A theory of accumulation and secular stagnation : a Malthusian approach to understanding a contemporary malaise

Thomas Malthus identified a crucial tension at the heart of a market economy: While an accumulation of wealth is necessary to provide the capital investment needed to generate growth, too much accumulation will cause planned saving to exceed profitable investment, which will result in secular stagnation, a condition of low growth and underemployment of resources. Keynes drew inspiration from Malthus in his attempt to comprehend the causes of the Great Depression of the 1930s. Now, Aronoff demonstrates how a related but slightly different aspect of Malthus' thought can illuminate one of the most pressing issues of our times. In A Theory of Accumulation and Secular Stagnation, Aronoff explores Malthus' ideas relating to secular stagnation and uses the insight gained to understand the origins of the subpar growth and tepid employment, periodically punctuated by booms, that has plagued the US economy since the turn of the millennium. He explains how the rise of mercantilism among Asian countries – principally China – and increased income concentration generated an upsurge in excess saving. This accumulation created a chronic deficiency in demand while also depressing interest rates, which generated a search for yield that fuelled periodic booms. Front Matter ....Pages i-vii Introduction (Daniel Aronoff)....Pages 1-8 Front Matter ....Pages 9-9 The Malthus-Ricardo Debate on General Glut and Secular Stagnation (Daniel Aronoff)....Pages 10-43 Say’s Principle and the Possibility of Deficient Demand (Daniel Aronoff)....Pages 44-65 Front Matter ....Pages 66-66 The Theory of Accumulation and Secular Stagnation (Daniel Aronoff)....Pages 67-87 Accumulation and Secular Stagnation in the United States after the Turn of the Millennium (Daniel Aronoff)....Pages 88-123 Some Concluding Thoughts (Daniel Aronoff)....Pages 124-127 Back Matter ....Pages 128-136 Aronoff Explores And Extends Thomas Malthus' Idea That If An Economically Significant Group Saves A Large Portion Of Income It Plans Never To Spend, It Will Cause A Deficiency In Demand That Prevents A Market Economy From Operating At Full Employment On A Sustainable Basis.