The Levy Economics Institute of Bard College is pleased to announce that it will hold the second annual Minsky Summer Seminar June 18�26, 2011. The Seminar will provide a rigorous discussion of both the theoretical and applied aspects of Minsky�s economics, with an examination of meaningful prescriptive policies relevant to the current economic and financial crisis.

The Summer Seminar will be of particular interest to graduate students, recent graduates, and those at the beginning of their academic or professional careers. The teaching staff will include well-known economists concentrating on and expanding Minsky�s work.

Applications may be made to Susan Howard at the Levy Institute ([email protected]), and should include a current curriculum vitae. Admission will include provision of room and board on the Bard College campus. A limited number of small travel reimbursements of $100 for U.S. fellows and $300 for foreign fellows, respectively, will be available to participants.

Due to limited space availability, the deadline for applications is March 31, 2011.

The summer seminar program will be organized by Jan Kregel, Dimitri B. Papadimitriou, and L. Randall Wray.

Hyman Minsky�s analysis, in the early 1990s, of the capitalist economy�s transformation in the postwar period accurately predicted the global financial meltdown that began in late 2007. With the republication in 2008 of his seminal books John Maynard Keynes (1975) and Stabilizing an Unstable Economy (1986), his ideas have seen an unprecedented resurgence, and the essays collected in this companion volume demonstrate why both economists and policymakers have turned to Minsky�s works for guidance in understanding and addressing the current crisis.

The volume brings together the world�s foremost Minsky scholars to provide a comprehensive overview of his approach, and includes chapters that extend his analysis to the present. Beginning with Minsky�s ideas on money, banking, and finance�including his influential financial instability hypothesis�subjects range from the psychology of financial markets to financial innovation and disequilibrium, to the role of Big Government in constraining endogenous instability, to a Minskyan approach to international relations theory.

The real wage�profit rate schedule allows one to analyze technical change through changes in the productivity parameters (labor and capital) and factor rewards (real wage and profit rates). The authors examine the direction of technical change in India�s organized manufacturing sector for the 1980�2007 period using the real wage�profit rate schedule. They find that the degree of technical change conformed to the international norm and was Marx-biased (declining capital productivity with increasing labor productivity) until 2000, before becoming Hicks-neutral (increasing capital and labor productivities).

The finding suggests that the Hicks-neutral technical change is a temporary phase that is part of a long-term trend of Marx-biased technical change. The puzzling aspect of technical change in India is that there has not yet been an expected phase of steady decline in the profit rate.

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Central bank independence (CBI) pertains to the structure of monetary policy and the degree of freedom from political interference enjoyed by the central bank. Research Associate J�rg Bibow finds a lack of empirical evidence to support the New Classical economists� perceived success of CBI.

Bibow does not completely reject CBI in spite of Post Keynesian objections to the concept of money neutrality and the notion that CBI may conflict with fundamental democratic values. According to John Maynard Keynes�s model, the issue is not to maximize CBI but to find a balance that would be conducive to efficient policy and compatible with democratic values.

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Unit labor costs are used to ascertain the level of competitiveness, and the policy implication is that higher unit labor costs harm the economy. The authors reinterpret these costs as the product of the labor share in output times a price adjustment that embodies the functional distribution of income between labor and capital.

Using data from India�s manufacturing sector, they find that the upward trend in unit labor costs is exclusively the result of an increase in the price deflator. This means that labor costs have trended downward and real wages have increased only minimally, while the profit rate and unit capital costs have risen substantially. Any real loss in the competitiveness of India�s manufacturing sector is related to capital and the real profit rate rather than labor costs.

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According to Research Associate Sunanda Sen, we have witnessed the limits of financialization in creating a sustainable path toward global economic development. She sees a need to re-create the base for economic expansion (by replacing speculation with real activity involving physical rather than financial assets), reorient the pattern of investment incentives, and control speculation directly.

Sen focuses on some of the theoretical concerns of John Maynard Keynes and Hyman Minsky when finance becomes removed from the real economy. She finds that when the total value of assets in the real and financial sectors turns negative, the economy collapses. When both real and financial assets fail to perform, there is an overall catastrophe.

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According to John Kenneth Galbraith, �innocent fraud� is about how economic and political systems cultivate their own versions of the truth�and no one is at fault. Bezemer and Gardiner claim that fraud persists because the costs of implementing public policies are misrepresented: the accounting side of financial and monetary policy is lost in the public discourse.

The authors suggest that the study of monetary policy should analyze the administration of financial accounting processes at the macroeconomic level and differentiate between different types of assets and liabilities. Otherwise, there is a refusal to face the facts, leading to confused policy interventions.

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The Report is aimed at a diverse general audience interested in policy matters. This issue highlights the 19th Annual Hyman P. Minsky Conference, which focused on planning a new financial structure based on Minskyan themes (e.g., the reregulation and supervision of financial institutions, and the role of government). In addition, it summarizes four public policy briefs, two policy notes, and twenty-five working papers by Levy Institute scholars and associates, and other authors. It also outlines upcoming events and news associated with the Institute.

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