Kindleberger

Kindleberger (pronounced khin-dil-berg-ah)

A family name of Germanic origin.

As “Kindleberger Moment” & “Kindleberger Trap”, two related terms describing different aspects from an underlying problem in international political economy and named after economist Professor Charles P. Kindleberger (1910-2003) whose writings inspired their coining.  Professor Kindleberger’s middle name was “Poor” and while that may seem more appropriate for a monk than an economist, it didn’t appear to hamper his career.

The surname Kindleberger is of German origin, functioning as a habitational or topographic name, the construct being Kind(l)- + -berg + -er.  Kind (kid, child, young person) was from the Middle High German kint, from the Old High German kind, from the Proto-West Germanic kind, from Proto-Germanic kindą & kinþą, from the primitive Indo-European ǵenh- (to give birth); there were many local dialect variations.  Berg (mountain, hill) was from the Middle High German bërc, from the Old High German bërg, from the Proto-West Germanic berg, ultimately from the Proto-Germanic bergaz; it may be compared with the Dutch berg, the German Low German Barg, Berg & Biärg, the West Frisian berch, the English berry & barrow, the Danish bjerg and the Swedish berg.  The –er suffix (in this context) was appended to indicate inhabitant or person from a specific locality.  The “-berg” element thus in general was used in the names of those living near a specific hill or a place named with those combined linguistic roots and Kindleberger would likely have began with someone who was the (probably male) offspring of someone named “Berg”, “Berger” or such.  As a compound surname, it may in some instances have referred not to individuals living near mountainous regions but those (likely female) who were known for their roles as caretakers of children; the etymological structure can indicate a connection between familial roles and the natural landscape.  The name dates from at least the Late Medieval period (when surnames became hereditary) and records of use exist in several German-speaking regions, clusters found concentrated in areas like the Rheinland-Pfalz (Rhineland-Palatinate) region that, while not characterized by alpine peaks, does have a topography noted for rolling hills, low mountain ranges, and deeply carved river valleys.  As internal migration increased (notably within the Holy Roman Empire), like many European surnames, variations like Kindleberger and Kindelberger spread and this occurred internationally during the nineteenth & twentieth centuries; outside of Europe, the Kindleberger name is most likely to be found in the states of the north-eastern US (the largest concentrations historically in West Virginia, Ohio & Pennsylvania).  Kindleberger is a proper noun; the noun plural is Kindlebergers.

A red meteor observed by US-born astronomer Stephen James O'Meara (b 1956) in the skies above Maun, Botswana.

Asteroid 42354 Kindleberger was named after the professor.  Originally listed by the International Dark Sky Discovery Center in Fountain Hills, Arizona on 12 February, 2002 (and provisionally allocated ID 2002 CK43), it was discovered by Charles Juels (1944–2009) and Paulo Holvorcem (b 1967), both amateur astronomers.  Paulo Holvorcem (b 1967) is a mathematician based in Brasília (one of a handful of “created” capital cities), Brazil while Charles Juels (1944–2009) was a US psychiatrist practicing in Phoenix, Arizona; after retirement, he became one of the planet’s most prolific discoverers of asteroids, minor planets and such.  The naming conventions administered by the IAU (International Astronomical Union) permit those who discover minor planets to submit potential names, once the orbit officially is confirmed.  Professor Kindleberger was honoured in recognition both of his academic contributions to the discipline of economics and the role his books (especially Manias, Panics, and Crashes: A History of Financial Crises (1978) played in explaining such phenomena to a non-specialist audience.  The choice (within certain limitations) is in the hands of the discoverer(s) and other economists have had asteroids named after them.  Red-tailed asteroids are rare but do exist, 3200 Phaethon's (provisionally 1983 TB) vivid tail made of sodium vaporized from the rock by the heat of the Sun, inducing  fluoresce an orange glow.  Definitely the next red-tailed asteroid should be named after Lindsay Lohan.

The World in Depression, 1929-1939 (1973) by Charles P. Kindleberger.

