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Customer Review

on 18 March 2012
One hundred and forty three reviews for Jo Nesbo's The Redbreast but just three for Minsky. We live in a world where economic forces are our first order of concern but people cannot be bothered to read about it. But they read asinine propaganda in their daily newspapers and on television and come away thinking macroeconomics is just like home economics. And politicians, who perhaps don't understand any better and anyway who have their mouths stuffed with bribery/campaign money, have a field day hoodwinking the electorate.

You need to come to Minsky after having read orthodox macroeconomic texts. The ones that start with Adam Smith ("the invisible hand" and all that malarkey), then move on to the American Depression of the 1930s (so we can understand why economics is important) before leading readers like sheep to the altar towards those ubiquitous demand and supply diagrams. In this world, constructed and presided over by our priests the neoclassical economists, prices are democratic and competition is perfect. Regulators always act quickly to set to rights any market inefficiencies and oligomonopolies are well behaved because they always sell where marginal cost equals marginal price.

What Minsky does is come in through the side door and upend this lie. Because, when we look at the real world (not the parallel universe imagined by neoclassical economists) things don't work as we've been brainwashed to believe. Minsky starts off explaining that profits can only be made when people are paid less than they produce. Those profits must be reinvested on investment or in higher wages. Add in government deficits and the human impulse to profit (leading to over-investment or excessive credit) and you get a virtuous cycle that leads to the boom before the bust. I paraphrase and you will need to read Minsky to get the full story. It's a damn good story and your understanding will deepen and then be elevated. The conclusion, expansions and contractions are inbred in capitalistic systems. They are not exogenous shocks as we've been previously told. In short, capitalistic systems are inherently unstable. Once we make this leap to seeing the world as it is and not as we would like it to be, we can move on to developing tools, techniques and institutions that help attenuate, but never eliminate, capitalistic business cycles. That is the best we can hope for.

Minsky rules.
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