On Sun, Nov 16, 2025 at 10:53 AM, Michael Meeropol wrote: > > Hell, even a mainstream guy like Larry Summers revisited the secular > stagnation idea in the last decade --- but of course he never mentioned > Baran or Sweezy!
For the fun of it, I asked ChatGPT to do a comparison of the views of Larry Summers concerning secular stagnation with those of the Monthly Review school. This is what it came up with. -------------------------------------------------------------------------- ****************************************************** *1. Basic Diagnosis: Similar Symptom, Different Cause* ****************************************************** Both Summers and Monthly Review agree that *advanced capitalism tends toward chronic stagnation* —slow growth, weak investment, excess saving, and an inability of monetary policy alone to restore strong demand. But they disagree dramatically on why stagnation occurs. ****************************************** *2. Summers’s View (Mainstream Keynesian)* ****************************************** Summers sees secular stagnation as caused by *structural imbalances inside modern capitalism* , leading to: * Excess saving (because of aging, inequality, global savings glut, etc.) * Weak investment (low demand, low population growth, tech not requiring much capital) * A natural interest rate below zero → monetary policy impotence His framework remains *within neoclassical-Keynesian macro* : markets can function, but structural factors distort them; if the natural interest rate could fall enough, demand would rebalance. That rate is stuck above its equilibrium because of the zero-lower-bound. *Prescription:* More public investment, bigger deficits, higher inflation targets, and stronger demand-side management. **************************************************************** *3. Monthly Review’s Stagnation Theory (Baran–Sweezy Tradition)* **************************************************************** Paul Baran and Paul Sweezy, beginning with Monopoly Capital (1966), and later Harry Magdoff, John Bellamy Foster, etc., developed a much deeper structural theory: *A. The core problem is not savings–investment mismatch* -------------------------------------------------------- Instead: *mature monopoly capitalism tends toward chronic overaccumulation* and insufficient productive investment opportunities. *B. Monopoly capitalism generates more surplus than can be profitably absorbed* ------------------------------------------------------------------------------- * Large oligopolistic corporations accumulate enormous surplus. * They cannot profitably reinvest most of it in expanding production due to: * Saturated markets * Slower population growth * Inequality suppressing mass consumption * Technological change reducing labor inputs * Oligopoly reducing competitive drive to expand capacity So *surplus must be absorbed artificially*. *C. The system is propped up by “surplus-absorbing” mechanisms* --------------------------------------------------------------- These include: * Military spending * Civilian government spending * Financialization * Suburbanization * Advertising and sales effort * Consumer debt * Global exploitation of the periphery These mechanisms are *necessary to prevent stagnation* , not incidental. *D. Without these props, capitalism naturally tends toward stagnation* ---------------------------------------------------------------------- This stagnation is not episodic or cyclical—it is the ”normal” tendency of mature capitalism in the Monthly Review view. *Prescription:* Only *systemic transformation* can overcome stagnation—redistribution, public ownership, or a socialist reorganization of the economy. ******************************* *4. Key Differences Summarized* ******************************* ---------------- *(A) Root Cause* ---------------- Summers: -------- “Neutral interest rate below zero” → demand shortfall. Structural savings–investment imbalance. Monthly Review: --------------- Monopoly capitalism generates an *inherently unabsorbable surplus*. Overaccumulation and insufficient profitable investment outlets. ------------------------ *(B) Role of Inequality* ------------------------ Summers: -------- Inequality increases savings of the rich → lowers interest rates → weak demand. Monthly Review: --------------- Inequality is a structural outcome of monopoly capitalism, and it systematically depresses mass consumption and reinvestment opportunities. -------------------------- *(C) Role of Corporations* -------------------------- Summers: -------- Firms invest little because population growth is slow and tech requires less capital. Monthly Review: --------------- Corporations invest little because global oligopoly reduces competitive pressure, creates excess capacity, and channels surplus into *finance, marketing, and speculation* rather than productive investment. ---------------------- *(D) Financialization* ---------------------- Summers: -------- Financial bubbles are symptoms of low interest rates and weak investment demand. Monthly Review: --------------- Financialization is a *structural response of monopoly capital* to chronic stagnation—an institutionalized method for absorbing surplus and sustaining accumulation. For MR theorists, financialization is not a temporary deviation but a central stage of contemporary capitalism. ---------------------- *(E) Policy Solutions* ---------------------- Summers: -------- * Fiscal stimulus * Higher inflation target * Government investment * Demand-side intervention Monthly Review: --------------- * Redistribution of surplus * Public or social ownership of major industries * Democratic planning * Ending monopoly-finance capital MR theory holds that reforms within capitalism cannot resolve stagnation in the long run. *********************** *5. Where They Overlap* *********************** Despite differences, there are notable points of overlap: *1. Both see chronic demand weakness as a major feature of mature capitalism.* ------------------------------------------------------------------------------ *2. Both believe monetary policy is insufficient.* -------------------------------------------------- *3. Both see inequality as linked to stagnation* , though via different mechanisms. ----------------------------------------------------------------------------------- *4. Both believe the economy tends to rely on asset bubbles or extraordinary measures to simulate full employment.* ------------------------------------------------------------------------------------------------------------------- Summers softens this by saying asset bubbles were historically “necessary” for growth. MR says bubbles are systemically required because surplus cannot otherwise be absorbed. ********************************************** *6. How Monthly Review Would Critique Summers* ********************************************** MR theorists would argue: * Summers reverses causality: it’s not that interest rates are too high but that *capitalists find too few profitable investment opportunities*. * He ignores the role of monopoly concentration. * His focus on “negative natural interest rates” is a technocratic surface-level explanation of a deeper capitalist contradiction. * He underplays imperialism and global labor arbitrage as mechanisms for surplus absorption. * His policy solutions cannot address the fundamental structural roots of stagnation in capitalist social relations. In other words, they would say Summers’s theory is *formally similar but substantively superficial* compared to the Marxist stagnation thesis. **************************************** *7. Very Short Comparison (3 sentences)* **************************************** Summers thinks secular stagnation arises because advanced economies have too much saving and too little investment, driving the “neutral” interest rate below zero. Monthly Review Marxists argue stagnation is inherent to monopoly capitalism, which produces more surplus than can be absorbed through profitable investment, requiring artificial mechanisms like militarism and financialization. Summers wants better macroeconomic management; MR calls for structural transformation beyond capitalism. -=-=-=-=-=-=-=-=-=-=-=- Groups.io Links: You receive all messages sent to this group. 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