1. Important must-read piece by @AnnieLowrey on America's ongoing economic dilemma. I'd like to use as jumping off point to provide some more context on the longer-run economic trajectory.
@AnnieLowrey 2. My take is that what the US economy & society is going through is a very long-run - some might say long-wave - kind of economic transformation, signaled by the Great Crash of 2008.
@AnnieLowrey 3. It is the kind of major economic transformation that political-economic theorists like Joseph Schumpeter, Nikolai Kontradieff, & Christopher Freeman wrote about.
@AnnieLowrey 4. I refer to this kind of event as a Great Reset, and wrote about it here in @TheAtlantic in 2009.
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@AnnieLowrey @TheAtlantic 5. There are two recent historical analogs. The Crisis & Long Depression of the late 19th century & the Great Depression of the 1930s. These are GENERATIONAL events.
@AnnieLowrey @TheAtlantic 6. The Long Depression signaled the shift from an older, simpler manufacturing economy to a larger, more fully blown mass industrial one.
@AnnieLowrey @TheAtlantic 7. The Great Depression signaled the shift to the modern mass production industrial economy that powered the US economy & lifted ***many*** boats, though certainly not all, until it started to break down l around 1980.
@AnnieLowrey @TheAtlantic 8. Today, we are in a larger & even more full blown transition from an industrial economy to a knowledge economy.
@AnnieLowrey @TheAtlantic 9. To my mind, tho' this is debatable, our current transformation may well be bigger than the previous 2 transitions because those were transitions within industrial capitalism. Today, we are shifting to a far more knowledge based kind of capitalism.
@AnnieLowrey @TheAtlantic 10. It is worth pointing out, though not dwelling upon, that this transition from industrial to knowledge based capitalism was anticipated by Marx in The Grundrisse. (More on that in my book The Great Reset).
@AnnieLowrey @TheAtlantic 11. Back to the current transition: Using historical analogies loosely & with all the necessary caveats, we are now roughly a decade into the current transformation or Great Reset.
@AnnieLowrey @TheAtlantic 12. Comparing our current situation to that of the Great Depression we would be in a position comparable to that of say 1939 or 1940. That is at least a decade away from the "reconciliation" or full resetting of that crisis.
@AnnieLowrey @TheAtlantic 13. It is also worth noting the similarities in our current stage and state in terms of the theorizing then by Alvin Hansen & now by Larry Summers about secular stagnation. The economy seems stuck in a proverbial rut, unable to reset and unlock itself.
@AnnieLowrey @TheAtlantic 14. But & this is an important but, and it comes through clearly in @AnnieLowrey's piece. There are some good signs in the economy. But the economy has not, and cannot yet, come together in way that generates more propulsive and inclusive growth. It has not yet been reset.
@AnnieLowrey @TheAtlantic 15. By way of historical comparison, according to a huge literature in economic history esp that of Alexander Field, the 1930s were the most technologically advanced decade of the 20th century.
@AnnieLowrey @TheAtlantic 16. But those technologies & advances were essentially blocked up & unable to fulfill their potential. Christopher Freeman has shown how innovations tend to back up in the wake of great crises, only to be unleashed in the subsequent recovery.
@AnnieLowrey @TheAtlantic 17. What unlocks those advances & enables the economy to regain its footing is The Great Reset. We are still in the middle stages of that kind of generational event.
@AnnieLowrey @TheAtlantic 18. But, the ability to the economy reset is not automatic. It depends on deep policy & institutional change & adaptation. (This is the sort of thing Carlota Perez also a long time collaborator with Freeman has been writing on: carlotaperez.org)
@AnnieLowrey @TheAtlantic 19. This shifting and stagnant moment in the resetting process is why the economy looks like, and IS, in a variant of Late Capitalism. (Ernst Mandel's work had a big effect on my thinking & I remain a fan). But we are not locked into it ...
@AnnieLowrey @TheAtlantic 20. Resetting the economy ultimately turns on two or three things. The first Schumpeter & Freeman identified as a technological fix. The rise of a new technological system that unlocks the potential of accumulated innovations.
@AnnieLowrey @TheAtlantic 21. In the 1940s & 50s, it was the rise of a more organized system of Fordist mass production capitalism - think giant factories with assembly lines - powered by corporate R&D units.
@AnnieLowrey @TheAtlantic 22. But it also CRITICALLY depends upon what @profdavidharvey brilliantly identified as the "spatial fix" - which is even more important ...
@AnnieLowrey @TheAtlantic @profdavidharvey 23. The spatial fix (summarizing massively) is a new geographical structure of capitalism which enables it to & unlock stultified new technologies.
@AnnieLowrey @TheAtlantic @profdavidharvey 24. After the Long Depression of the 19th century, it was the further development of technologies & of urban infrastructure that enables the development of denser cities & early suburban expansion - streetcars, subways and the like.
@AnnieLowrey @TheAtlantic @profdavidharvey 25. After the Great Depression of the 1930s, it was the rise of the car, the interstate highway system, modern mortgage finance & more which enables suburbanization which in turn powered demand for industrial goods.
@AnnieLowrey @TheAtlantic @profdavidharvey 26. These are periods when it also takes new institutions & policies to effect distribution as well as unlock production, & mitigate inequality. These can range from anti-trust to limit concentration of power to labor law like the Wagner Act to social welfare polices.
@AnnieLowrey @TheAtlantic @profdavidharvey 27. This is the conversation we need to be having today and which @AnnieLowrey's piece provokes. But who is having it, where is is happening? To what degree is it being drowned out by "populism?"
@AnnieLowrey @TheAtlantic @profdavidharvey 28. Also, perhaps the federal government is wrong place to look. The two previous resets were part of the shift to a mass industrial economy where national solutions & strategies make sense.
@AnnieLowrey @TheAtlantic @profdavidharvey 29. The current reset is part of a shift to a more geographically localized, clustered, concentrated & divergent knowledge economy.
@AnnieLowrey @TheAtlantic @profdavidharvey 30. This time it may be time for a shift in power & in solutions from the national to the local level. That may be a key part of the reset.
@AnnieLowrey @TheAtlantic @profdavidharvey 31. Anyways, by historical standards (always rough & incomplete), it looks like we may be roughly halfway into or through the current, ongoing economic transformation.
