Commentary on Political Economy

Sunday 14 May 2017

Theoretical Reflections on the Concept of “Secular Stagnation”

The notion of “secular stagnation” – made famous initially by Alvin Hansen when the Great Depression was in full swing in the 1930s – refers to the secular – that is to say, constant and irremediable, in the course of time – decline of “the natural rate of interest”. There are two elements that immediately leap to our attention when considering these twin notions: the first is that secular stagnation refers to the inevitable decline of the “natural rate of interest”; and the second is that therefore the “natural rate of interest” is not “natural” merely in the sense that it is set and determined by involuntary factors beyond human control – natural in the sense of “automatic” – but also that the natural rate of interest is “natural” in the sense that the economic organism to which it applies is subject to a physiological or organic process of stagnation that resembles the ageing of an organism that is unstoppable. This would seem to bring the operation of economies, and therefore also of economics as a “science”, closer to the study of a biological process rather than a purely mechanical-quantitative one. The old notion of Classical and Neo-Classical Political Economy that located the scientific kernel of “economic science” in the determination of Value and in its distribution among various “factors of production” – this notion seems to be outflanked and entirely superseded by that of “the natural rate of interest” when it is tied to that of “secular stagnation”.

In both Classical and Neo-Classical Political Economy there simply was no room for notions such as “secular stagnation”, though there certainly was an implicit notion of a “natural rate of interest”, that is, a rate of profit “naturally” corresponding to a given type of economy. The concept of secular stagnation goes beyond Wicksell’s initial formulation of the natural rate of interest in the sense that for the first time the problem of economic science is no longer that of the distribution of Value or indeed of the growth of Value (its production) which up until now had seemed to be a “natural” aspect of capitalist production. With the notion of “secular stagnation” for the first time bourgeois economic “science”, and thus the bourgeoisie itself, seems to be coming to terms with the “decline” of its system of production, capitalism, which it now sees as inevitable to the degree that it is “secular”. At the same time, with this notion the bourgeoisie tries to shift the blame for the decline of its system of production and of its political regime to a “natural” and “organic” process – a process akin to that of the “ageing of an organism”.

In other words, whereas in the heyday of bourgeois capitalist development the focus of orthodox bourgeois “economic science” was to determine the “natural” mechanism for the production and above all the distribution of Value – now suddenly bourgeois economic science becomes aware of the inevitable, unstoppable decline of capitalist production…and quite possibly even of the demise,of this system of production – and with it, surely, also the extinction of the bourgeoisie itself. For once, the usually triumphant bourgeoisie becomes aware and wary of its ultimate mortality!

Hence, not only is the bourgeoisie aware of its system of vertiginously and intolerably destructive production (the oxymoron is a slap in the face for Schumpeter’s “creative destruction”), but yet it also seeks profligately to deflect responsibility for this onto some “natural” process of decay – without examining the causes of this degeneration and indeed the reasons behind the fact that “economic science” can no longer be an objective impersonal and disembodied, neutral-technical study but must rather concentrate on the ways in which distorted human social relations of production have as their ultimate deleterious effect the destruction of the environment in which humans necessarily operate – the destruction of the ecosphere.

No comments:

Post a Comment