Does this sound familiar? \u00a0Falling commodity prices, unsustainable official debts, crashing stock markets, pullback in global lending by dominant megabanks, misaligned currencies, plus a healthy dose of political dysfunction.<\/p>\n
These are the ingredients, according to Charles Kindleberger, that made for world depression in 1929-1939. \u00a0“My contention is that the difficulty lay in considerable latent instability in the system and the absence of a stabilizer…In 1929, 1930, and 1931 Britain could not act as a stabilizer, and the United States would not. \u00a0When every country turned to protect its national private interest, the world public interest went down the drain, and with it the private interests of all.” (The World in Depression<\/em>, 1986, p. 290-1).<\/p>\n First published in 1973, as the postwar Bretton Woods system lay in shambles, the book reads as Kindleberger’s attempt to sound the alarm before it was too late. \u00a0To him, the world’s embrace of floating exchange rates represented abandonment of efforts to rebuild the world economy after WWII, most irresponsibly by the United States itself. \u00a0The last time that happened, after WWI, world depression was the result; the stakes in 1973 could not have been higher.<\/p>\n Reissued in revised form in 1986, after Kindleberger’s surprise election as President of the American Economics Association gave him a platform, the revised book reads as Kindleberger’s attempt to sound a different alarm, this time about the state of economic science. \u00a0Notwithstanding his emeritus status at MIT, in 1986 Kindleberger found himself on the “fringes” (p. xxi) of a profession whose discourse had long been dominated by the war between the monetarists and the Keynesians. \u00a0His book constitutes a plea for a third way, an older way of doing economics, the way that his teachers at Columbia University and then the Federal Reserve Bank of New York had done economics in the 1930s. \u00a0All of the teachers who make an appearance in his official autobiography (The Life of an Economist<\/em> 1991), make their appearance first in this quasi-autobiographical account of the Great Depression: \u00a0James Angell, Wesley Clair Mitchell, Henry P. Willis, John H. Williams, even Ralph Robey.<\/p>\n Kindleberger writes, he says, to establish “the general conclusion that the conventional wisdom of the period was not as wrong as most modern economists believe in its concern with the dangers of speculation, the necessity to raise prices, the desirability of lowering tariffs, and the need to stabilize exchange rates” (p. 11). \u00a0\u00a0 Not only were they substantially right on the substance, but also they were substantially right in the way they did monetary economics.<\/p>\n