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... going by content Krugman tells us that except in these very special circumstances the classical theory works.

Ha.  That sounds a lot like how Mason characterized "the mainstream".  So you would you put Krugman among that lot?

Mainstream economics had convinced itself that capitalism tends towards equilibrium; and that any shocks must be external. It did so by reducing economic thought to the construction of abstract models, which perfectly describe the system 95% of the time, but break down during critical events.

In the aftermath of the crisis - which threatens some countries with a phase of stagnation lasting decades - Minsky's insight has been acknowledged. But his supporters face a problem. The mainstream has a model; the radicals do not. The mainstream theory is "good enough" to run a business, a finance ministry or a central bank - as long as you are prepared, in practice, to ignore that theory when faced with crises.

And here I was, believing Krugman's voice to be John the Baptist's, crying in the Wilderness.

Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire

by marco on Wed Mar 25th, 2015 at 10:14:56 AM EST
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