Full text: Stagnation.

In a somewhat modified form it is this theory, in essence, 
which has been used by H.Grossmann ( 1929) to demonstrate 
the necessity of breakdown of capitalism. It should be 
noted here that breakdown and stagnation are not the same 
thing. Stagnation involves breakdown if it is assumed 
a) that the capitalist system cannot exist without growth, 
and b) that it is impossible, in the long run, to overcome 
stagnation by adequate economic policies. Many Keynesians 
will readily accept the truth of the first condition, 
but the second can not so easily be demonstrated on purely 
economic grounds, and discussion of it tends to shift 
to the political and sociological plane. 
In opposition to the stagnation theories Schumpeter ( 1939) 
appealed to the concept of long waves to explain the 
great depression of the 1930s: It was so exceptionally 
severe, he maintained, because the trough of the trade cycle 
coincided with the trough of the Kondratieff cycle. 
This leaves some open questions. The empirical evidence 
for long cycles is limited and refers mainly to price 
rather than volume series. There is little theory behind 
the long wave. A.Hansen (1938) linked it to dominant 
innovations ( railway, motor car ). More recently 
Freeman and Soete (1982) interpreted it as a succession 
of product innovations and process innovations, the ones 
resulting from the others. 
In the following a number of authors will be reviewed 
whose ideas on stagnation are closely related. They 
were all influenced by Keynes or Kalecki. In fact, there 
are occasional glimpses of stagnation in the General 
Theory and more so in Joan Robinsonfe work.

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