But it does seem to decide the case in favour of the classicals for the real world: prices must be set by a mark-up on costs, rather than by the ‘twin blades’ supply and demand.
That’s the opinion I held, until a crucial step in generalising my model of Minsky’s Financial Instability Hypothesis implied that, at a macro level, the two models are identical. I’ll get on to that – and the role of prices in economic instability – in the next post in this series.
Steve Keen's Debtwatch
Is Capitalism Inherently Unstable? (3)
Steve Keen | Associate Professor of Economics & Finance at the University of Western Sydney
