3
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.