Crash Course in Disequilibrium Economics

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This is a set of 5 lec­tures that I deliv­ered last week in Quito, Ecuador, at FLACSO–the Latin Amer­i­can Fac­ul­ty of Social Sci­ences. In future years I hope to expand this into two com­plete courses–one on the his­to­ry and devel­op­ment of eco­nom­ics from a dis­e­qui­lib­ri­um per­spec­tive, and the oth­er on dynam­ic mon­e­tary mod­el­ing in eco­nom­ics using Min­sky, the Open Source sys­tem dynam­ics pro­gram that I have devel­oped with the help of a grant from INET.

Lecture One: Why economics must be a disequilibrium discipline

In oth­er dis­ci­plines, I would use the word “dynam­ic” in place of dis­e­qui­lib­ri­um (and more strict­ly still, evo­lu­tion­ary, as Veblen argued so long ago). But in eco­nom­ics the con­cept of equi­lib­ri­um has become so embed­ded that the con­trast­ing approach I and many oth­ers have championed–thus far with­out mov­ing the main­stream one iota–is best described as dis­e­qui­lib­ri­um eco­nom­ics.

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Lecture 2: The founding fathers of disequilibrium economics

I cov­er Marx, Schum­peter, Fish­er, Keynes, Kaleckii and Min­sky, Good­win as dis­e­qui­lib­ri­um econ­o­mists. In a longer course, I will include many others–including Roy Har­rod and Janos Kor­nai.

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Lecture Three: Minsky’s Financial Instability Hypothesis

Min­sky’s hypoth­e­sis brings these threads of dis­e­qui­l­bri­um analy­sis togeth­er, with direct influ­ences from Marx, Schum­peter, Fish­er, Kalec­ki, and Keynes–and in that order.

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Lecture Four: Modeling Minsky’s Financial Instability Hypothesis

I built my first mod­el of Min­sky’s hypoth­e­sis by extend­ing Richard Good­win’s 1967 Growth Cycle. This lec­ture out­lines both Good­win’s method, its ori­gins in Marx’s dynam­ic mod­el from Chap­ter 25 of Vol­ume 1 of Cap­i­tal, and how its com­plex behav­ior yield­ed an unex­pect­ed but pre­scient result of a “Great Mod­er­a­tion” pre­ced­ing an eco­nom­ic break­down

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Lecture Five: Endogenous Money and Instability

All dis­e­qui­lib­ri­um the­o­rists (except Richard Good­win) have empha­sized the piv­otal role of bank­ing and mon­ey in dis­e­qui­lib­ri­um think­ing, while in Neo­clas­si­cal equi­lib­ri­um analy­sis, banks and mon­ey (and most of the time, debt) play no role in macro­eco­nom­ics.

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