In 2013, L. Summer brought back the discussion of secular stagnation which has first been introduced by Hansen and Keynes (late 1930s). Summer argues that presently western economies may be facing a such a stagnation (long term stagnation) triggered by the financial crisis and enhanced by decreasing population, shrinking investments and productivity gains, excess of saving, insufficient demand. The proponents suggest income redistribution, negative interests, public investments and hence debts, unconventional monetary policy (strong expansion of the money supply), abolishment of cash, and they consider bubbles a means to spark the economy.
Other economists start to talk of “new normal” and mean a situation with little growth (minimal growth) which, however, should be overcome as much and fast as possible through improving the offer side, i.e. low taxes, deregulation, privatisation but also by boosting the demand side.
These concepts however, hardly capture the economic and societal dynamics behind the present situation, they ignore the environmental limits and the growth criticism. Yet, also the degrowth and post growth debate are hardly aware of two above introduced concepts though being acquainted with would help to better understand present economic policies and to criticize the mainstream explanations that just delay necessary adaptations.
In our presentation we will introduce and discuss the concepts of secular stagnation and new normal, we will contrast them with explanations of the present economic and societal crisis by degrowth and post growth proponents, and we will draw conclusions regarding topics to be raised and discussed by growth critics.
This media entry was a contribution to the special session „Secular stagnation, new normal, and growth criticism “ at the 5th International Degrowth Conference in Budapest in 2016.