Edited by Paul Davidson
9. Demand constraints and the new economy Marc-André Pigeon and L. Randall Wray. Like the clock that loses a second an hour, the American economy has lost ground so gradually over the past twenty years that we don’t realize how far behind we have fallen. The economic expansion of the ﬁrst half of the 1990s has made it even more diﬃcult for Americans to judge how weak our economy has been over the past two decades compared with the rest of our industrial history. The main reasons for this decline are not inﬂation, government budget deﬁcits, low levels of investment, faltering education, the irresponsibility of Democrats or Republicans, excessive spending on the military, the aged, or the poor – or the many other explanations for America’s economic dilemma that we repeatedly hear. Rather, these presumed causes are themselves largely the consequences of a more persistent problem: a sharp slowdown in economic growth (Madrick 1997: 3–4). If rapid economic growth returns, most of the acute social issues that worry us today will become manageable. Wages will rise, our Social Security, Medicare, and welfare commitments will be easily met, and we will generate enough resources to invest adequately in our future. Most Americans would once again make the kind of ﬁnancial progress they had come to expect . . . When workers are in demand in a growing economy, ethnic or sexual prejudice diminishes, and labor unions ﬁnd it easier to organize and win more beneﬁts for their members. In times...
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