The Nature of Capitalism and Secular Stagnation

McCloskey, Lazonick, Despin, and Shaikh (I'm covered)

The joint AEA/URPE session was very lively, but suffered from the last minute absence of Brad DeLong. He did send the notes of what he was going to discuss here. On the topic of stagnation per se only Hans Despin suggested that it was an important phenomenon, but not necessarily for the same reasons Larry Summers and Brad De Long. It was unclear to me, however, that his views were based on a demand side story, and, hence, that this was more like Steindl would call it a question of stagnation policy. All the others, for different reasons were against the idea of secular stagnation.

Deirdre McCloskey, who said she was an Austrian economist (and no, that doesn't make her heterodox, just a different version of the orthodox marginalist approach), argued vigorously against it. I was a bit surprised that nobody pushed back on her explanation of growth as based on ideas, and the notion that the movement of the marginal productivity of capital (that she drew in an imaginary blackboard as being downward sloping) to the right is what explains improved livings standards. I mean I agree that capital accumulation does not explain growth (it's the other way round, growth of demand explains capital accumulation, but nobody there believed in that, other than me, and I was just the moderator), but at this point the notion of downward MPK curves should receive more criticism among heterodox economists.

Lazonick and Shaikh had more to debate on the nature of capitalism, in particular with McCloskey, and the reasons for technological innovation, with both emphasizing the role of the state in promoting technical change, rather than the idea of the innovator as a superhero.

PS: I was going to film it, but the memory card jammed, and in spite of all the technological advancement, we're left only with oral history.


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