“What is Stagnation?” in Robert Cherry, et. al., eds. The Imperiled Economy: Macroeconomics from a Left Perspective (New York: Union for Radical Political Economics, 1987), pp. 59-70. [PDF]
For a majority of mainstream and radical economists, the answer to the question “What is Stagnation”? is fairly simple and straightforward and devoid of any real theoretical significance in and of itself. Either it is seen as a period of longer and deeper than average recessions, or it stands for a long-cycle downturn, which will be followedmore or less automatically, after some 25 years duration, by a long-cycle upturn. However, in the case of most of those thinkers on the left who continue to emphasize theprimacy of demand- side constraints on the accumulation process in “the present as history,” the search for an answer to the above question is nothing less than an attempt toaddress the central contradiction of the mature monopoly capitalist system.
The purpose of this article is to uncover the complex historical logic through which the phenomenon of stagnation is manifested in modern capitalism , as explained in the work of such radical demand-side theorists as Michal Kalecki, Josef Steindl, Paul Baran, Paul Sweezy and Harry Magdoff. Beginning with the reasons why a condition of stagnation (the main traits of which are widening underemployment, stop-and-start investment and slow growth) has come to represent the normal trend-line of the modem economy around which the recurrent fluctuations of the business cycle occur, the analysis will then shift to a consideration of the various self-limiting forces that sparked the expansionary wave of the 1960s; and how a waning of these forces, or of their positive effects, has led in the 1970s and 1980s to a resurfacing of stagnation and a doubling-over of economiccontradictions. The seriousness of the multi-layered crisis that emerges from such a conception of political economic evolution, will then be contrasted, in the conclusion, to the relative complacency engendered by the dominant supply-side strategy for the renewal of American capitalism.