Stabilizing an Unstable Economy

Hyman Minsky was one of the more interesting financial/economic theorists of the 20th century. Unlike most of his colleagues — who generally viewed the economy as one that tends toward equilibrium absent any exogenous event — Minsky focused on the ways that a stable economy can lead to an environment of gradually increasing risk-taking and debt levels to the point that it eventually becomes destabilized. In other words, stability breeds instability, and booms lead to busts. While his work was underappreciated during his lifetime (he died in 1996), he received significant attention — his own personal Minsky Moment — in the wake of the 2008 financial crisis. Much of Minsky’s published work is unfortunately not well-written, so probably the best way to understand his economic philosophy is through others. (Some of the links on this page are a good place to start.) But Stabilizing an Unstable Economy is still a useful introduction to his important work.