George Terborgh’s *The Bogey of Economic Maturity*

Since the idea of secular stagnation has reemerged in economic discourse, I thought I would go back and reread this 1945 critique of Alvin Hansen.  It is uneven, overly polemic, but definitely interesting in places.  The author argues for instance that rates of population growth simply don’t predict spurts of economic growth very well.  It is also interesting to see how much commentators of that time blurred together demand-side and supply-side approaches to stagnation.  Is that insight or misunderstanding?  Perhaps we still don’t know.  Here is one excerpt from Terborgh:

There is thus no evidence that investment in major innovations as a class, including the young and old ones alike, has had any higher growth rate than investment in minor innovations as a class.  There is no evidence that one “great new industry” is any more dynamic in its impact on capital formation than ten small new industries.  The important thing is the total flow of technological development, not its degree of concentration.

And I enjoyed this rhetoric:

Capital formation is not a polite game in which replacements meekly and decorously await, like dutiful heirs, the natural death of existing assets.  It is a ruthless and cutthroat struggle in which new capital goods rob the function of the old.

You can buy the book here, and here is a Questia link to the text.  And here is his 1966 book The Automation Hysteria.  It seems he had the temperament of a debunker.  I don’t know much about Terborgh, but for a while he was a private sector economist and also a research economist at the Fed.


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