Real Economy, Finance and Instability: Hyman Minsky and Karl Marx
Hyman Minsky is inextricably linked to Karl Marx, both in terms of their family origins and academic backgrounds. However, what is baffling is that Minsky rarely cited and referred to Marx's works. This comparative study reveals that although Minsky and Marx have many commonalities and similarities in their economic visions and methodological frameworks, especially concerning that they both find the essential defect of endogenous instability of the capitalist economy from its process of capital accumulation, they diverge on the understanding of finance, and thus on the judgment and analysis of the specific causes of the instability and crisis. Perhaps it is these differences that lead to the misunderstanding of Marx by Minsky, who mistakenly believes that Marx regards finance as the external “manifestation” of the “essence” of real economy and thus ignores him. Some Marxists also misunderstand Minsky, mistakenly conceiving that Minsky's “financial instability hypothesis” is just a pure theory of finance on the dynamics of capitalist instability,and therefore dismiss him. However, in fact, the differences between the two can be reconciled and complemented. Understanding the instability of capitalism requires an organic combination of both of their conceptions on real economy and finance, and the absorption and development of Minskys ideas about finance and financialization within the theoretical framework of Marx.