ABSTRACT
This chapter explains Joseph Schumpeter’s view of long economic cycles and shows how that idea has been further developed by later scholars. It summarizes the core arguments of Robert Gordon’s book and lays out a critique. The chapter presents Gordon into dialogue with Schumpeter and offers an alternative explanation for Gordon’s findings. The term ‘secular stagnation’ that last flourished in the 1930s and early 1940s has returned as a diagnosis of this period of significantly slower global growth. Schumpeter was a theorist of historical discontinuity; he did not see societies or economies moving along some smooth trajectory, but rather, he emphasised disruption, creative destruction and the likelihood of deep economic downturns. The problem, however, is that there are significant institutional barriers to a new period of expansion that could take full advantage of these technologies. So, what happened instead was an extremely anaemic economic recovery after the stock-market bubble burst in the early 2000s.
