Many people view the outbreak of the severe financial crisis of 2007-8 as confirming Minsky's "financial instability hypothesis". Nevertheless, those who interpret this financial crisis as a "Minsky crisis" don't get a majority even among heterodox economists who believe that the capitalist growth process is inherently unstable. One of the reason is that there are still various theories of economic crisis in the strands of heterodox economics. Therefore, heterodox economists' assessments on Minsky's theory aren't also uniform. Some indicate the limitations of Minsky's perspective. For example, many Marxian economists often point out that Minsky finds the source of instability of a capitalist economy exclusively in the financial sector of the economy and he pays little attention to the contradictions and crises of capitalist economies that result from factors located in the real sector. But economic crises don't necessarily always occur by only one cause. In many case, crises occur because of the complex interaction of plural factors. Further, the form of a crisis may depend on the institutional structure of the economic system at a particular time and place. In order to grasp the nature of economic crises that occur taking various forms each time, we need a comprehensive theoretical framework that integrates perspectives of schools of heterodox economics. We will be able to construct such a framework for the first time by the animated cross-fertilization between various strands of heterodox economics. Since their advent in the late 1960s, American radical economists have done a lot of valuable attempts toward a synthesis of heterodox economics. They have inherited the intellectual capital of Marxian, Keynesian and American institutional schools, and sought to construct an alternative framework to the neoclassical orthodoxy through the integration of those ideas. In addition to the analysis of the real aspect of the economy, they have also achieved many rich results in the analysis of financial instability of a capitalist economy. This paper reviews American radical economists' critical assessments of Minsky's financial instability hypothesis, and examines their interpretations of the current crisis. With these considerations, I explore the possibility of a synthesis of heterodox theories of economic crisis.

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This paper examines the Subprime Mortgage Crisis as a Minsky Crisis by reexamining Minsky's Financial Instability Hypothesis. The fundamental proposition of the Financial Instability Hypothesis is that "Stability is destabilizing". When we re-examine the process of endogenous destabilization of the financial structure in the capitalist economy from the point of view of financial innovation, it reveals that financial innovations deploy "speculative finance" and "Ponzi finance." Increasing investment to specific capital assets requires new financial products that overcome regulation constraints. New financial products also must have acceptable yield and maturity both for lenders and borrowers. Financial instability develops in periods of "tranquility" when decreasing liquidity preferences attracts economic entities to obtain alternative assets with high interests instead of cash and demand deposits. In this process financial innovations are carried out and a pyramiding of liquid assets is built. However, the chain of financial contracts made in pyramiding of liquid assets increases likelihood of a serious liquidity crisis by the liquidity shortage of central financial institutions or financial markets. It means that financial innovation endogenously increase financial instability. Since 2000s, a huge pyramiding of liquid assets which is called the Originate-to-Distribute (OTD) Model had been created. In the OTD model, subprime mortgages loan originated by commercial banks were converted into CDO. Off-balance sheet entities of commercial banks and hedge funds bought the majority of AAA tranches. Re-securitization made it possible for them to produce large amounts of short-term financial assets from long-term financial assets and to raise funds from MMMF and Securities Lenders in short term using such as repo and ABCP. MMMF raised funds from selling the shares to households and firms. Securities Lenders raised funds from long-term savings of the household sector. However, the downgrading of subprime MBS by rating agencies since June 2007 invoked liquidity crisis in the CP market and the repo market. It made it impossible for off-balance sheet entities of commercial banks and hedge funds to raise funds in those markets. Money center banks which provided liquidity support to off-balance sheet entities and investment banks which provided fund to hedge funds through repo and prime brokerage made losses. Collapse of Lehman Brothers in September 2008 caused run on MMMF and Securities Lenders. The run reduced investment and exacerbated the liquidity crisis further. In short, the OTD Model which constituted of banks, off-balance entities, hedge funds, MMF and Securities Lenders formed a chain of financial contracts to earn interests from the interest gaps. This scheme made financial structure vulnerable to liquidity shortage. The chain of financial contracts was collapsed by downgrading of subprime MBS. This entailed huge liquidity crisis and severe depression. I conclude from the point of endogenous destabilization that Subprime Mortgage Crisis is one of a Minsky Crisis.

