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Perspectives on Money and Finance: Secular Stagnation or Transformation of Capitalism?

Michel Aglietta * Conseiller, CEPII et France Stratégie. Contact :

After the great financial crisis in 2008, advanced countries have been shackled by low capital return, anemic demand in Europe and deflation worries. A self-fulfilling roundabout process, called secular stagnation, has settled down. Lately emerging market economies have met trouble. Many, China at the top, are plagued with overcapacities in industry, slowdown in foreign trade and a pervasive slump in commodity prices.

Those intertwining processes point out to an incipient transformation of capitalism beyond the sheer impact of the financial crisis. A major feature is the inability of global market finance to fund long-term investments, which would be the drivers of a new growth regime, grounded on sustainable development. Another brand of finance, with public development banks at the core, will be needed along with an evolution of the international monetary system to multilateralism and acceptance of the SDR as international liquidity.

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