Re: Minsky, FIH, and stability

[Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>]

FROM:  Paul Davidson
"      Economics Department
"      523 Stokely Management Center     974-4221
Dear Alan Isaac: All of these institutions can be built up on a General
Theory (Keynes) foundation or an ad hoc classical foundation. But it makes
a diofference!  For example, you mention the current exchange rate regime.
Query: Is the current regime desireable? If yes, how do you explain
that despite the recent (perhaps 6 months) good economic performance
of the US, OECD nations in general are doing very badly-- and that
all measures of GDP and GDP per capita (see my Winter 1992-93 JPKE article) for
 both OECD and LDCs shows significantly lower growth for the period 1973 to
1992, than during the Bretton Woods period? And that the average growth of GDP
per capita for OECD nations were more than twice the PEAK rate of growth
for the industrializing nations during the industrial revolution -- and during
the gold standard era? To suggest that this institutions be developed
merely to "stabilize" an economy subject to either nonlinearities or
coordination failures, in my view, fails to understand the need for a
GENERAL theory on which to start -- and on which to check to see if
the institution solves the fundamental faults of the economic system
we actually live in. I may not persuade you Alan; but at least if you
accept Keynes's General Theory as the foundation on which to build your
tinker-toy models perhaps they will be a little sturdier. Paul Davidson

Have a good day!