The Political Economy of Secular Stagnation

In recent years, several economists, most notably Lawrence Summers, have suggested that the global economy may have entered a period of 'secular stagnation' marked by endemically low growth rates. This slowdown is presumed to have resulted from aging populations, a productivity slowdown and accordingly a lack of economic demand which has produced slow growth, low investment and a savings glut. Political scientists have been slow to consider the impact of this trend for social cleavages and policy preferences. In this article we develop a series of political implications from secular stagnation theory identifying three main new cleavages: between young and old; between the owners of assets and non-owners; and between the high-skilled and the middle or low skilled. We examine the existence of these cleavages through an analysis of cross-national public opinion data and a survey data from Japan, a country with a quarter-century of recent 'secular stagnation'.