Über die Autorin bzw. den Autor

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.

Von der hinteren Coverseite

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

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

Stabilizing an Unstable Economy

The McGraw-Hill Companies, Inc.

Contents

Chapter One

As we approach the last decade of the twentieth century, our economic world is in apparent disarray. After two secure decades of tranquil progress following World War II, in the late 1960s the order of the day became turbulence—both domestic and international. Bursts of accelerating inflation, higher chronic and higher cyclical unemployment, bankruptcies, crunching interest rates, and crises in energy, transportation, food supply, welfare, the cities, and banking were mixed with periods of troubled expansions. The economic and social policy synthesis that served us so well after World War II broke down in the mid-1960s. What is needed now is a new approach, a policy synthesis fundamentally different from the mix that results when today's accepted theory is applied to today's economic system.

Although vital problems like personal safety, honesty, and integrity transcend pure economic concerns, my focus is upon stabilizing the economy. Perhaps naively, a premise in what follows is that if the economy provides basic security and a sense of personal worth for all—because work is available for all—many social problems will recede to manageable proportions.

In an era when performance failures demonstrate the need for economic reform, any successful program of change must be rooted in an understanding of how economic processes function within the existing institutions. That understanding is what economic theory is supposed to provide. Even as institutions and usages are not ordained by nature, neither is economic theory. Economic theory is the product of creative imagination; its concepts and constructs are the result of human thought. There is no such thing, per se, as national income, aside from a theory of how to combine elements in the economy into this special number; demand curves do not confront sellers—customers do; the way in which money and finance affect the behavior of the system can be perceived only within a theory that allows money and finance to affect what happens.

Unfortunately, the economic theory that is taught in colleges and graduate schools—the equipment of students and practitioners of economics over the past thirty years and the intellectual basis of economic policy in capitalist democracies—is seriously flawed. The conclusions based on the models derived from standard theoretical economics cannot be applied to the formulation of policy for our type of economy. Established economic theory, especially the highly mathematical theory largely developed after World War II, can demonstrate that an abstractly defined exchange mechanism will lead to a coherent, if not an optimum, result. However, this mathematical result is proven for models that abstract from corporate boardrooms and Wall Street. The model does not deal with time, money, uncertainty, financing of ownership of capital assets, and investment. If, on the other hand, the factors from which theory abstracts are important and relevant, if financial relations and organizations significantly influence the course of events, then the established economic theory does not furnish an underpinning for the proposition that coherence results from the type of decentralized market economies that exist. In fact, the Wall Streets of the world are important; they generate destabilizing forces, and from time to time the financial processes of our economy lead to serious threats of financial and economic instability, that is, the behavior of the economy becomes incoherent.

In the mid-1960s, after behaving well for some twenty years, the economy began to behave in a manner that cast serious doubts on the validity of the standard theory. Beginning with the credit crunch in 1966, we experienced a sequence of financial near crises (the others occurred in 1970, 1974–75, 1979–80, and 1982–83), each one growing progressively more severe. Officials and pundits alike responded to these cycles by calling for a rejection of the macroeconomic theory derived from the work of John Maynard Keynes and a return to the presumably tried and true analysis of classical microeconomic theory. In truth, however, the economy is now behaving in the way that Keynes's theory holds that a capitalist economy with a fragile financial structure and a big government is expected to behave. The error is in current economic theory, which grossly misinterprets Keynes's work.

A theory that denies what is happening can happen, sees unfavorable events as the work of evil outside forces (such as the oil crisis) rather than as the result of characteristics of the economic mechanism, may satisfy the politicians' need for a villain or scapegoat, but such a theory offers no useful guide to a solution of the problem. The existing standard body of economic theory—the so-called neoclassical synthesis, which takes on both a monetarist and an establishment Keynesian garb—may be an elegant logical structure, but it fails to explain how a financial crisis can emerge out of the normal functioning of the economy and why the economy of one period may be susceptible to crisis while that of another is not.

The economic instability so evident since the late 1960s is the result of the fragile financial system that emerged from cumulative changes in financial relations and institutions over the years following World War II. The unintended and often unnoticed changes in financial relations, and the speculative finance induced by the successful functioning of the economy, have made the rules for monetary and fiscal policy based on the experience of the 1950s and the early 1960s invalid. No set of monetary and fiscal manipulations by themselves can reestablish and sustain the relative tranquility of the 1950s and early 1960s. Fundamental institutional changes similar in scope to the basic reforms of the first six years of the Roosevelt presidency are necessary if we are to recapture such relative tranquility. If reform is to be successful it needs to be enlightened by a theoretical vision that enables us to understand the causes of the instability that is now so evident.

For a new era of serious reform to enjoy more than transitory success it should be based on the understanding of why a decentralized market mechanism—the free market of the conservatives—is an efficient way of handling the many details of economic life, and how the financial institutions of capitalism, especially in the context of production processes that use capital intensive techniques, are inherently disruptive. Thus, while admiring the properties of free markets we must accept that the domain of effective and desirable free markets is restricted. We must develop economic institutions that constrain and control liability structures, particularly of financial institutions and of production processes that require massive capital investments. Paradoxically, capitalism is flawed precisely because it cannot readily assimilate production processes that use large-scale capital assets.

It may also be maintained that capitalist societies are inequitable and inefficient. But the flaws of poverty, corruption, uneven distribution of amenities and private power, and monopoly-induced inefficiency (which can be summarized in the assertion that capitalism is unfair) are not inconsistent with the survival of a capitalist economic system. Distasteful as inequality and inefficiency may...