Can "It" Happen Again?: Essays on Instability and Finance

by Hyman P. Minsky

First Published in 2015. Routledge is an imprint of Taylor&Francis, an informa company.

Genres: Economics, Finance, Nonfiction, Business

320 pages, Paperback

First published June 1, 1982

About the author

Hyman Philip Minsky (September 23, 1919 – October 24, 1996) was an American economist, a professor of economics at Washington University in St. Louis, and a distinguished scholar at the Levy Economics Institute of Bard College. His research attempted to provide an understanding and explanation of the characteristics of financial crises, which he attributed to swings in a potentially fragile financial system. Minsky is sometimes described as a post-Keynesian economist because, in the Keynesian tradition, he supported some government intervention in financial markets, opposed some of the financial deregulation policies popular in the 1980s, stressed the importance of the Federal Reserve as a lender of last resort and argued against the over-accumulation of private debt in the financial markets.

Minsky's economic theories were largely ignored for decades, until the subprime mortgage crisis of 2008 caused a renewed interest in them.

Reviews

[Darius · Rating 2 out of 5]

The book is a collection of articles and papers, many going over the same topic. Since most are written for academic publications, they're dense. Most people would do better reading a modern re-telling by someone sympathetic to Minsky's views: e.g. Steve Keen.

[Michael Knolla · Rating 5 out of 5]

While the academic nature of some of the articles included in this collection can make for very dense reading the central pieces which describe of economic stability creates economic instability by changing risk tolerances and encouraging leverage are well articulated. While Minsky Moments May never garner the intellectual currency of Taleb’s Black Swans understanding them is incredibly valuable.

[Sheng Peng · Rating 3 out of 5]

It's literally a collection of Minsky's papers. So describing them as essays might have been kind of a con job. Nonetheless, the words are filled with wisdom and the theory makes a lot of sense.

[Gregg Wingo · Rating 5 out of 5]

This is less a book than a collection of Minsky's papers published over the years in various economic journals. Of course, this is a plus on two points 1) It is economics not philosophy and 2) It allows the reader to see the evolution of his thought from the the 60s to the early 80s.

In Chapter Two Minsky provides the basic formula for the relationship of our advance economy:

After Tax Profits = Investment + the Government Deficit - the Balance of Trade Deficit + Consumption Out of Profit Income - Saving Out of Wage Income

Reflection on this will allow the reader to better understand the complex relationships that govern the performance of the economy and the interconnection between Big Business, Big Government, executive pay, consumer behavior, and many other areas. He outlines three other types of economies where the following formulas hold sway:

1) Profits = Investment (Pre-Keynesian, small government)

2) After Tax Profits = Investment + Government Deficit (Huge Government with private investment)

3) After Tax Profits = Investment + the Government Deficit - the Balance of Trade Deficit

3a) Profits = Investment - the Balance of Trade Deficit

Utilizing formula 3a he predicts the Japanese economic malaise of the 90s in 1980.

The other chapters in the book focus on unveiling the nature of true Keynesian economics untainted by the Neoclassical synthesis and, thereby, allowing the creation of policies to avoid another Great Depression. Unfortunately, no one was listening in the heydays of Reagan's supply-side reign of terror that has continued to lead us to the Great Recession. One hopes that policymakers with the Minsky Moment on their lips will also be taking the time to read his thoughts on the issues that are inherent in the capitalist system we are embedded in.