Kindleberger, Charles Poor

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Kindleberger, Charles Poor 1910-1993

Charles Kindelberger’s career unfolded in three distinct phases: public service; university teaching; and postretirement scholarship. A native New Yorker, he entered Columbia University’s doctoral program in 1932 near the bottom of the Great Depression. His first employers were the U.S. Treasury and the Federal Reserve. As World War II approached, he moved to the Bank for International Settlements in Switzerland, returning to Washington in 1940. After Pearl Harbor, he served with the Office of Strategic Services (OSS) and the U.S. Army in Europe. An unpretentious man of Kantian moral standards, he was overjoyed to have played an important role at the State Department in establishing the Marshall Plan for European Recovery. Kindleberger moved to the Massachusetts Institute of Technology in 1948, where he remained until he retired in 1976. In response to the warmth, wit, and wisdom he showered on students and colleagues alike, he was universally known as “Charlie” or “cpk.”

Kindleberger enjoyed contrasting his expertise in old-fashioned “literary economics” with the more-circumscribed “technical economics” practiced by his colleagues and graduate students. The belief that he could help government policymakers avoid a repeat of signal economic disasters served as the cornerstone of his sixty-year professional life.

Unlike most of his contemporaries, Kindleberger made his mark through books, words, and index cards rather than with articles, equations, and datasets. His curiosity, energy, and vision overspread not only the page limits enforced by journal editors, but the narrow taxonomy of problem areas and research paradigms recognized in modern economics.

His teaching and research in international economics embraced the idea that nations, exchange-rate regimes, and technologies had ineluctable life cycles. His efforts to document these cycles spilled increasingly into what he teasingly renamed “historical economics.”

The transition became clear in 1964 with the publication of Economic Growth in France and Britain: 1851–1950, but reached full flower only after his retirement. Kindleberger saw himself not as doing history, but as using “historical episodes to test economic models for their generality” (Kindleberger 1990, p. 3). His research method was to read everything he could find on a subject and then to turn what he had learned into a coherent explanation of things. The eclectic syntheticizations this method produced challenged the methodological foundations of both financial history (The World in Depression, 1929–1939, 1973) and mainstream finance (Manias, Panics, and Crashes: A History of Financial Crises, 1978).

Both books portray financial institutions and markets as so volatile and prone to crisis that they must be stabilized by government. The World in Depression, 1929–1939 developed the thesis that the instability of national economies between the wars was a global problem that was enabled to spread by the absence of a dominant nation-state (a “hegemon”) willing and able to act as an international lender of last resort. Manias, Panics, and Crashes sought to refute the widely held hypothesis that participants in financial markets process information rationally.

These studies stand out from Kindleberger’s other twenty-eight books in the size, heat, and durability of the controversies they produced. On one side of the debate, opponents in political science and finance dispute the empirical applicability of his models of irrational actors and breakdown-prone markets and institutions. Many of these critics see government action as more likely to spawn or exacerbate institutional and market failures than to prevent or mitigate them. On the other side, Kindleberger attracted many followers and is remembered as a founding father of the fields of hegemonic stability and behavioral finance. He spent his last years energetically preparing new editions that answered specific critics and applied his models to additional episodes.