Stabilizing an Unstable Economy

Stabilizing an Unstable Economy is Hyman Minsky's most important book, published by McGraw-Hill in 1986 and reissued by Yale University Press in 2008 when the financial crisis made his framework impossible to ignore. The book provides the fullest statement of the Financial Instability Hypothesis, the taxonomy of hedge, speculative, and Ponzi positions, the role of the lender of last resort and Big Government as stabilizers, and the employer of last resort program. The book's argument is that capitalism is inherently unstable, that the instability is generated endogenously by the system's success, and that stabilization requires specific institutional structures — not the elimination of capitalism but the construction of dams that moderate its excesses. The book was largely ignored upon publication. The 2008 reissue made it one of the most influential works in contemporary macroeconomics.