Can you explain slavery by looking at the laws that supported it?
Minsky actually writes an economic theory that explains what we observe. Steve Keen is working on explicit dynamical equations to do simulations based on it. The theory is based on understanding the effect of debt contracts denominated in nominal (not 'real') money values.
Standard economics can't explain what's going on except as an "exogenous shock".
And you come and tell us that we don't need an economics of debt contracts to understand what's going on.
Minsky doesn't do it by means of cultural anthropology, whereas standard economics is just religion. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
It's nice that Minsky knew what was going on ahead of time, but a lot of other people who aren't nearly as economically sanctified seem to have been able to predict the last melt-down too.
Which isn't really that difficult, considering similar melt-downs have been happening since at least the 15th century, often for congruent reasons.
Why did Minsky's modelling not make any difference to the outcome?
Could that have been because of the politics?
So shall we pretend that politics and morality don't matter as long as we have some differential equations that can Explain Everything™?
Excuse my scepticism, but I'll be more convinced when I see this making a real difference to policy.
But anyway, we're agreed that the problem is not one of economics but of politics. And one of the most important rhetorical/political tools is to obscure the role of the financial sector in economics, focusing on "the real economy". "Real business cycle" theory is a way of blaming the unemployed for taking an unpaid vacation. The reason these (IMHO) correct theories are being ignored is precisely that they are 1) correct; 2) politically inconvenient. So don't tell me that the fact that they are correct doesn't matter. There has to be a role in politics for actually having the right information about what is going on and how.
And Minsky is not sanctified, he was studiously ignored and now he's being misrepresented (his work is not "prescient" - writing an economic history of the US 1960-1980 in 1986 is anything but - and it is not about "minsky moments" it's about fiscal policy, monetary policy, banking supervision, and so on. Precisely the kind of things the serious people need to get right but don't). En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