A “Kindleberger Moment” is a critical point in global history when the world’s dominant power (of late typically a hegemon) ceases providing economic leadership and no other country is able or willing to assume the role.  MIT (Massachusetts Institute of Technology) Professor of Economics Charles P. Kindleberger illustrated the concept during his study of the Great Depression of the 1930s, arguing the global economy “crashed” (ie suffered a significant decline in economic activity, employment, trade etc) because (1) the economy of the previously dominant power (the UK) had been too weakened by the First World War (1914-1918) to be able to provide the necessary leadership and corrective mechanisms and (2) the rising power (the US) was both also greatly affected by the downturn and anyway uninterested in becoming entangled in international affairs.  A Kindleberger moment can be considered a “global power vacuum”, the previous leader withdrawing from maintaining and contributing to global rules, trade agreements, and international organizations with no successor available.  At such moments, competing rising new powers tend to focus only on their own interests instead of supporting global stability, meaning the international system faces heightened risks of financial collapse, trade wars, political instability and related chaos (mass irregular migration, border conflicts etc).  Of late, there has been renewed interest in the Kindleberger moment as doubts have been raised about the ability of the US to continue in the rule it has fulfilled since 1945 at a time when the PRC (People’s Republic of China, 1949-) is becoming increasing powerful and assertive but has neither the capacity nor (apparently) the inclination to be the world’s “indispensable nation” (ie “global policeman and banker”).

Professor Kindleberger in his office at MIT, Cambridge, Massachusetts.

As an economist discussing the smooth operation of the international economy, Kindleberger didn’t attach to the concept of “hegemon” the negative connotations vested famously by the Italian Marxist theorist Antonio Gramsci (1891-1937) who had used to idea in a predictably Marxist way (of a “ruling class & ruling culture” able within a society to exert control and maintain power for its own economic benefit).  For Kindleberger, a hegemonic power was a highly desirable element in an inter-connected world economy that in the absence of such an authority would inevitably descent into conflicts that likely would spread.  A Kindleberger moment occurs when there’s hegemonic absence (or even significant deficit) in which the international system lacks a power willing and able to supply essential stabilising functions including:

(1) Maintaining an international trading system in which markets were free, open and transparent.

(2) Providing a system in which international capital flows were regulated to the extent of ensuring stability.

(3) Maintaining a stable monetary system by providing a stable, convertible reserve currency, able to be used by trading nations.

(4) Acting as a lender of last resort.

(5) Coordinating international responses to economic and other crises.

The related “Kindleberger Trap” (a term dating only from 2017) describes the structural dilemma that can arise from the world entering a “Kindleberger Moment”.  Were there always a nice symmetry in that as one power withdrew from the role, another took over on a “business as usual” basis, it would be a smoothly run world but in international relations things tend to be more messy and depending on the dynamics, things can take decades or even centuries to be resolved (for better or worse).  As a rising power acquires sufficient economic, military and geopolitical weight, it might be expected to contribute to maintaining the international order (from which, by definition, it has gained that strength) at a time when the established hegemon simultaneously is reducing its capacity or willingness to carry the burden but history suggests conflict is more likely than cooperation.  The twist in the “Kindleberger Moment” theory is that in a situation where the existing hegemon is in decline but the rising power is unwilling or unable to assume the role, a “trap” begins to open.  That trap is created by the rising power “probing” often regional weaknesses in the hegemon’s strategic architecture and the response to that often is localized tactical violence (often called “containment”), something that can exacerbate the decline of the authority of the established power while doing little to curb (and likely even encourage) the assertiveness of the rival.  Once the hegemon is so engaged, the trap has closed and the point is the “trap” is likely a process rather than a singer decisive event.  Deliberately the phrase echoed the better-known “Thucydides Trap” (the name from the Ancient Greek general & historian Thucydides (circa 460-circa 400 BC)). Describing the idea that when a rising power threatens to supplant the established one, the result is often war (pre-emptive or preventive depending on the spin chosen), either through a fear of being attacked or in an attempt to “contain the upstart”.  So, conceptually, a Kindleberger moment is the situation; the Kindleberger Trap is the recurring structural predicament that can lead to it.

