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Inherent Vice: Minsky, Markomata, and the tendency of markets to undermine themselves

Published online by Cambridge University Press:  16 July 2010

PHILIP MIROWSKI
PHILIP MIROWSKI*
Affiliation:
University of Notre Dame, Indiana, USA
*
*Email: pmirowsk@nd.edu
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Abstract:

Most current explanations of the crisis which began in 2007/8 tend to search for scapegoats, in the format of behavioral flaws. Their treatment of ‘risk’ is an important signpost to where such theories go awry. This paper suggests a structural theory of the crisis, informed by Institutionalist themes. We insist there is an alternative to a neoclassical macroeconomics, in the guise of possible alternative heterodox microfoundations for Minsky's account of economic crises, beyond the Kaleckian markup model. The sketch is based upon elevation of some formal notions of computational complexity to pride of place, and characterization of crises as a collapse of complexity. It is an attempt to portray a market system evolving to a point of ‘inherent vice’: an endogenous development which by its very nature, cannot be tamed through conventional insurance or risk models.

Type
Research Article
Information
Journal of Institutional Economics , Volume 6 , Issue 4 , December 2010 , pp. 415 - 443
Copyright
Copyright © The JOIE Foundation 2010

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