Marx, Minsky, and the Great Recession.pdf

Marx, Minsky, and the Great Recession Maria N Ivanova maria.n.ivanova@ Paper presented at the Second International Conference in Political Economy, ‘Neoliberalism and the Crises of Economic Science’, May 20-22, 2011, Istanbul University, Turkey Abstract This paper challenges prevailing accounts of the financial origins of the Great Recession by engaging two distinct theoretical perspectives originating in the works of 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 US economy and the globalization of production have been 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 US financial sector but in the system of globalized production which reflects the growing unevenness of capital accumulation on a planetary scale, as manifested in the global imbalances. Second, the belief originally fathered by Proudhon, reinvented by Keynes, and avowedly embraced by Minsky, that social problems have monetary/financial origins, and ergo 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. The paper argues that outward expansion of US productive capital, coupled with financialization at home, has transformed the deep structure of the US economy ma