Industrial overcapacity caused a long-term economic downturn that debt only papered over

Evidence

Many popular, shortsighted accounts of the financial crash in 2007–8 portray the collapse as merely the combination of improper mortgage sales and overleveraged investment banks. Historian Robert Brenner traces the root causes deeper, to the “huge, unresolved problems in the real economy that have been literally papered over by debt for decades.” What may have appeared as broad-based prosperity for many during the 1990s and 2000s was actually an ever-greater buildup of debt, as the engine of growth continued to slow. This is what Brenner calls “the long downturn—the extraordinarily extended phase of reduced economic dynamism and declining economic performance, persisting through the end of the millennium and into the new.” Brenner’s explanation is that industrial overcapacity has stalled the manufacturing growth engine, and none of the attempted alternatives (service economy, digital economy, knowledge economy, finance economy) have provided enough growth to make up for that decline. … Belatedly, mainstream economists have recognized the validity of this long-term decline, as when Larry Summers repopularized the term secular stagnation in 2013. — Andrew deWaard, Derivative Media, 79

Categorization

• XREF: Connects to secular stagnation debates and to the reader’s interest in whether finance-driven growth leaves traceable fingerprints elsewhere in the economy. — connects to: Pre-2008 capitalism cannot be restored because debt fueled its demand — Mark Fisher (edited by Darren Ambrose), K-Punk: The Collected and Unpublished…, 1674