MMT book, but still a slightly odd aggregate of Minsky, political economy, and poor editing (again - what is up with those MMT theorists?). Minsky was clearly a prescient dude.
I've taken another step down the rabbit hole and am now reading The Rise and Fall of Money Manager Capitalism: Minsky's Half Century from World War Two to the Great Recession by Wray and Eric Tymoigne, and I have now realized what I should have figured out from the very start: if you want to learn something, go textbook. The letter is serious piece of work for economists, and is very illuminating. Clif's review is a good read to get a taste.
I've taken another step down the rabbit hole and am now reading The Rise and Fall of Money Manager Capitalism: Minsky's Half Century from World War Two to the Great Recession by Wray and Eric Tymoigne, and I have now realized what I should have figured out from the very start: if you want to learn something, go textbook. The letter is serious piece of work for economists, and is very illuminating. Clif's review is a good read to get a taste.
August 15, 2018
Minsky had different ideas on what Keynes meant. Most “Keynesians” miss the mark. Much of what Minsky thought came true. One of his big ideas was that stability is destabilizing. The minute things are humming along, some group or another will try to gain an advantage by changing up the rules, usually by reducing regulation and oversight.
I also liked his ideas on a jobs guarantee rather than welfare, but the book is full of his ideas.
I also liked his ideas on a jobs guarantee rather than welfare, but the book is full of his ideas.
October 6, 2023
The author repeats himself on many occasions, which makes the book thicker than it should be. Points are made by providing examples from the real world, but I am sure that there are many other real-world examples that do not support the author's point of view.
Overall, I have enjoyed it, and it contains solid information about how financial institutions work and how they need to be organized to produce a better sustainable financial system that supports all people, not only the top 1%.
Overall, I have enjoyed it, and it contains solid information about how financial institutions work and how they need to be organized to produce a better sustainable financial system that supports all people, not only the top 1%.
January 18, 2024
The book is a great introduction for people interested in Economics. It summarizes his thinking about the inherent financial instability, banking and endogenous money, and his approach to labor market policy (which is not well known).
I think he is (with Wyne Godley) one of the most important figures in post-keynesian theory.
I think he is (with Wyne Godley) one of the most important figures in post-keynesian theory.
December 18, 2024
Enlightening book on the contributions of economist Hyman Minsky by L.Randall Wray, who was Minsky's student. Minsky is known for his Instability Hypothesis (inherent instability of the finance sector), his work on government as Employer of Last Resort (ELR), and his identification a macroeconomic condition that came to be called the "Minsky moment."
February 1, 2019
Extremely easy to read
This introduction is a very clear and loyal introduction to Minsky’s thoughts and work. Still 9 years after its publication, it is deeply relevant also for non economists
This introduction is a very clear and loyal introduction to Minsky’s thoughts and work. Still 9 years after its publication, it is deeply relevant also for non economists
June 18, 2023
Competent survey of the works of economist Hyman Minsky by his disciple L. Randall Wray.
The "need to know" material in this book is:
1) Minsky's F... [see the rest on my book review site.]
The "need to know" material in this book is:
1) Minsky's F... [see the rest on my book review site.]
Read
January 13, 2020Modern capitalism is the highway to default.
July 10, 2020
Would've totally given a four-star if not for the great editing and writing.
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