Publications
Charles J. Whalen
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Working Paper No. 892 | June 2017
Standing on the Shoulders of Minsky
Since the death of Hyman Minsky in 1996, much has been written about financialization. This paper explores the issues that Minsky examined in the last decade of his life and considers their relationship to that financialization literature. Part I addresses Minsky’s penetrating observations regarding what he called money manager capitalism. Part II outlines the powerful analytical framework that Minsky used to organize his thinking and that we can use to extend his work. Part III shows how Minsky’s observations and framework represent a major contribution to the study of financialization. Part IV highlights two keys to Minsky’s success: his treatment of economics as a grand adventure and his willingness to step beyond the world of theory. Part V concludes by providing a short recap, acknowledging formidable challenges facing scholars with a Minsky perspective, and calling attention to the glimmer of hope that offers a way forward.
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Working Paper No. 724 | May 2012
This paper surveys the context and contours of contemporary Post-Keynesian Institutionalism (PKI). It begins by reviewing recent criticism of conventional economics by prominent economists as well as examining, within the current context, important research that paved the way for PKI. It then sketches essential elements of PKI—drawing heavily on the contributions of Hyman Minsky—and identifies directions for future research. Although there is much room for further development, PKI offers a promising starting point for economics after the Great Recession.
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Policy Note 2010/1 | July 2010
The nation’s economic challenges are daunting. Restoring robust American prosperity and widespread economic opportunity will not be easy. But, as Hyman Minsky stressed, “Economic systems are not natural systems…. Policy can change both the details and the overall character of the economy.”
It’s clear that what we are now facing is not simply a cyclical crisis, or even an employment crisis, writes Charles J. Whalen. Rather, it is a standard-of-living-and-economic-opportunity crisis—the latest phase in a decades-long “silent depression.” In order to resolve it, our policy response must reflect that we are dealing with a deep-seated structural problem, one rooted in the evolution of US economic development. Policymakers must pursue an agenda of recovery and reform that includes, at minimum, a major assistance package for state and local governments; more relief for the unemployed and those facing foreclosure; tougher supervision of financial institutions; stronger automatic stabilizers (e.g., public service employment); policies that foster economic opportunities for working families; improved retirement security; and labor law reform that gives workers a more realistic chance to organize and bargain collectively.
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Public Policy Brief No. 92 | October 2007
A Minsky Moment
It is now clear that most economists underestimated the widening economic impact of the credit crunch that has shaken American financial markets since at least mid-July. A credit crunch is an economic condition in which loans and investment capital are difficult to obtain; in such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get done. Financial economist Hyman P. Minsky (1919–1996) was the foremost expert on such crunches, and his ideas remain relevant to understanding the current situation.
This brief by Charles J. Whalen demonstrates that the US credit crunch of 2007 can aptly be described as a “Minsky moment.” It begins by taking a look at aspects of this crunch, then examines the notion of a Minsky moment, along with the main ideas informing Minsky’s perspective on economic instability. At the heart of that viewpoint is what Minsky called the “financial instability hypothesis,” which derives from an interpretation of John Maynard Keynes’s work and underscores the value of an evolutionary and institutionally grounded alternative to conventional economics. The brief then returns to the 2007 credit crunch and identifies some of the key elements relevant to fleshing out a Minsky-oriented account of that event.
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Public Policy Brief Highlights No. 92A | October 2007
A Minsky Moment
It is now clear that most economists underestimated the widening economic impact of the credit crunch that has shaken American financial markets since at least mid-July. A credit crunch is an economic condition in which loans and investment capital are difficult to obtain; in such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get done. Financial economist Hyman P. Minsky (1919–1996) was the foremost expert on such crunches, and his ideas remain relevant to understanding the current situation.Download:Associated Program:Author(s):Charles J. Whalen -
Working Paper No. 277 | August 1999
During the last decade of his life, Hyman P. Minsky drew on insights acquired from Joseph Schumpeter in an effort to explore the long-term development of capitalism. He believed such an exploration would underscore the economic implications of postwar financial-system innovations and could encourage a broad discussion regarding the appropriate structure of the US economy. This paper focuses on the theory of capitalist development that Minsky produced during that decade.
After describing the purposes of Minsky's exploration, his theory is outlined both in terms of its essential elements and as it applies to the US economy. In addition to emphasizing the relations between finance and business, Minsky identified a transition through at least five distinct stages of capitalism: from the merchant-capitalist era to a recent period dominated by money managers. A concluding section identifies a number of research directions suggested by Minsky's analysis.
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Working Paper No. 165 | May 1996
Economic Insecurity and the Institutional Prerequisites for Successful Capitalism
View More View LessIn this working paper, Distinguished Scholar Hyman P. Minsky and Visiting Scholar Charles Whalen search for reasons to account for the split in post-World War II economic performance—that is, the difference in performance between the 1946–66 period and the 1966–96 period. The authors discuss a number of economic problems that have arisen during the past quarter of a century, including slower growth, stagnant earnings, rising financial instability, and increasing inequality. Minksy and Whalen concede that factors such as globalization and technological change have undoubtedly played a role in the split performance. An additional important and often overlooked element is the evolution of the US financial structure. The authors explain that a key component influencing the evolution of the financial sector during recent decades has been the rise of "money manager" capitalism. Important features of money manager capitalism are increased financial fragility (lower margins of safety in indebtedness and a greater reliance on debt relative to internal finance) and the introduction into the financial structure of a new layer of intermediation. In particular, managers of pensions, trusts, and mutual funds currently control the largest share of the liabilities of corporations. These managers are judged by only one criterion: how well they maximize the value of funds. As a result, business leaders have become increasingly sensitive to the stock market valuation of their firm.
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Working Paper No. 149 | December 1995
Lessons from the States
A two-year budget and appropriations cycle at the federal level has been endorsed by Republicans and Democrats during the past 20 years. The first congressional proposal for a federal biennial budget appeared in the late 1970s, and several others have since been submitted. There are two dominant models for a biennial budget: the stretch model, which expands action on the budget resolution over a two-year period, and the split-sessions model, which confines budget resolution and appropriations actions to the first session of Congress. In this working paper, Resident Scholar Charles J. Whalen reviews states' experience with biennial budgeting and outlines policy implications of extending the budget period.
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Public Policy Brief No. 20 | April 1995
The Balanced Budget Amendment: Toxic, Not Tonic
Charles J. Whalen evaluates the political and economic arguments in favor of a constitutional amendment requiring a balanced budget and concludes that, although today’s federal budget process needs reform, the balanced budget amendment is not a solution. In fact, such an amendment would divert attention from what is really needed, namely, establishing priorities and making difficult decisions concerning the deficit. It would be damaging to both the economic and the political systems of the United States. He recommends budget alternatives—a full-employment budget, an investment budget, a narrowly defined federal capital budget, a biennial budget—that would give the budgeting process more direction and encourage more restraint than the amendment would.
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Working Paper No. 132 | January 1995
Fiscal Irresponsibility: The Balanced Budget Amendment of “Contract with America”
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Working Paper No. 128 | November 1994
No further information available.
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