Minsky’s Approach to Employment Policy and Poverty

While Hyman P. Minsky is best known for his work on financial instability, he
was also intimately involved in the postwar debates about fiscal policy and what
would become the War on Poverty. Indeed, at the University of California, Berkeley,
he was a vehement critic of the policies of the Kennedy and Johnson administrations,
and played a major role in developing an alternative. Minsky insisted that the
high investment path chosen by postwar fine-tuners would generate macroeconomic
instability, and that the War on Poverty would never lower poverty rates significantly.
In retrospect, he was correct on both accounts. Further, he proposed high consumption
and an employer of last resort policy as essential ingredients of any coherent
strategy for achieving macro stability and poverty elimination. This paper summarizes
Minsky’s work in this area, focusing on his writings from the early 1960s
through the early 1970s in order to explore the path not taken.