introductiontominsky’sstabilizinganunstableeconomy（17页）.docVIP

Introduction to Minsky’s Stabilizing an Unstable Economy Dimitri Papadimitriou and L. Randall Wray As we prepared this new edition of Hyman P. Minsky’s most comprehensive work—first published in 1986--the U.S. financial system began to face its worst financial crisis since the 1930s. What is truly remarkable about this book is its demonstration that Minsky is more relevant than ever, two decades later. However, Minsky was always ahead of his time. It is important to remember that Minsky’s first work on financial instability came in the late 1950s, accurately predicting the transformation of the economy that would not become apparent for nearly a generation. While we have read this book many times, our careful re-reading in preparation of this edition impressed upon us the depth of analysis and the importance of Minsky’s theoretical contributions for understanding the operation of the modern capitalist economy. There is, quite simply, nothing like it. There has been a steady demand for the book since it went out of print, with used copies offered on the internet purportedly commanding prices upwards of a thousand dollars. In the past few months, interest in Minsky’s work suddenly exploded as the financial press recognized the practical importance of his analysis for the rapidly unfolding mortgage securities market meltdown. Indeed, in this book Minsky examined a number of financial crises in detail—several of which involved similar financial instruments such as commercial paper, muni bonds, and real estate and investment trusts (REITs). More importantly, he explained why the economy tends to evolve in such a way that these crises become more likely. Further, if the crises are successfully contained—as they have been so far—then risky practices are “validated”, setting the stage for subsequent, and probably more frequent and severe, crises. As Minsky insisted, the fundamental instability in our sort of economy is upward, that is, toward a speculative boom. Unlike