Re: Minsky, FIH, and stability

[Doug Henwood <dhenwood@xxxxxxxxx>]

Paul Davidson suggests that the bustup of the Bretton Woods system led to
deteriorating economic performance. But what if deteriorating economic
performance (not to mention the erosion of US imperial power) led to the
bustup of Bretton Woods?

Doug

Doug Henwood [dhenwood@xxxxxxxxx]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)


On Fri, 28 Jan 1994, Paul Davidson wrote:

> 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!