In this essay I will compare and contrast theories of cyclical and long-term instability associated with the Marxian tradition and with the work of Keynes and Minsky. I will assess the explanations of the ongoing economic crises of the current era offered by Minsky and by Marxist writers. I will also discuss the different perspectives that the Keynesian and Marxian traditions bring to the analysis of the economic role of government.
When the mainstream of the profession was almost unanimous in celebrating the death of the business cycle and the onset of perpetual prosperity in the mid-1960s, Minsky reminded us of the endogeneity of cyclical instability and of the transitory nature of the institutional underpinnings of financial markets. The economic crisis of the 1970s and 1980s and the crisis of economic theory and policy that accompanied it may have come as a surprise to most of the profession, but Professor Minsky would have been surprised if such crises failed to materialize.