Minsky and Kindleberger: Fellow Traveling Theorists of National and International Financial Instability

While a connection between economists Charles P. Kindleberger and Hyman Minsky is clear, the full extent of their intellectual relationship was unclear. By his own account, Kindleberger’s attention was only first brought to Minsky by Martin Meyer in 1976 as he was looking to build on his renowned book, World in Depression, 1929-1939. Kindleberger and Minsky also had repeated direct personal intellectual contact through colloquiums and seminars.

A new working paper by Perry Mehrling traces the evolution of what has come to be called – by Minsky – the Kindleberger-Minsky model, starting with Kindleberger’s 1978 publication of Manias, Panics, and Crashes and continuing thereafter. 

According to Mehrling, the key to understanding the affinity of the two men is a shared intellectual ancestry in pre-war American institutionalism, which led to shared outsider status in the post-World War II economics academy. Both also identified with the longer tradition of monetary thought that emphasizes the inherent instability of credit, and hence, the necessity for central bank management. 

In all, the Minsky-Kindleberger connection can be understood as one of mutual support. Kindleberger used Minsky as a stepping stone for his own renewed scholarly agenda, and Minsky subsequently used Kindleberger as a respectable ally for his own activist agenda of structural reform.