Dear Mohammed,

Partly, yes. there is too less effective demand leading to a too low equilibrium; I think one of the great things Keynes has shown that there is no lack of equilibrium, but an equilibrium at too low a level. Due to pover expectations people (consumers, investors) kept their money in their pocket and therefore demand was too low. Now we see an increase in trust and expectations and consumers and investors dare to let their money roll again.

Yes. There is a philosophical treatise put forward by Leonard Peikoff in his book the DIM hypothesis. There seems to be evidence of it even in economics.For what is economics but a branch of moral philosophy (in its modern genesis in the Enlightenment), with its father, Adam Smith.

Of course if one takes the views of current economists, the stagnation maybe nothing more than an aberration, a blip, a punctuated equilibrium. To these it is not a failure to philosophize but a failure in their endeavors to "fine-tune" the beast known as the global economy; to optimize benefits to the West or "developed world". An emphasis on outcomes rather than moral sentiments is largely to be blamed. Just as when a once-great company loses its bearing in the thrill of it all and losses its soul, the moral fabric that undergirds the business model.That is where stagnation begins to creep in, poisoning the fountain of wealth and progress.

Mohammad,

I posted an article on the research gate site with statistical analysis showing that the first phase of the Great Depression and the Great Recession appears similar.

As to the broader question about stationary stage or state, I want to call your attention to a quote from Sir John Hicks: “We cannot determine the actual path which the economy (even the model economy) will follow...we can say more about its optimum path, about the path which will best satisfy some social objective.” (Hicks, Capital and Growth, Oxford 1965, p. 201) This is the area of work we find in modern growth analysis such as by Lucas, Romer etc.

Hi, see "Classical theory of growth and stagnation" from Wikipedia

  Happy Eid al-Adha!

Joseph Dubrovkin|

Dubrovkin Sir

Thanks.

A Very Happy Eid al Adha to you and your family!

Israr

The developed world lives under capitalist systems. These systems have not been as rigid as some of the socialist systems but they have passed through many problems. At a number of junctions, the capitalist systems approached the brink of downfall but they managed to survive by adopting flexible measures.

I think that there are limits to the survival power because of fierce competitions, desire of some countries to dominate & win all, and precarious games played by some "smart but devious" rich persons who consider the world economy as a gambling casino. The future risk may be higher than reaching a stationary stage & some countries in Europe ought to have sent alarming signals.   

Well articulated thought provoking question. In my view, the phenomenon is cyclical and consequence is obvious. Nature needs conservation. If we tamper or break this rule, it is obvious for all to face accrued results....

Dear Mohammad,

I tend to agree with you.

Mohammad

The responses you have so far tend to be the answers you might expect from conventional neoclassical or neoliberal economists.   I hope you are aware that there are many economists and natural scientists who do not particularly buy into their view.  Included in that are a group whom we call (ourselves) BioPhysical economists -- people who believe that since economics is mostly about stuff then it should not be (only) a social science but we need to bring the natural sciences (not to mention the scientific method)  to bear on economic issues.  One of the tenets of BPE is that one must look at the energy that allows economic growth and, indeed, all economic activity.   [For a brief thought experiment you can think of a dollar as a lien on energy, valued now at about 6 mJoules, a half a coffee cup's worth of oil.  No energy behind the dollar, no economic activity).  There is much more to this view, and considerable empirical justification (See "Energy and the wealth of nations" by Hall and Klitgaard (Springer)  and many other publications). 

We BPEers are having a meeting in Vancouver next week where I shall examine your question.   In fact the GDP of most of the OECD nations have more or less stopped growing   (Japan, all Europe, somewhat the US).  The decline in their growth rate follows very closely the decline in the growth rate of energy and especially oil.   One could argue chicken and egg indefinitely, but even at $45 a barrel oil is expensive by historical standards. 

So to answer your question there is more than a little evidence that the global economies are starting to bump into the "Limits to growth" in various ways.   Whether this is a "classical stationary stage" as you ask and we shall cycle out of it ---  or instead whether the recent massive growth of the human population and its economies has led to excessive depletion and overexploitation of so many of the world's resources that we are now entering a more sustained and perhaps indefinite period of low or negative growth cannot be determined yet.  But it is necessary to think of that as a possibility. 

There is a powerful case to be made for the stationary state or, as I prefer, secular stagnation. Summers ad Krugman forecast slow, bubble-driven growth “forever,” unless steps are taken - the steps recommend, among another things, a negative interest rate, which involves, Krugman avers, reducing workers’ savings. Robert A. Gordon’s 2012 and 2014 papers also suggest an end to innovation-driven growth. Robert Skidelsky, surprisingly, has come around to this view. Key here is the very low cost of investment in these times, not merely due to IT advances. On the secular atrophy of net investment, see James Livingston, Against Thrift, especially the 20-page Appendix containing data support. 

Respected Hall Sir

I am very happy to learn your branch is BPE. Certainly, it should be a valuable intellectual contribution to the ways we look at economies and societies.

The issue which makes me anxious is the common sense of the classical economists that some day economies have to settle down at a level of comfort where most of their needs are nearly met and they can enjoy the luxury and leisure of prosperity for somethings more enjoyable than mere wealth.

The Globalization though vehemently pursued is not helping much to bring the developed world out of slowness. Some decades ahead, the world population growth is bound to decelerate and stabilize. The natural non-renewable resources, too, are likely to become a concern. 

So, one day or the other, are not we destined to reach a level of steady stability. Maybe, it begins with the developed world. 

I would request you to provide some resources on your BPE sciences.

Thanks.

Israr

 dear Nasser

I am thankful to you for extending the debate and suggesting good research works in your contribution.

Thanks.

Israr

The present-day situation was beyond imagination of classical thought. Growth in developed countries has come to more or less at a level tending towards Zero. But because of innovations, they may take a diversion sooner or later in days to come. However in spite of the capacity to avoid stationary stage, because of the heavy exploitation of nature and natural resources, growth cannot take new heights and jumps/leaps. Result may be A Growth moving slowly near & around an imaginary point of stationary stage.

Israr

Thank you for your kind words. 

Unfortunately I have a hard time envisioning the comfortable world you envision -- I wish I could.  The problem is that it was the past exponential growth of fossil fuels (and the associated technology) that has allowed the human population to reach 7 billion, with maybe a quarter with some serious affluence and most very poor.   But it appears that the fossil fuel will not increase more than another decade or several and then decline, probably fairly steeply.  This is likely to greatly undermine human endeavors.(See attached figure from Mohr et al. 2015)  --- there are other such studies with similar conclusions -- I published a similar graph in 1975!).

I horrible future is not inevitable, but could be avoided with: 

1) stringent population control

2) reduced desire for affluence today, spreading out the resources over time

3) A much greater sharing of wealth

4) (perhaps) a very large investment of remaining fossil fuels into renewables.

But I do not see any of these things, let alone all of them, occurring.

If you send your own email to [email protected] I will send you some resources.  

Charlie Hall

Mohammad, I thik the Ricardian stationary stage supouse any technology change, but in now days it is far of reality, my point of view is similar Keynesian liquitness trap: near of zero economic growth, inflation and interest rate such as in The Economist, The World Bank, IMF, OCDE statsitics is confirmed; nevertheless this situation is shared with a lot tchological development.  

Everything changes all the time and hence economies change due to many reasons.

One of these reasons is technology (both hardware and software or both technical and organizational). 

Hence technology will rescue economies again in due time.

Then no stationary economies exist in reality!