Farm Debt and Financial Instability

Abstract

In the 1980s American farmers have found themselves under great financial stress. Low crop prices and large accumulations of debt have forced many farmers out of business and have forced others to the brink of failure. This dissertation looks at the current stress in agriculture, not only as a description but as a pattern that fits a larger pattern in capitalism. That pattern has been put forward as the "financial instability hypothesis" of Hyman Minsky. The current crisis in agriculture has its roots in the transformation that agriculture underwent during the post World War Two period. American agriculture was transformed from a labor intensive system which was largely dependent on inputs produced on the farm, to a capital and petroleum intensive system. This transformation left an agriculture that was susceptible to the pressures that Minsky outlines. The evidence of this susceptibility was shown in the 1970s and 1980s.