Research

Technology, Complexity, and Culture as Contributors to Financial Instability: A Generalization of Keynes's Chapter 12 and Minsky's Financial Instability Hypothesis

Keynes's discussion of "the state of long-term expectation" explains why uncertainty about the future makes investment unstable. Minsky used Keynes's ideas to explain why every economic boom sets the stage for a financial crisis. This paper extends the Keynes/Minsky framework by arguing that uncertainty about the future also biases scientific knowledge and human culture. Just like overly optimistic financial markets, the persistence of inaccurate scientific paradigms and cultural beliefs can also generate financial crises. For example, the debt toward nature that our capitalist culture continues to obscure is likely to be a case of Ponzi finance. The Keynes/Minsky framework is useful for analyzing diverse causes of potential economic instability.

Publication Information
Article Title: Technology, Complexity, and Culture as Contributors to Financial Instability: A Generalization of Keynes's Chapter 12 and Minsky's Financial Instability Hypothesis
Journal: Journal of Economic Issues (2012)
46(2), 343-352
Author(s): van den Berg, Hendrik
Researcher Information
    
van den Berg, Hendrik
van den Berg, Hendrik
Emeritus
Expertise:
  • Economic Development
  • Heterodox Economics
  • International Finance
  • Open-Economy Macroeconomics
Economics
CBA 350
P.O. Box 880489
University of Nebraska-Lincoln
Lincoln, NE 68588-0489, USA
Phone: (402) 202-6997
Fax: (402) 472-9700
hvan-den-berg1@unl.edu