A Prophet Not Accepted in His Own Time: Hyman Minsky, the Disruption of the Postwar Growth Model by Financial Innovation, and the Vision of a Truly Wage-Led Economy

Since the financial crisis of 2007–9, the economics of Hyman Minsky has inspired calls to reduce financial instability so as to rebalance the current US growth model or even to replace that growth model with a new one that would distribute prosperity more evenly. Why did Minsky's economics fail to achieve even a modicum of such uptake during his lifetime? This article conducts the first systematic analysis of Minsky's archived correspondence to study his little-known but sustained efforts to influence policymakers. In the late 1960s, Minsky collaborated with the Federal Reserve to begin collecting data on the innovation that he considered the greatest source of financial instability, the money market. Yet Fed officials grew concerned that the project would be opposed by banks. They terminated the collaboration when Minsky said in a speech before the Board of Governors that there was no way of rebalancing the extant growth model that would be acceptable to its core constituencies. In the 1970s, Minsky developed a blueprint for a new growth model that he pitched to congressional Democrats. It centered on regulating the money market and shifting the backbone of employment and aggregate demand from private investment to a public job guarantee. The more Minsky rose to the challenge of explaining the economics of his proposal through narrow-bandwidth channels such as newspaper articles and congressional hearings, the more Democrats grew concerned about its politics. The article demonstrates that bringing growth model analysis into dialogue with the sociology and history of economics can be mutually beneficial.