A Minsky Perspective on the Global Recession of 2009

As the U.S. credit crunch of 2007 evolved into a global recession in late 2008 and early 2009, the economic ideas of the late Hyman Minsky received increasing attention on both sides of the Atlantic Ocean. However, few observers seem to appreciate that about the last dozen years of Minsky�s life were devoted largely to synthesizing his financialinstability hypothesis (the influence of Keynes) and his understanding of long-term capitalist development (the influence of Schumpeter). To fill that gap, this essay offers a Minsky perspective on the global recession of 2009 by drawing on the insights Minsky gained from Keynes and Schumpeter. While the Keynesian and Schumpeterian dimensions of Minsky�s viewpoint are intertwined in the real world, this presentation highlights the cyclical and structural aspects of the current crisis separately. After examining the nature and causes of the global downturn through those two lenses, Minsky�s policy proposals are compared with steps taken by the U.S. government through April 2009.