PhD-Project: Towards a Varieties of Socio-Economic Productivity Regimes Approach – Post-Keynesian Perspectives on the Political Macroeconomy of Technical Progress in the Age of Secular Stagnation

Philip Blees, PhD registered at Université Paris Sorbonne Nord (USPN), Analyse des Crises et Transitions (ACT)

Supervisors: Prof. Dr. Eckhard Hein (HWR Berlin); Prof. Dr. Dany Lang (USPN)

Funding: Hans-Böckler-Foundation

About

Stagnation tendencies of capitalism after the Golden Age of capitalism have not spared labor productivity. In fact, the observed decline in the so-called total factor productivity growth traces primarily back to a decline in labor productivity growth (Storm, 2017, 2022). These decelerating dynamics have put increasing pressure on policy makers in developed countries. Productivity growth developed into a crucial topic of the economic policy debate. In Europe, this is reflected in numerous statements on the topic from official entities (e.g., Schnabel, 2024), a recurring focus of the European Semester on competitiveness measures (European Commission, 2024) and vivid debate on recent policy conferences (e.g., Bergeaud, 2024). The debate is characterized in particular by a fear of falling behind of the EU relative to the US, some commentators attesting that the US is winning the ‘innovation race’ (Eichengreen, 2024). In fact, the US exhibits higher growth on average in the period from 2009 to 2022 than, for example, Germany (OECD, 2024). Thus, besides the general decline in productivity growth rates (Hartwig, 2014; Bergeaud, Cette and Lecat, 2016; Syverson, 2017; Goldin et al., 2024), it appears that the traditional capitalist world has adopted different policy approaches to the realm of productivity growth with varying effect on the measure. Economies differ in their socio-economic productivity regime, i.e. the institutional background for technical progress. Nevertheless, most developed economies are failing to stop the declining productivity growth rates.

This backdrop opens the field to alternative theoretical explanations of the slowdown of productivity growth. For example, Vergeer and Kleinknecht (2014) embed this observation in a contest between supply- and demand-side economics. This exemplifies the divergent theoretical perspectives on technical progress. On the one hand, early neoclassical growth theory treats technology as exogenous to the growth process (Solow, 1956) while later work in the context of New Growth Theory (Romer, 1990) endogenizes it as an intertemporal optimization problem. On the other hand, post-Keynesian research has long considered technical progress as an endogenous outcome of growth dynamics through a technical progress function or Verdoorn’s law (Kaldor, 1957, 1961, 1966; Oughton and Tobin, 2023). Modern post-Keynesians (e.g., Hein and Tarassow, 2010) have added a Marx-Hicks effect of wage-push and have thus included the notion of distributional struggle to this picture. Institutional conditions that affect demand dynamics and shape distribution conflict would have to be included to provide a full picture and to explain medium- to long-run country-specific differences. This is where the now fashionable Demand and Growth Regime (DGR) approach (for a summary see e.g., Hein, 2023) could be used. Blees (2025) presents an approach to integrate the post-Keynesian notion of productivity regimes with the respective determinants.

This is where my PhD project is meant to contribute. Drawing on post-Keynesian theories of endogenous technical progress and various political economy approaches, especially the Comparative Political Economy (CPE) discipline like Varieties of Capitalism (VoC), the Growth Model Perspective, or Régulation School, I aim to include the institutional drivers of productivity growth and identify channels through which aggregate demand dynamics, social relations, and distributional conflict affect productivity growth. In my empirical analysis, I will focus on the period from beginning of the Great Moderation until today with an emphasis on the pre- (1990-2007) and post-GFC/GR (2009-2024) period and will analyze regime changes between these two subperiods. My approach will initially focus on developed capitalist economies. However, to tackle global complementarities of DGRs and productivity regimes, emerging economies might have to be included in the analysis during the research process.

Based on the current state of research, the following questions arise, which will be addressed in my PhD project. A first set of questions deals with the theoretical clarification:

• How do different strands of literature deal with the interaction between distribution, demand, institutions, and innovation?
• In what ways can productivity growth be systematically incorporated into the theoretical understanding of DGRs?
• What kind of socio-economic productivity regimes emerge? What are the main drivers of certain socio-economic productivity regimes? How can we classify these partial regimes?

Second, another set concerns the application of the theoretical approach developed to case studies:

• Which quantitative and qualitative methodologies are most appropriate for empirically classifying and differentiating socio-economic productivity regimes in connection to their DGRs?
• Which economy of the developed countries follows which socio-economic productivity regime?

Lastly, an application beyond the case study is of interest:

• How can the insights from this theoretical framework be applied to address global challenges such as the socio-ecological transition?

The approach to be developed will be relevant for economic policies, since it focuses on the institutional and thus also political conditions shaping DGRs and productivity regimes. It is thus relevant for the current challenge of socio-ecological and –economic transformation in the face of the climate crisis but can also be applied to issues of inequalities.

