Stagnation

Abstract

As far as modern experience is concerned, stagnation is linked to the decade of the 1930s when accumulation in the US practically ceased. The concept of stagnation as the inevitable fate of capitalism, however, is as old as classical economics; only its motivation has not always been the same. The source or inspiration of the idea may be traced to various lines of thought. They are, first, historical: it is known that a number of civilizations stagnated, decayed and perished. Some philosophers, among them Oswald Spengler (1923), believed in a general pattern of creative phase followed by decadence in all civilizations. The knowledge that, in the past, civilizations have decayed must have had an influence on speculation about the future of our society. The second source is biological: in analogy to the organic world, societies are seen to age. Growth is followed by stagnation and finally decay. This underlies the term ‘maturity’ (Hansen 1938), used for a society which has reached the end of its growth phase. There are two different interpretations of the process of ageing. One refers to the gradual exhaustion of natural resources. This covers the ideas of the classics who anticipated a scarcity of land in relation to the growing population as well as the modern ideas about the limits of growth determined by the exhaustion of fossile resources of energy or of the healthy environment. The alternative interpretation of ageing is social. With the evolution of capitalism it is seen to pass from its competitive to its monopolistic (and imperialistic) phase. The pioneers of this outlook have been Hilferding (1910) and Luxemburg (1913) with their affirmation of the existence of a new phase of capitalism, characterized by monopoly elements and by imperialism. The elaboration of a theory of stagnation on this basis has been possible only after Kalecki and Keynes had provided the analytical tools in the form of a consistent theory of effective demand.