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Following the financial crisis of 2008, a large number of economists have become interested in the financial instability hypothesis of Hyman P. Minsky. However, his theory of money manager capitalism is also important in thinking about the crisis. At the end of the 1980's, Minsky had already pointed out that American capitalism evolves from corporate capitalism to money manager capitalism. However, he regarded this evolution as retrogression, not progress. Money manager capitalism has been the largest cause of the poverty and the enormous inequality of income and wealth in the United States. He also pointed out that there was a possibility that a serious depression would occur in the future. The global financial crisis of 2008 can be called the realization of Minsky's prediction. Actually, we cannot regard the year 2008 as an exception, since the United States experienced a financial confusion every several years. It is the intervention of the Federal Reserve and government that have prevented this financial confusion from expanding into a financial crisis. However, today when several years have passed since the crisis, the U. S. economy seems to be recovering, as if there had been no crisis. However, current economic recovery means the revival of money manager capitalism. It is often said that the U. S. economy is recovering smoothly since the crisis. In fact, since the early 2000s, the U. S. long-term GDP growth per capita has not been different from that of Japan, whose economy is said to be stagnant due to deflation. It is true that the present U. S. unemployment rate has today been reduced to nearly 5% from its peak of 10%, but the main reason is that people who cannot find jobs have given up looking for jobs. The U. S. employment recovery is far behind that of Japan. In the era of the housing bubble, households in the U. S. borrowed money to consume and to purchase houses. But after the crisis, households have found it difficult to borrow further. The crisis ended the era of financial Keynesianism, and that delayed the U. S. economic recovery. Nevertheless, finance has shown a quick recovery. Profits or capital gains in the financial sector have already recovered and are now near the previous peak. The income and wealth of the super-rich have been restored, as finance is reinvigorated and stock prices are rising. Recovery from the current crisis is contrary to the recovery from the Great Depression in 1930s. The Great Depression and the New Deal ended the era of financial capitalism. The depression destroyed the income and wealth of the super-riches. On the other hand, the economic growth rates of the early New Deal period were very high. The unemployment rate rapidly decreased to 10% in 1936, from its peak of 23%. The U. S. economic policy, which regards the financial sector as most important, is the main cause of the revival of money manager capitalism. The framework of such an economic policy was made by the political and economic structure of the U. S. Today, the financial sector is a powerful player in U. S. politics and economic policy. The manufacturing industry has declined, and real wages are stagnant. In this situation, financial Keynesianism is almost the only model for economic growth. Sadly, the crisis ended the era of financial Keynesianism, but an alternative model has not yet founded.

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Minsky's classification of financing profiles of non-financial business firms based on his concept of "margin of safety" can be applied not only to problems in a domestic financial system, but also to those in the international financial system. The present paper investigates issues regarding financial instability in the international economy by extending his perspective to the relationship between creditor and debtor countries. Section 2 reviews Minsky's classification of financial profiles of non-financial business firms whose assets are financed by liabilities, namely, his concepts of hedge, speculative, and Ponzi financing, with a brief comment on how patterns of debt amortization affect the "margin of safety." Relying on Kregel's recent study of financial crises and international imbalances in the current global economy, we show in Section 3 that (1) the Asian financial crisis in the late 1990s was triggered and exacerbated by the liquidation of foreign currency-denominated debts owed by the non-financial corporate and banking sectors of those countries and (2) emerging Asian economies have boosted their exports by lending to their trading partners, as evidenced by the fact that China's trade surplus with the United States has increased and its holdings of U.S. long-term securities too have accumulated since the early 2000s. By re-examining Domar's analysis of the time behavior of the ratio of funds inflow (amortization plus interest received) to their outflow (foreign investment), we show in Section 4 that Domar's condition for sustainable foreign investment-namely that the growth rate of foreign lending is higher than the rate of interest-turns out to be equivalent to the condition for Ponzi financing, namely that new foreign borrowings are larger than the repayment of principal and interest for outstanding foreign debts. Section 5 concludes with a short comment on the debt sustainability of the key currency country.

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The entire contents of K. Marx's credit theory have been released thorough the completion of the manuscript Capital Volume III (MEGA II/4.2). It is now clear that Engels edited Capital Volume III Part five, changing the titles, sections and statements originally written by Marx and these modifications certainly created unnecessary ob fuscations for readers. Moreover, because the manuscript Capital Volume III Part five is one of the most difficult parts of Capital Volume III, there are parts that the previous researchers could not understand and hence failed to comprehend the main theme and logic of Marx's writing. So in this paper, I will develop the main theme of Marx's credit theory, based on the manuscript Capital Volume III Part five. This paper will focus on the following issues. We will look at some advanced Japanese research of Marx's credit theory, focusing especially on a series of Otani's (1988-2005) contributions. The view that Capital Volume III Part five is constructed from two parts -the "theory of Interest-Bearing Capital" and the "theory of the credit/banking system"- is generally shared by conventional research. However, after closely examining Marx's original manuscript and translating its entirety into Japanese, Otani revealed in particular the following point; the main subject of the latter part which they thought explained the "theory of the credit system" is not a direct analyzes about the credit system itself. Although Marx certainly outlines the credit/banking system at the beginning of 5) (corresponding to Chapters 25 and 27 in Engels' edition) after examining the concept of interest-bearing capital in 1)-4) (corresponding to Chapter 21-24), this was not the continuous main theme. On the premise of understanding the credit system, "monied capital" which moves under the credit system and the monetary markets mainly was analyzed in I) (Chapter 28), II) (Chapter 29) and III) (Chapters 30-35) which are the main issue of 5). The main theme of the latter part is not "the analysis of the credit/banking system itself", but "the analysis of monied capital under the credit system"; as such, this is the "theory of monied capital". This paper builds upon the research done by Otani whose work was based on the manuscript. Although one might expect the newly published manuscript would have advanced research, I have yet to see a great academic advancement since the research done by Otani. It appears this is a result of researchers seemingly having not understood where the core of Marx's credit theory is and therefore not able to develop the contexts. As above, though the subject of 5) is "the analysis of monied capital under the credit system", the theoretical core is especially focusing on, "the analysis of the accumulation of monied capital in relation to the accumulation of real capital", the issue of which is set up at the beginning of III), and this is considered as being among, "the incomparable difficult questions". Though Marx analyses this problem under the industrial cycle (business cycle), it has not been well clarified in the hitherto research. Thus, in this paper, I will present the distinctive points of Marx's credit theory, through clarifying the content of especially III) of the manuscript Capital Volume III Part five.

