In part one of my blog post, The Myth of Secular Stagnation, I explained the background to the debate among bourgeois simpleton economists. The stagnation debate among bourgeois economists begins with the Great Depression and Keynes’ characterization of the problem of the Great Depression as “technological unemployment”. The source of the technological unemployment was the improvement in the productivity of labor, the industrial revolution wrought by capital. For Keynes in 1930, this was not necessarily a malady in and of itself, it promised a future where labor itself would be abolished. The transition to a society of less work might be very painful, but the distress was only temporary.
By 1933, however, Keynes’ argument had changed: although he continued to insist that, technically, the “economic problem” had been solved he now focused on the problem of restoring capitalist profit. The Great Depression was no longer caused by the lack of investment opportunities, instead there was a lack of sufficient state deficit spending. The Great Depression, now having lasted 3 years, required state intervention; “a blend of economic theory with the art of statesmanship”.