Related Publications

• Blees, P. (2025): Productivity Growth and Class Struggle in a Growth Regime Framework, IPE Working Papers, 254.

Mentioned Literature

Bergeaud, A. (2024) ‘The Past, Present and Future of European Productivity’, in. ECB Forum on Central Banking.

Bergeaud, A., Cette, G. and Lecat, R. (2016) ‘Productivity Trends in Advanced Countries between 1890 and 2012’, Review of Income and Wealth, 62(3), pp. 420–444. Available at: doi.org/10.1111/roiw.12185.

Blees, P. (2025) ‘Productivity Growth and Class Struggle in a Growth Regime Framework’, IPE Working Paper, 254.

Eichengreen, B. (2024) Why Is Europe Losing the Productivity Race? | by Barry Eichengreen, Project Syndicate. Available at: www.project-syndicate.org/commentary/why-european-productivity-growth-lags-us-by-barry-eichengreen-2024-04 (Accessed: 11 April 2024).

European Commission (2024) European Semester Spring Package Provides Policy Guidance to Enhance the EU’s Competitiveness and Resilience, and Maintain Sound Public Finances. Available at: ec.europa.eu/commission/presscorner/detail/en/ip_24_3290 (Accessed: 18 October 2024).

Goldin, I. et al. (2024) ‘Why is Productivity Slowing Down?’, Journal of Economic Literature, 62(1), pp. 196–268.

Hartwig, J. (2014) ‘Testing the Bhaduri–Marglin Model with OECD Panel Data’, International Review of Applied Economics, 28(4), pp. 419–435. Available at: doi.org/10.1080/02692171.2014.896881.

Hein, E. (2023) ‘Varieties of Demand and Growth Regimes – Post-Keynesian Foundations’, European Journal of Economics and Economic Policies Intervention, 20(3), pp. 410–443. Available at: doi.org/10.4337/ejeep.2023.0103.

Hein, E. and Tarassow, A. (2010) ‘Distribution, Aggregate Demand and Productivity Growth: Theory and Empirical Results for Six OECD Countries Based on a Post-Kaleckian Model’, Cambridge Journal of Economics, 34(4), pp. 727–754. Available at: doi.org/10.1093/cje/bep066.

Kaldor, N. (1957) ‘A Model of Economic Growth’, The Economic Journal, 67(268), pp. 591–624.

Kaldor, N. (1961) ‘Capital Accumulation and Economic Growth’, in F.A. Lutz and D.C. Hague (eds) The Theory of Capital. London: Palgrave Macmillan UK, pp. 177–222.

Kaldor, N. (1966) Causes of the Slow Rate of Economic Growth of the United Kingdom. Cambridge: Cambridge University Press.

OECD (2024) ‘OECD Productivity Statistics’. Available at: stats.oecd.org/WBOS/index.aspx (Accessed: 13 May 2024).

Oughton, C. and Tobin, D. (2023) ‘Joan Robinson: Early Endogenous Growth Theorist’, Cambridge Journal of Economics, 47(5), pp. 943–964. Available at: doi.org/10.1093/cje/bead032.

Romer, P.M. (1990) ‘Endogenous Technological Change’, Journal of Political Economy, 98(5), pp. 71–102.

Schnabel, I. (2024) From Laggard to Leader? Closing the Euro Area’s Technology Gap. Available at: www.ecb.europa.eu/press/key/date/2024/html/ecb.sp240216~df6f8d9c31.en.html (Accessed: 18 October 2024).

Solow, R.M. (1956) ‘A Contribution to the Theory of Economic Growth’, The Quarterly Journal of Economics, 70(1), p. 65. Available at: doi.org/10.2307/1884513.

Storm, S. (2017) ‘The New Normal: Demand, Secular Stagnation, and the Vanishing Middle Class’, International Journal of Political Economy, 46(4), pp. 169–210. Available at: doi.org/10.1080/08911916.2017.1407742.

Storm, S. (2022) ‘The Secular Stagnation of Productivity Growth’, in L.R. Wray and F. Dantas (eds) Handbook of Economic Stagnation. Academic Press, pp. 37–58. Available at: www.sciencedirect.com/science/article/pii/B9780128158982000136 (Accessed: 4 May 2023).

Syverson, C. (2017) ‘Challenges to Mismeasurement Explanations for the US Productivity Slowdown’, Journal of Economic Perspectives, 31(2), pp. 165–186.

Vergeer, R. and Kleinknecht, A. (2014) ‘Do Labour Market Reforms Reduce Labour Productivity Growth? A Panel Data Analysis of 20 OECD Countries (1960-2004)’, International Labour Review, 153(3), pp. 365–393. Available at: doi.org/10.1111/j.1564-913X.2014.00209.x.