What happens when Hyman Minsky’s financial instability hypothesis is read through a neoclassical lens?
Steve Keen explains:
My good friend and long term fellow rebel in economics Professor Rod O’Donnell once remarked that neoclassical economists are incapable of reading Keynes: they look at his words and then spout Walras instead. A similar phenomenon applies here: neoclassicals like Krugman read Minsky, and then proceed to build equilibrium models without banks, and think they’re modelling Minsky.
No they’re not: they’re creating an equilibrium-obsessed Walrasian hand puppet and calling it Minsky—just as they did to Keynes with DSGE modelling.
And I would add: just as they did to Marx, when his critique of political economy was taken to be a theory of market prices that corresponded to labor values.