Marx, Minsky, and the Great Recession

Abstract

This paper challenges prevailing accounts of the financial origins of the Great Recession by engaging two distinct theoretical perspectives originating in Karl Marx and Hyman Minsky. The paper argues that the domestic and global, financial and “real” origins of the crisis are deeply intertwined as the financialization of the U.S. economy and the globalization of production are inextricably linked. Thus, the merits of a Marxian interpretation of the crisis surpass those of the Minskyan for at least two reasons. First, the structural causes of the Great Recession lie not in the U.S. financial sector but in the system of globalized production which reflects the growing unevenness of capital accumulation on a planetary scale, manifested in the global imbalances. Second, the belief that social problems have monetary or financial origins, and could be resolved by tinkering with money and financial institutions, is fundamentally flawed, for the very recurrence of crises attests to the limits of fiscal and monetary policies as means to ensure “balanced” accumulation. JEL Codes: E40, E50, E60, F30, F40, F50