Download The Long Depression - Michael Roberts Blog

The Long Depression
By Michael Roberts
Some comments by José Tapia
My global evaluation of The Great Depression
1. An important contribution to social knowledge, particularly to the
analysis of economic crises in capitalism
2. A large compendium of valuable information on the Great
Recession of the late 2000s and the following period of sluggish
economic growth that Michael Roberts calls “the Long Depression”.
3. A major contribution to criticism of mainstream economics in all
their schools (neoclassical, New Keynesian, Post Keynesian,
Austrian …)
4. A significant contribution to the critique of capitalism.
My criticism of the book (1)
• Depression as a period in which a crisis is followed by a partial
recovery of capital accumulation, so that the long-term trend of
economic growth is not recovered.
• A recession has the shape of a V, while a depression is rather like a
square root sign, or perhaps as W when it takes the form of a double
dip recession.
• Michael Roberts defends this typology by mentioning only three
depressions (late 19th century, 1930s, after 2008)
• Three cases of something do not provide much basis for theorizing.
• More solid idea, that Roberts suggests: sometimes economic crises do
not fulfill sufficiently their role of rising profitability, then the recovery
is weak.
• What is the concrete relation between the concepts of economic
crisis, recession and recession?
• This is in my view particularly important because left-wing criticism of
capitalism often theorize that economic crises and recessions are
different entities.
Recession
Depression
My criticism of the book (2)
• Particularly unconvincing: the views in chapter 12, “Cycles
within cycles”
• Roberts “observes” in capitalism a number of cyclical
phenomena, including a 4-year inventory cycle (Kitchin), an
8-10 year business cycle of expansion-recession (Juglar), a
18-year housing cycle (Kuznets) and a long 50- or 60-year
wave or cycle (Kondratiev).
• To that Roberts adds a 16- to 18-year cycle of profitability,
and a stock market cycle of similar periodicity
• One Juglar would comprise three Kitchin, one Kuznets
would comprise two Juglars, one Kondratiev would
comprise so many Juglars etc.
Harmonia Mundi Economics
• Actually, a number of numerical variables go up and down in which
we could call business cycle or construction cycle or inventory cycle, or
stock-market cycle
• However, when these phenomena are studied in concrete, the basic
characteristics is that they are irregular.
Business cycle duration 1960-2009
==================================================================
Lower 95%
Upper 95%
CL for Mean CL for Mean
Mean N
=======================================
3.8
9.0
6.4
8
=======================================
Business cycle duration 1873-2009
==================================================================
Lower 95%
Upper 95%
CL for Mean CL for Mean
Mean N
======================================
3.9
5.6
4.8
29
=======================================
K-Waves
==================================================================
Lower 95%
CL for Mean
14.7
Upper 95%
CL for Mean
74.6
Mean
N
44.7
3
==================================================================
K Waves Chronology
id start end Duration
===============================
1 1873 1929
56
2 1929 1975
46
3 1975 2007
32
A period of 69 years neatly divided in four
similar period of bull market or stock
market, about 15-year each
Five rather
than four
periods
Michael Roberts maintains that there was a depression lasting
from the early 1870s to the early 1890s
GDP growth (%)
1850-70
1870-90
42
17
57
50
61
59
?
<0
France
UK
Germany
Russia
* According to these data it seems as if the depression of the
1870s-1880s had been just a French phenomenon.
* It seems to me data on GDP for these years are not very reliable
My criticism of the book (3)
• Michael Roberts uses repeatedly profit rates computed for national
economies.
• The appendix of the book on computation of profit rates provides a
good explanation on the various criteria that can be used to compute
that rate, but says little on the major issues that computation of profit
rates (particularly, what to include in the denominator as a measure
of total capital).
• Roberts provide little information on his sources for various countries.
• In spite of all the former, I believe his estimates look sound, and thus
my criticisms here are probably picky.
• Is the Long Depression ending? Roberts apparently suggests a new
recession will be needed before the Long Depression ends