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Title:Minsky's money manager capitalism and the global financial crisis PDF Logo
Authors:Wray, L. Randall
Issue Date:2011
Series/Report no.:Working paper, Levy Economics Institute 661
Abstract:The world's worst economic crisis since the 1930s is now well into its third year. All sorts of explanations have been proffered for the causes of the crisis, from lax regulation and oversight to excessive global liquidity. Unfortunately, these narratives do not take into account the systemic nature of the global crisis. This is why so many observers are misled into pronouncing that recovery is on the way - or even under way already. I believe they are incorrect. We are, perhaps, in round three of a nine-round bout. It is still conceivable that Minsky's it - a full-fledged debt deflation with failure of most of the largest financial institutions - could happen again. Indeed, Minsky's work has enjoyed unprecedented interest, with many calling this a Minsky moment or Minsky crisis. However, most of those who channel Minsky locate the beginnings of the crisis in the 2000s. I argue that we should not view this as a moment that can be traced to recent developments. Rather, as Minsky argued for nearly 50 years, we have seen a slow realignment of the global financial system toward money manager capitalism. Minsky's analysis correctly links postwar developments with the prewar finance capitalism analyzed by Rudolf Hilferding, Thorstein Veblen, and John Maynard Keynes - and later by John Kenneth Galbraith. In an important sense, over the past quarter century we created conditions similar to those that existed in the run-up to the Great Depression, with a similar outcome. Getting out of this mess will require radical policy changes no less significant than those adopted in the New Deal.
Subjects:Hyman Minsky
Hilferding
Veblen
Keynes
John Kenneth Galbraith
financial crisis
Minsky crisis
Minsky moment
finance capitalism
money manager capitalism
debt deflation
can it happen again?
JEL:B22
B25
B26
B52
E02
E11
E12
E44
G01
G18
G20
G21
Document Type:Working Paper
Appears in Collections:Working Papers, Levy Economics Institute of Bard College

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