The Ghost of Paul Sweezy

By Stephen Gowans

Reading Paul Krugman’s New York Times column today, A Permanent Slump?, I couldn’t help but get the feeling that the IMF, Larry Summers and Paul Krugman, had belatedly discovered an idea that Paul Sweezy, a Marxist economist who died in 2004, had elaborated on decades ago, namely that stagnation is the normal state of contemporary capitalist economies.

Krugman writes,

…the case for “secular stagnation” — a persistent state in which a depressed economy is the norm, with episodes of full employment few and far between — was made forcefully recently at the most ultrarespectable of venues, the I.M.F.’s big annual research conference. And the person making that case was none other than Larry Summers. Yes, that Larry Summers.

Summers is a Harvard economist whose career has included stints as chief economist of the World Bank, US Secretary of the Treasury and chief economic adviser to US president Barack Obama.

Krugman paraphrases Summers:

We have, he suggested, an economy whose normal condition is one of inadequate demand — of at least mild depression — and which only gets anywhere close to full employment when it is being buoyed by bubbles.

The idea that financial bubbles have counteracted the economy’s slide into permanent stagnation was also explored by Sweezy. But he cited other countervailing effects, too, including military spending, and in the post-war period, pent-up demand and the building of the interstate highway system, with its concomitant boom in the construction of the suburbs and expansion of the automobile industry.

Krugman concludes that “the evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing.”

Sweezy, I think, would have agreed, but added that the tendency to stagnation is hardly new, but has been an enduring characteristic of contemporary capitalist economies, traceable to their internal logic.

4 thoughts on “The Ghost of Paul Sweezy

  1. so
    if one could describe the late USSR as a state capitalist system
    it is not surprising (??) that the rapidly growing Soviet economy stagnated early
    especially given the stagnation promoting characteristic of the Soviet economy – mainly relatively low circulation of money due to state subsidization

  2. Larry Summers is a member of the David Rockefeller chaired and founded Trilateral Commission and (on the Steering Committee of) the Bilderberg Group.

    Click to access TC_list_1-13(1).pdf

    The Rockefeller family founded what are now ExxonMobil, Chevron, Philips 66 (all from the Standard Oil Trust, founded by JD Rockefeller sr.), JPMorgan Chase (Chase National Bank founded by JD Rockefeller jr.).

    That’s why it is so difficult to get off oil, why we are fighting over the dominance of the southern oil supply route out of Saudi Arabia, etc.

    And study those lists – they are the real government of the planet.

  3. I’m not an economist, but I know something about cybernetics, from which point of view capitalist economies are in the main positive-feedback systems. (Them as has, gets, etc.) Undamped positive-feedback systems inevitably blow up. Damping may prevent the system from blowing up, but it can be damped at a very low level of activity and remain stable. Once it reaches this state it is likely to stay there unless it is significantly disturbed. In the case of a capitalist economy, that could occur as the result of war, natural disaster, or sudden technological innovation — or not. The damping forces, in the case of the economy sinkholes like waste, may be too strong. The Internet has been socially revolutionary but it does not seem to have altered the depressed economy much except for a couple of brief bubbles. Hence it seems to me that Krugie and the abominable Larry Summers are waking up to the obvious rather late in the game — I had this figured out decades ago, probably like a lot of other people. So, if we’re so smart, where’s our Nobel Prize?

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