Manias, Panics, and Crashes: A History of Financial Crises (1978) by Charles P. Kindleberger, fifty years on, still the standard work and now in its eighth edition (2023) and, there being no indication there'll not be more manias, panics, and crashes, a ninth edition can be expected, updated to document the latest crises.

The consensus among specialists seems to be the world is not at this point in a Kindleberger Moment because structurally the PRC is not yet able to assume the global role the US has evolved to fulfil since 1945.  These was nothing unique about the shift in 1945, just as the US replaced the UK, the UK had replaced the Netherlands, the Netherlands had replaced Spain and Spain had replaced various Italian city-states.  What however now makes the situation potentially unstable is that the PRC does not accept the existing US-led order, but is not only unable to replicate the global role but uninterested in doing so.  The PRC’s preferred model is “spheres of influence” on a grand scale administered on a “Westphalian basis” (ie non-interference in each other’s spheres).  In that, Beijing’s vision differs from spheres of influence approach during the Cold War in that the earlier model was one of conflict disguised as peaceful co-existence; the PRC’s regarding their mode; as beneficial for all.  Unlike those running the early Soviet Union (1922-1991), the CCP (Chinese Communist Party) has no interest in exporting its system of governance to other states; the lessons have been well-learned from the US attempting to “impose democracy” in places where historically it has never taken root.  The modern CCP does not wish to attempt to transform other places to clones of the PRC; what is wants is for them become good, reliable suppliers and consumers and whether they are run as democracies, theocracies or dictatorships is an “internal affair”.  What matters is peace, good order and a common system of “non-interference”.  The CCP’s collective view is not unknown in the annals of the US State Department, the diplomat and historian George Kennan (1904-2005) in one of his long (and mostly ignored) reports from Moscow in 1945 noting the US should “…remain true to its ideals but should not try to foist them on peoples with entirely different national traditions.”

Leviathan (1651) by Thomas Hobbes (1588-1679).  The etching used for the frontipiece of the original edition was by the French printmaker Abraham Bosse (circa 1604–1676) “with input from the author”.

The One comparison that can be made is between the notion a world hegemon is necessary for a generally stable world economy and the idea the very clever and deliciously wicked English philosopher Thomas Hobbes explored in Leviathan (1651): A strong sovereign (to whom individuals must cede certain “natural rights”) is essential for a peaceful, stable society.  Although striking, there are limitations to the extent the hegemon in Professor Kindleberger's model can be thought an international analogue of the grim vision in Leviathan; it is not a direct application of Hobbesian political theory.  Hobbes argued the fundamental problem in the “state of nature” (ie in which the earliest “societies” came to be formed) was the lack of a sufficiently powerful common authority to prevent individuals from pursuing their interests against one another.  In that model, because each person (at least theoretically) possesses roughly equal capacity to threaten others, rational individuals have an incentive to seek security by establishing a sovereign and one not there merely to coordinate but also with coercive power.  What the existence of a powerful sovereign offered was that in exchange for restrictions on individual freedom (at the most basic, not killing one’s opponents), collective security would be guaranteed.  Because all in the society would be subject to the same authority (and thus the same loss of certain freedoms) the arrangement would come to be accepted, if for no other reason than the alternative(s) being worse: “nasty, solitary, brutish and short” Hobbes’ memorable phrase.

Kindleberger's argument was developed in his book The World in Depression, 1929–1939 (1973) and concerned something analogous to what Hobbes described but at the international economic level.  His thesis was that (1) with an economy damaged by involvement in World War I and the consequent “difficulties” of the following decade, the UK was no longer able to provided the international economic leadership it had delivered before the war while (2) the US was unable or unwilling to assume the role.  With no stabilising hegemon, nations resorted to acting in short-term self interest, leading to reductions in trade, wealth and employment; Professor Kindleberger's key insight was that whatever their granular nature, in international economics these things must be thought public goods but, of course, individual countries each had incentives to have others bear the cost of maintaining them, thus the famous “Kindleberger Problem”: Who pays for the system?  That the UK was not prepared to go deeper into debt and the US preferred to focus on its own problems he held to be the major factors that made what might have been a sharp but relatively short recession into the Great Depression of the 1930s.  It was the leadership vacuum that created the conditions leading to the collapse of the international economic order.

