Category: Innovation

Secular Stagnation: Short-term Fixes for Long-term Problems

Rahul Menon1 Comment

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The concept of secular stagnation, first propounded by Alvin Hansen in the 1930s, has enjoyed an academic 鈥� and mainstream 鈥� resurrection thanks to Lawrence Summers (2014, 2016), who first advanced the theory as an explanation for the subdued recovery and anaemic growth prospects of advanced economies. A surprising criticism recently came from (August, 2018), who believes that the theory offers a convenient escape away from assuming responsibility for failed policy during the crisis. 听An acrimonious debate between followed. 听

On the face of it, Summers 鈥� and 鈥� are right: the modern theory of secular stagnation does see a central and substantial role for fiscal policy. The problem, however, lies in the fact that a short-term fix for aggregate demand shortfalls 鈥� fiscal policy 鈥� is being advanced as a long-term solution of the problem of reduced growth prospects. The central question of what drives investment in a capitalist economy is not addressed.Read More »

Towards a better understanding of convergence and divergence: or, how the present EU strategy 鈥� at the expense of the economic periphery – neglects the theories that once made Europe successful

Erik ReinertLeave a comment

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This new working paper attempts to address some of the main problems of the European Union today. The main thesis is that the Weltanschauung and the economic narrative on which the European project has been based have changed radically since the inception of the European Project, from one conducive to convergence and cohesion to another which is conducive to divergence and, in the last instance 鈥� I shall argue 鈥� to a form of internal colonialism towards the economic periphery.

The field of Science and Technology employs the term sociotechnical imaginary [1] about the collective narratives and visions of social futures and of the common good. I shall argue that the European Union has moved away from the sociotechnical imaginary, or narrative, that dominated after World War II. I shall argue that this post WW II Marshall Plan Narrative (MPN) gave way to an equilibrium-based Neo-Classical Economics Narrative with an added innovation rhetoric, which I shall argue is based on a fairly shallow understanding of innovation (which I shall call NC+I).Read More »