Financial Conditions and Macroeconomic Performance: Essays in Honor of Hyman P. Minsky.

• Author: Carroll, Michael C.

P. Minsky

Seldom does a tribute volume actually do justice to the scholar it purports to honor. Regrettably, most attempts fail to provide any fresh insights into the scholar's work and are relegated to the task of offering sweeping generalities. This is especially prevalent when the honoree is one whose academic latitude spans several of the current research paradigms. I was delighted to find that the editors of Financial Conditions and Macroeconomic Performance: Essays in Honor of Hyman P. Minsky have succeeded where so many have failed. Steven Fazzari and Dimitri B. Papadimitriou, the editors, have assembled an exceptional representation of papers from contributors of the highest caliber. Each of the ten essays reflects the immense variety and intellectual richness of Hyman Minsky's scholastic vision.

Steven Fazzari opens the volume with a unique introductory essay which: ". . . attempts to draw together the diverse ideas expressed in the individual chapters, relating them to the view of economic activity that Minsky conveys at a personal level". With such an arrangement, Fazzari is able to furnish a precis of the volume while offering the reader a brief glimpse into Minsky's personality. Dimitri B. Papadimitriou continues the personal view of Minsky in the second essay entitled "Minsky on Himself." Papadimitriou provides a concise history of Minsky's life from the rare perspective of long time friend and colleague.

Next, Gary Dymski and Robert Pollin investigate Minsky's "Wall Street" paradigm. The authors summarize the fundamentals of the Minsky model by showing: "Its major thrust . . . has been |in~ developing a macroeconomic model corresponding to what he |Minsky~ saw as Keynes' revolutionary message; that, 'stability is destabilizing' under capitalism because of uncertainty and the centrality of financial relations". In other words, the model sees capitalist economies as inherently unstable. Full employment equilibriums are fleeting moments within the temporal dynamics of the system.

Benjamin Friedman's contribution emphasizes Minsky's concept of financial fragility. Friedman points to the current debt structure of U.S. corporations as a source of this macroeconomic fragility. As a result of the recent merger and acquisition boom, U.S. companies have borrowed to pay down equity in either their firm or the firm they are taking over. They have borrowed so much that it now takes nearly sixty cents out of every dollar just to pay the...