From Laissez-Faire to Greenspan: Feedback Control in Economic Systems

This chapter analyzes a fundamental question: Should economics be controlled or not? Is the “invisible hand” and the self-regulationSelf-regulation of free market capitalism the best possible mechanism, or does the economy need governmental intervention? Minsky’s hypothesis suggests that stability implies instability. It is an observational fact that the economy shows a cyclic pattern: business cyclesBusiness cycles with different frequencies are very general. Uncompensated positive feedbackPositive feedback is found to be a general mechanism leading to extreme events, among otherHyperinflation hyperinflation.