This post reviews the Social Structure of Accumulation theory, a relatively young, yet analytically capable, school of economic thought. Borrowing concepts and ideas from other economic traditions, such as Keynesianism, Institutionalism, and Marxism, the SSA theory explores the relatively long-term cycles of capitalism. Such cycles generally consist of a period of successful accumulation, growth, and progress followed by a period of stagnation and crisis. I conclude this post by several key characteristics of this theory, which, depending on the situation, may enhance its applicability or renders it limited.
This post is a summary of a longer piece that I wrote on the SSA. The complete article is available on my website Dianoetic.
What is the Social Structure of Accumulation?
The main research area of the Social Structure of Accumulation (SSA) school is the long-term patterns of accumulation in the capitalist system. In this regard, they study the causes of regular periods of prosperity and crisis that the capitalist system undergoes. To this aim, the researchers of this school take a multidisciplinary approach, employing the method and analytical tools from various sciences (e.g. sociology and history) and other economic schools of thought (e.g. Marxian tradition, Keynesian school, institutionalism and long-wave theories) (Kotz, McDonough & Reich 1994).
The accumulation process relies on a set of institutions, which can be “economic, political, ideological, or cultural in character” (McDonough, Reich & Kotz 2010). These institutions are mutually compatible and generally supportive of the accumulation process. If these conditions are in place, these institutions secure the determinants of profitability and promote growth and expansion. However, the growth period is not indefinite and the system may go through a crisis phase.
Figure 1 schematically presents the general components of the relatively long-term cycles of capitalism. A new social structure of accumulation is established with a set of key institutions, which are mutually compatible and supportive of each other and the accumulation process in general. The presence of these institutions secures the long-term profitability and stabilises the rate of profit. Capitalists, now seeing a bright prospect of a profit return to their capital, begin to invest. The increase in the level of investment stimulates the economy and engenders growth and expansion. However, the economic expansion may generate negative side effects. It can intensify the conflict between the capitalist and the working classes. It can also increase the competition between the capitalists themselves. Moreover, a high level of economic activity can eventually saturate the markets and thus, decrease the level of profit return.
Photo credit: Dianoetic
These negative aspects initiate conflicts between the accumulation process and the current institutions. If the conflict is superficial, it can be mitigated by fiscal or monetary policies. However, deeply-rooted accumulation/institutions contradictions may cause a long-term stagnation. To overcome the stagnation, a restructuring of the institutions becomes necessary, which will establish a new social structure of accumulation. And, hence, a new cycle begins.
3) Key features
The SSA framework has several key features that set it apart from other economic frameworks. Depending on the context, these features may limit or enhance the economic applicability of the SSA.
a) Multidisciplinary Approach
Probably the most important, and a clearly positive, feature of the SSA school is its interdisciplinary approach to the economy. Economic phenomena are the superimpositions of different forces with various nature. To develop a holistic picture of them, the researcher needs to employ an eclectic, non-reductionist approach. By using ideas and analytical tools from various disciplines, the SSA framework endeavours to develop such an approach.
For a relatively long time, the SSA approach consciously limited the level of analysis to nation-states, specifically the U.S. (McDonough 2010: 33). Research studies considered the institutions and the social structure of accumulation of countries individually and not in the global context. However, as a result of the general consensus on the establishment of the new era of globalisation, the SSA analysis shifted toward a global level. For example, in the introduction to Contemporary Capitalism and Its Crises, the authors not only admit this shift but also propose several areas of research considering globalisation (McDonough, Reich & Kotz 2010: 8-14).
Analysis at the state level has the benefit of covering more depth and including details that are usually neglected in the global analysis. However, while this could suffice for the nation-states of previous centuries, neglecting the effect of global institutions, forces, and trends is definitely a limitation for any analysis at the new age of globalisation.
c) Research orientation
Similar to the regulation theory (Boyer & Saillard 2005: 36, 45), the SSA framework appears to be more concerned with research programs rather than practical applications. This tendency demonstrates itself in:
- Qualitative preference: While David Gordon, whose Up and down the long roller coaster (1978) marks the beginning of SSA publications, in his later works attempted to operationalise the approach, other researchers abandon such tendency due to the centrality of qualitative analysis to the SSA theory (McDonough 2010: 26; Reich 1997: 3).
- Inconclusiveness: The SSA researchers seem unable or reluctant to make clear conclusions about the state of the economy. For example, it took the SSA literature until 2009 to “converge” on the view that a new SSA was consolidated after the 70s (McDonough, Reich & Kotz 2010: 10). This was necessary to evaluate the seriousness of the Global Financial Crisis (GFC).
- Unwillingness to identify key institutions: The SSA approach prefers to use the term “institution” in its broadest meaning, which not only includes organisations but also customs and habits (Lippit 2005: 27). While this tendency creates a flexibility that is useful in developing a general theory, its conjunction with the reluctance to identify “crucial” institutions (Harriss-White 2003: 14) with a determining influence on the accumulation process, may render the approach vague and less practical.
The research-orientation and its characteristics are common to most academic approaches and are signs of academic conservatism/prudence. While it lacks practicality, it has the benefit of preventing rash decisions based on flawed knowledge, which can exacerbate the situation.
The Social Structure of Accumulation is a relatively young analytical framework. It has key features that distinguish it from other schools of thought. The most important feature is the multidisciplinary approach which enables the researcher to develop a holistic view of the nature of economic phenomena. Viewed in this way, the SSA shows great potentials in research and, if further enhanced, even in practice.
Boyer, R & Saillard, Y (2005), Regulation theory: the state of the art, London, Routledge.
Gordon, DM (1978), ‘Up and down the long roller coaster’, In, US capitalism in crisis, New York, Union for Radical Political Economics, pp. 22-35.
Harriss-White, B (2003), India Working: Essays on Society and Economy, Cambridge University Press.
Kotz, DM, McDonough, T & Reich, M (1994), Social structures of accumulation: The political economy of growth and crisis, Cambridge University Press.
Lippit, VD (2005), Capitalism, New York, Routledge.
McDonough, T (2010), ‘The State of the Art of Social Structure of Accumulation Theory’, In, Contemporary capitalism and its crises: Social structure of accumulation theory for the 21st century, Cambridge University Press.
McDonough, T, Reich, M & Kotz, DM (2010), Contemporary capitalism and its crises: Social structure of accumulation theory for the 21st century, Cambridge University Press.
Reich, M (1997), ‘Social Structure of Accumulation Theory: Retrospect and Prospect’, Review of Radical Political Economics, vol. 29, no. 3, pp. 1-10.
Featured image is the cover of Social Structure of Accumulation – The Political Economy of Growth and Crisis