Krugman rejected Minsky’s insight because Minsky abandoned neoclassical micro theory

Evidence

Paraphrasing, Krugman there aired his opinion that what had been done in macroeconomics over the past thirty years had been “spectacularly useless at best, positively harmful at worst.” However, many journalists had been pointing to Minsky’s work as an alternative, and Krugman conceded his core insight had been spectacularly right, concerning the dynamic of progressively increased leverage setting the stage for crisis. Nevertheless, Krugman raised what he saw as a definitive objection: Minsky had rejected neoclassical micro theory, and Krugman highlighted his rejection of marginal productivity theories of distribution as particularly unforgivable. Then he began to pine for a day when his favorite Men in White Hats, the behavioral economists, would ride into town and do what Minsky did, but in a more acceptable idiom. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 820

Categorization

• QUESTION: Interesting to trace how behavioral economics was deployed post-2008 as the orthodoxy’s acceptable face of critique.
• SEED: An essay on how ‘behavioral economics’ functions as the crisis’s acceptable heterodoxy — criticizes without threatening the core paradigm.
• XREF: Mirowski elsewhere treats behavioral economics as a cynical bulwark of the orthodoxy against genuine reform.