On Aug 26, 2007, at 1:42 AM, bhandari at berkeley.edu wrote:
> However good his dance steps, can't possibly see how Minsky's
> theory can be
> understood as Marxist. No real impediments in the real sector of the
> economy? No wonder Meyer and others can enthuse about his theory.
> Doug,
> you don't agree with that yourself, given your insistence that the Fed
> responds to a real tightness in the labor market, though Fed action
> does
> not seem as mechanical as that either.
You, Crotty, and the rest are right that Minsky ignores the real sector, as do a lot of PKs. But a lot of Marxists ignore the financial sector. It would be hard to explain the U.S. economy of the last 25 years without paying a lot of attention to what went on in finance. For someone like Shaikh, causality only flows from the real to the financial and never vice versa.
Not sure what you mean by the Fed's not being as mechanical as making policy on the unemployment rate. Of course that's not the only thing, but it's an important indicator of the balance of class relations. They rarely reverse a tightening cycle by loosening until the unemployment rate has risen by 0.3 point or more. That hasn't happened yet, though it's close. I heard Bernanke at the CFR before he became Fed chair. He said that sagging productivity is a late cycle phenom, and it would incline the Fed to be tighter than it otherwise would be. So I think they're not enthusiastic about having to ease for financial reasons, so they're being as coy & grudging as possible. If it looks like things are going haywire, they will ease of course.
Doug