Our Current 'Secular Stagnation' as Expected by Jean Fourastié, 1949

Abstract

Jean Fourastié introduced a meaningful but neglected theory of economic development in a 1949 book. According to Fourastié, technical progress is stronger in some industries (e.g. light bulb production) than in others (e.g. hairdressing). Meanwhile, consumers’ demand is only insatiable for products weakly affected by technological improvements. When demand for one product is saturated, additional technological progress leads to a decline in the number of workers in this sector. Therefore, workers have to migrate from activities with high productivity gains to production lines which still enjoy growing demand from consumers but which are less sensitive to technology. Gradually, jobs with low productivity gains dominate, reducing the global potential productivity gains. The tertiary civilization Fourastié expected after 2000 is associated with stagnation, despite continuous technical progress. 1800-2000 was a transitory period of global high productivity gains between two eras of stability. This stability occurs because most of the population work in activities with low productivity gains (agriculture before 1800 and the service industry after 2000). His model precedes and inspired Baumol’s analysis and provides a rationale in the “secular stagnation” debate.

Keywords: Secular stagnation, Productivity gains, Economic growth, Technological progress, Fourastié

JEL Classification: B22, B25, O11, O47, N14