Stagnation and Social Structures of Accumulation

>> This is a draft of a chapter that will be published in the forthcoming book, The Handbook of Economic Stagnation, edited by Randall Wray and Flavia Dantas.

The recovery from the financial crisis and Great Recession of 2008-09 has been sluggish in the United States and more so in a number of other developed countries. This has given rise to a literature about possible secular stagnation. This paper proposes an approach to explaining the current stagnation that differs from that found in the existing literature. We argue that the current stagnation stems from the effect of the evolving institutional structure of the economy on long-run macroeconomic performance. This explanation for the current stagnation is based on the social structure of accumulation (SSA) theory

First, we offer an explanation of the social structure of accumulation (SSA) theory and draw some implications from SSA theory about the cause of long-run stagnations. Next, we present historical data about SSAs in U.S. history and economic performance. Then we present an argument that the institutional form of capitalism that emerged in the U.S. around 1980, referred to as free-market, or neoliberal, capitalism, can explain the stagnation since 2009. We will show that the character of the last several decades of relatively stable economic expansion prior to 2008 as well as the outbreak of the financial crisis and Great Recession — and the stagnation that has followed – all derive from the working, and the evolution over time, of the neoliberal form of capitalism. Finally, we present empirical evidence for the claim that institutional factors underlie the current stagnation by focusing on the relations among an SSA, the rate of capital accumulation, and the rate of profit.