Global Stagnation and a Comparative Analysis of Economic Stagnation Theories


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Akcoraoglu A.

SOSYOEKONOMI, vol.26, no.35, pp.87-118, 2018 (Journal Indexed in ESCI) identifier

  • Publication Type: Article / Article
  • Volume: 26 Issue: 35
  • Publication Date: 2018
  • Doi Number: 10.17233/sosyoekonomi.303226
  • Title of Journal : SOSYOEKONOMI
  • Page Numbers: pp.87-118

Abstract

This article explores one of the most significant problems of contemporary global capitalism, namely 'secular stagnation', in the light of theories of the three different schools of economic thought (Neo-classical, Post-Keynesian and Radical Political Economy). In the age of stagnation, the ability of global capitalist system to maintain its stability and survival has declined significantly. The long-run stagnation has weakened the consensus among social classes, leading to a 'political crisis' and an increasing authoritarian tendency in contemporary capitalism. This paper divides modern orthodox theoretical explanations of stagnation into three categories: demand-sided theories (Summers/Krugman), supply-sided ones (Gordon) and theories denying the existence of stagnation (Bernanke & Rogoff). Although some leading orthodox economists accept that there has been a strong tendency of stagnation in advanced capitalist world since the start of this century, they neither consider stagnation to be a consequence of capitalist accumulation process nor one of neo-liberal variant of capitalism. In contrast, analyzing stagnation from a wider perspective with historical, social and political dimensions, heterodox theories have stronger theoretical foundations than those of orthodox theories. While Post-Keynesians argue that stagnation stems from structural/chronic demand deficiency caused by neo-liberalism enhancing income inequalities, radical political economists emphasize that stagnation is a 'systemic' problem inherent to monopoly, mature capitalism.