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The purpose of this paper is to consider the theoretical relationship between the embodied-labour version and the abstract labour one, two representative types of labour theory of value, and to show the new mission and possibility of labour theory of value. The embodied-labour version is the labour theory of value developed by Karl Marx, and the most prevailing theoretical type of it nowadays. This theory insists that the magnitude of commodity's value is determined by the quantity of labour used in its production. In the embodied-labour version, the substance of commodity's value is regarded as abstract human labour used and embodied in its production. Here, the abstract human labour is as sort of a human's physiological energy outlaid in the all kinds of labour. In this case, abstract human labour is considered to exist really in the dimension of production. In contrast to it, the abstract labour version insists that labour producing commodity, more directly speaking the concrete useful labour producing its use value, translate into abstract labour, when the commodity is realized as money in the process of circulation (that is the market). In the case of the abstract labour version, the private, concrete labour producing the commodity's use value can be socialized and abstracted, and also it can be realized as the abstract labour producing the commodity's value, when the commodity translates into money (C-M) in the market. The problem to be treated here is the theoretical relation between these two labour theories of value and the circuit of capital. The total movement of capital consists of following three circuits: (1) Money capital: M-C…P…C'…M' (in short M…M') (2) Productive capital: P…C'-M'-C…P (P…P) (3) Commodity capital: C-M-C…P…C' (C'…C') Marx analysed the social reproduction process from the viewpoints of two circuits of capital mainly: productive capital (P…P) and commodity capital (C'…C'). Then the labour theory of value that Marx based on was the embodied-labour version. By these ways, what he could recognize is a social organization (distribution) of concrete useful labours being realized ex post. It was a result of the long term and the average analysis. However if we analyzed the social reproduction process from the viewpoint of circuit of money capital (M…M'), the situation in sight would be different. The first stage of the circuit of money capital (M-C…P…C'-M') is a procurement process of the productive capital by the money capital (M-C{lp + mp}). The scale of the social organization of concrete useful labours is dependent on the number of labour power(lp_1, lp_2,…lp_n) procured by the money capital here. On the other hand, the last stage of the circuit of money capital (C'-M') is a place of commodity's salto mortale in which labours producing commodities are judged whether they are realized as labours producing their values. At this moment, the organization of concrete useful labours formed through the movement of social aggregate capital is judged whether it can get a social acceptance and validity also. If we wished to know the structure of social reproduction ex post recognized by the long term and the average analysis, the embodied-labour theory of value would be an effective tool. However, if we want to understand the process itself of the social organization of labours brought about by movement of money, it would be necessary for us to analyse the social reproduction process from the viewpoint of circuit of money capital. The abstract labour version is a very value theory that will be able to response to such a task. It is a value theory that can achieve its mission elucidating the process of the social organization of human labour, in another dimension and by logic different from the embodied-labour version.

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It is well known that there are two opposed views of the asset price rising, Fed view and BIS view. Fed view advocates "Clean up the mess" strategy, which leaves the asset price rising and eases credit boldly in the burst of the bubble. On the other hand, BIS view advocates "Lean against the wind" strategy, which tightens credit proactively at the asset price rising. The opposition between the two views also exists in the debate of Global Imbalances in the 2000s. Bernanke, Fed view, argues that "Global saving glut" flows into US and makes the current account deficit (i.e. net capital inflow) larger in US and the interest rate lower in the world. On the other hand, Borio, BIS view, objects that the excess savings in national economic accounting system is irrelative to the bank ability to expand credit and to set the interest rate, and that what is influential on the asset price rising is not net capital inflow but gross one. Borio's argument is superior to Bernanke on the financial economy, but has some weaknesses when it is reviewed from the point of the Marxian economics. This paper tries to develop the Marxian credit theory. Firstly, Borio accepts the concept of ex ante saving and investment though he thinks little of it in determination of the market interest rate. As we can see in the debate between Keynes and Ohlin in 1937, ex ante saving is not lending the saving but financing the investment by the credit creation. Secondly, Borio emphasizes that money (credit money) is made by credit creation from nothing, ex nihilo. But, though the recent Marxian economics also accepts that money is created by the banks, it emphasizes that credit money anticipates the reflux of money in the future. Credit money is backed by the value of commodity or the ability to gain money, such as the labor's ability to gain wage and the government's ability to collect tax. That is, credit money is not created from nothing, but based on the value of commodities or on the ability to realize the value in the future. Thirdly, the interest rate is determined at the level where banks can gain the average profit. Marx explained the level of interest rate from the relation between demand and supply of money capital. But the bank, as a capital, self-valorizing value, gains the general profit rate on the invested capital through the competition in the same sector and among the all sectors.

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