Minsky_Financial Instability Hypothesis 1977
9
HYMAN P. MINSKY T h e Enandal Instability Hypothesis: Aninterpretatbn ofKeynes a n d a n Alternative to"Standard" Theory This hypothesis represents an attempt by the author to build a theory that is relevant for a inancially sophisticated capitalist econ omy, and to show w h y such an economy i s unstable. Professor Jacob Viner of the University of Chicago wrote a long and serious review of Keynes' General Theory, the only review which drew forth a rebuttal by Keynes. Professor Viner m aintained that the Gen- eral Theory really did not make a sharp break with traditional economics and that Keynes achieved novel results because velocity was allowed to vary and prices and wages were assumed to be rigid. Profes- sor Viner's review pointed toward the neoclassical synthesis, which can be said to have reached m aturity with Patinkin's work at Chicago. In his rebuttal Keynes rejected Professor Viner's interpretation and offered a concise statement of the General Theory.^ Once Keynes' rebuttal to Viner is used as a key to disentangle the new from the old in th e General Theory, an interpretation of the work emerges as "a theory of why output and employment are so liable to fluctuations." The interpretation that follows from Keynes' argument is inconsistent with both the Hicks-Hansen formulation of Keynesian theory and the neoclassical synthesis.' Furthermore, the interpretation of the General Theory that is con- sistent wit h Keyne s' rebuttal to Viner leads to a theory of the capitalist economic process that is more rele- vant and useful for understanding our economy than the standard neoclassical theory: this theory, which HYMAK P . MINSKY is Professor o t Economics at Washington University, S t. Louis. TWs article is used by pennission o f Nebraska Journat of Economics an d Business. 20 Challen e/March-A ril 1977
-
Upload
martijnbrouwers1987 -
Category
Documents
-
view
217 -
download
0
Transcript of Minsky_Financial Instability Hypothesis 1977
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 1/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 2/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 3/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 4/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 5/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 6/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 7/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 8/9
7/28/2019 Minsky_Financial Instability Hypothesis 1977
http://slidepdf.com/reader/full/minskyfinancial-instability-hypothesis-1977 9/9
