Daniel H. Neilson - Minsky

1 Key Contemporary Thinkers Series includes:

2 Title page Minsky Daniel H. Neilson polity

3 Copyright page Copyright page Copyright © Daniel H. Neilson 2019 The right of Daniel H. Neilson to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988. First published in 2019 by Polity Press Polity Press 65 Bridge Street Cambridge CB2 1UR, UK Polity Press 101 Station Landing Suite 300 Medford, MA 02155, USA All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. ISBN-13: 978-1-5095-2849-3 ISBN-13: 978-1-5095-2850-9 (pb) A catalogue record for this book is available from the British Library. Typeset in 10.5 on 12pt Palatino by Fakenham Prepress Solutions, Fakenham, Norfolk NR21 8NL Printed and bound in the UK by TJ International Limited The publisher has used its best endeavours to ensure that the URLs for external websites referred to in this book are correct and active at the time of going to press. However, the publisher has no responsibility for the websites and can make no guarantee that a site will remain live or that the content is or will remain appropriate. Every effort has been made to trace all copyright holders, but if any have been overlooked the publisher will be pleased to include any necessary credits in any subsequent reprint or edition. For further information on Polity, visit our website: politybooks.com

4 Dedication Dedication To my parents

5 Acknowledgments Acknowledgments I am deeply appreciative of the support of Diana DePardo-Minsky, Alan Minsky, and Esther Minsky in producing this book. My debts to Perry Mehrling, beyond the many citations in the pages that follow, cannot be listed exhaustively. I will mention only two: thank you for showing me Minsky, and thank you for teaching me how to be an economist (though I do it differently than you!). I have been enjoying conversations on all subjects with Tyler Bickford, Çağlar Girit, and Jackson Jones for decades now, and perhaps they will find some of those ideas reflected in these pages. Chris Coggins has been an inspiring co-teacher and friend. I thank Asma Abbas, who among many other lessons pointed me to Rancière (1987), where I found Jacotot (1823), which has been indispensable. An anonymous conversant helped me learn to navigate with map and compass. Whitney Harris was a dedicated research assistant and an indulgent counterparty in conversation and study. I am grateful to my students, and in particular to Jacques Ben-Avie, Mario Campbell, Mackenzie Dwyer, Darcy Pollard, Alice Sinclair, Jeff Tsen, John Zhang, and Chandler Zincke-Byer, each of whom taught me something during this project – thank you, it is what sustains me as a teacher. I am grateful for and humbled by the work of three anonymous reviewers who read a quite rough version of the manuscript. I responded to many if not most of their suggestions in the text, sometimes by clarification rather than a change in course. I am likewise grateful for the editorial interventions of George Owers and Fiona Sewell at various stages of the process. The book is undoubtedly improved by all of these contributions, though I take responsibility for what remains. Lena and Augie, I am inspired by how you love your work, and from you I am learning to love my own. Sara, you are present in every word, in every chapter, and in the entire book, but still I feel I have only just begun to speak to you.

6 1 IntroductionTheory, history, discipline Time, uncertainty, capitalism Minsky as economist The crisis of 2008 Note

7 2 Financial capitalismThe institutions Evolving financial structures The financial instability hypothesis Coherence Before and after the “moment”

8 3 A payments theory of financeCapitalism and payment Survival constraint Position-making and cash kickers Economizing on reserves

9 4 The inadequacy of economicsIatrogenesis Cash flow over income Nominal over real Liquidity over solvency

10 5 Making the marketPosition-making and liquidity Dealing and initiative Supply and demand Market liquidity, funding liquidity, and monetary liquidity Interpreting Keynes

11 6 Last resortThe endpoint of position-making Centrality and discretion Validation Regulation and uncertainty

12 7 The resilience of economicsAnticipation of crisis Breaking point Memory of crisis

13 8 Minsky for all momentsFinancialization Disciplinarity and study Minsky’s economics

14 Bibliography

15 Index

16 End User License Agreement

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Daniel H. Neilson

polity

Copyright © Daniel H. Neilson 2019

The right of Daniel H. Neilson to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2019 by Polity Press

Polity Press

65 Bridge Street

Cambridge CB2 1UR, UK

Polity Press

101 Station Landing

Suite 300

Medford, MA 02155, USA

All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.