What is Minsky?

Minsky is a software program for designing monetary macroeconomic models that has been named in honor of Hyman Minsky–the non-orthodox American economist whose once neglected “Financial Instability Hypothesis” is now almost universally regarded as the explanation of the economic crisis of the past half-decade.

One of Minsky’s wisest observations was that, in order to be valid, an economic theory had to be able to reproduce a Great Depression:

Can “It”—a Great Depression—happen again? And if “It” can happen, why didn’t “It” occur in the years since World War II?… To answer these questions it is necessary to have an economic theory which makes great depressions one of the possible states in which our type of capitalist economy can find itself. (Minsky 1982, p. 5)

An essential aspect of this is the modeling of finance and debt, which is what Minsky (the program) enables. It is not a model itself, but a means by which models can be built. Minsky differs from standard economic models by being essentially dynamic rather than static, but there are many similar modeling frameworks developed by engineers–such as Simulink, Vissim, Vensim, Stella. What Minsky adds is a simple means by which monetary models can be constructed.

Minsky Model with Banking
A Minsky Model with Banking

This sort of software should have been introduced into economics 4 decades ago, but the Neoclassical dominance of the academic profession has prevented it–and made funding for concepts like Minsky essentially impossible to attain. So, after an initial grant from INET I have now turned to the public for funding to continue Minsky‘s development, via the crowdfunding site Kickstarter.

The campaign has achieved its minimum target of $50,000, and I am now trying to extend that to over $100,000 in the final few days of the campaign, which ends on Monday March 18. If you would like to help an innovative, monetary, non-equilibrium approach to economics evolve, please go to our Kickstarter page and make a pledge. It’s easy: if you have ever bought anything from Amazon, you’re already equipped to pledge:

http://www.kickstarter.com/projects/2123355930/minsky-reforming-economics-with-visual-monetary-mo

For more on Minsky, please check out this YouTube playlist:

http://www.youtube.com/playlist?list=PLqs7-zw9kiAKl9Sw6RXrUPrfx5koa_ftg&feature=view_all

You can download the Open Source program from its SourceForge page.

One Response to "What is Minsky?"

  1. Pecos Banker   March 12, 2013 at 7:19 pm

    Steve Keene rules! My own theory is that economists in general do not know mathematics, which is why there is resistance to Keene's ideas, which involve dynamical systems, requiring a good grasp of some sophisticated mathematics. People tend to gravitate toward the so-called soft sciences precisely because they are unsuccessful in mathematics. Since the majority of economists are like that, it's hard for Keene's ideas to gain traction. Another way of saying this is that the majority of his colleagues are relatively stupid, though well-above the norm. With stupidity, one always finds arrogance and thick-headedness. Sorry Steve, I just had to say this even though I know you must "show respect" to these people.