The limitation in pursuing the analogy is of course that neither the UK in the nineteenth century nor the US since 1945 were the sovereign of the international system in the Hobbesian sense; Hobbes’ sovereign had juridical and coercive supremacy over subjects while the international hegemon does not because, although in the modern age state sovereignty is no longer the fabulous beast it was once claimed to be, individual nations remain still independent with some (though much varied) capacity to resist a hegemon.  In other words, Kindleberger's hegemon can help to provide order through preponderance in economic, political and political capabilities whereas the Hobbesian sovereign, within their territory, enjoyed absolute authority.  So the problems can be seen as similar but the solutions differ, Hobbes describing a rigid hierarchy and Kindleberger a leadership that administers anarchy by making it “managed chaos”.

US National Debt: US$40 trillion by August 2026.

All the history and economic theory is of course of interest but of immediate concern is (1) whether a Kindleberger moment is to hand (protagonist and antagonist being the US and PRC) and (2) whether the consequences of soch a moment will be economic disruption (of unknown extent or duration) or armed conflict (of unknown extent or duration).  The world is in a most unusual situation in that although the US continues of operate as hegemon, debatably it shouldn’t be able to because of its US$40 trillion debt (about 123% of GDP (gross domestic product)) and other problems.  While it’s true US debt was nudging 120% immediately after World War II (1939-1945), the US position at that time (vis-à-vis the rest of the planet) was unique and the debt trend was downwards whereas now it’s upwards.  There are those who argue things have changed and the US$40 trillion number is no longer an expression of “debt” in the conventional sense of the word but merely a way of describing the “new” mechanism of managing the US money supply.  The notion the US Treasury could at any time mint a single US$40 trillion coin, add it to the balance sheet and declare a net-debt free status has been offered as one example of why “deficits don’t matter” and while not all accept that, just about the whole world is now dependent on the US sustaining the existing system with this ever-growing debt so, in the absence of another country (or “demi-country” such as the EU (European Union (1993)), the multi-national aggregation which evolved from the EEC (European Economic Community), the Zollverein formed in 1957)) able and willing to fulfil the role of hegemon, the world economy and the US remain engaged in what some fear is a kind of economic danse macabre and there seems no way to use the numbers to predict if it's a debt level of US$50, 75, or 100 trillion that risks triggering a crisis.

Presidents Xi (left) and Trump (right).  With sufficient (1) goodwill or (2) amorality, the art of the deal can be done.  With enough of the latter, the former may one day emerge.

Of course the ultimate wild card (others might prefer “joker”) is that Donald Trump (b 1946; POTUS 2017-2021 and since 2025) is in the White House and while his idiosyncratic methods of governance intrigue political junkies, so marvellously unpredictable are his actions that it’s hard to map onto the dynamics a well understood concept like the Kindleberger Moment.  At heart a CEO (chief executive officer) rather than a democrat operating within constitutional norms, it’s suspected that left to his own devices, Mr Trump would sit down at the map table with comrade Xi Jinping (b 1953; General Secretary of the CCP and paramount leader of the PRC (People's Republic of China) since 2012) and divide up their respective spheres of influence.  Like Mr Trump who wants as little as possible to do with the internal affairs of America’s suppliers and customers (ie other countries), Mr Xi has no wish to waste effort or resources on “pointless squabbles” and not since a couple of horse-traders like Winston Churchill (1875-1965; UK prime-minister 1940-1945 & 1951-1955) & comrade Stalin (1878-1953; Soviet leader 1924-1953), needing nothing more, than pencil, paper and limitless cynicism divided up the Balkans into bite-sized spheres have two great powers been headed by a pair as suited to “doing the art of the deal”.  Of course, for those in places like the “renegade province of Taiwan”, there would be a cost but as at was demonstrated at the Yalta Conference (February 1945), somebody “always has to pay the price” and that may be a better trap to spring than risking the jaws of a Kindleberger Trap.