The New Normal: Demand, Secular Stagnation, and the Vanishing Middle Class: A Reply to James K. Galbraith and William Lazonick

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This is a rejoinder to the challenging comments by Professors James K. Galbraith and William Lazonick on my article “The New Normal: Demand, Secular Stagnation, and the Vanishing Middle Class.” Professor Galbraith favors an evolutionary approach to the issue instead of my approach but admittedly not on very convincing grounds. His characterization of actual conditions in the U.S. economy (including his view of what drove voters to Trump) appears to focus more on the current state than on underlying structural trends (which are all more negative than he seems to think). Professor Lazonick usefully extends my macroeconomic analysis by his microeconomic emphasis on the impacts of the change to predatory value extraction under a “downsize-and-distribute” corporate governance regime, legitimated in the name of shareholder-value maximization. However, even when we extend the analysis to include micro-level financialization, it is still insufficient aggregate demand that is underlying the twin diseases—secular stagnation and a growing dualization—afflicting the U.S. economy at the macro level.
Original languageEnglish
Pages (from-to)227-232
Number of pages5
JournalInternational Journal of Political Economy
Issue number4
Publication statusPublished - 2018


  • Baumol model
  • demand
  • dual economy
  • secular stagnation
  • vanishing middle class

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