Fighting Neoliberalism with Keynes & Minsky?
New Economic Thinking, 2020
According to Bellofiore, neoliberalism is dead and yet still alive in that it still impacts the economy in different ways. He thinks it obvious that indebted consumption may create the appearance of stability for a while, but creates ramshackle capital ultimately. As Bellofiore tells in this interview, he has known Minsky personally and has been intrigued by the latter's two analytical concepts. The best known is the financial instability hypothesis. Minsky died in 1996 but became a well known figure after the crisis of 2007/08, because he was connecting instability to private debt. The other concept of Minsky's was developed in the 80s, describing a stage view of capitalism. To Minsky's mind there were five stages, a commercial, an industrial, a financial, a managerial/welfare state, and finally a money manager capitalism.
Comment from our editors:
Bellofiore gives us an explanation of Minsky's thinking about neoliberalism as well as a comparison of his ideas with other economists. He proposes to revise the insights of Minsky's financial instability hypothesis, so that in combination with the Keynesian theory of the monetary circuit, it is enabled to explain how the source of risk and instability in the modern economy has shifted from firms to traumatized workers and indebted consumers. Bellofiore also thinks that under the new circumstances, conventional policy tools are inadequate to stabilize the economy, and governments should consider programmes of social investment, e.g. into public health and education, to ensure stability and build up productive capital for the future.