(stagnation + inflation) when inflation is high, the economic growth rate slows, and unemployment remains steadily high
the economy of the mid-1970s seemed to trade in inflation with unemployment in a phenomenon called "stagflation", where wages/prices (inflation)and unemployment rose together
in an apparent contradiction of the Phillips curve, which many by this point took as the sine qua non of Keynesianism
quoted from TPK
In the 1970s, however, both problems arose simultaneously – rising inflation and rising unemployment, or ‘stagflation’. The traditional Keynesian policy solutions were incapable of dealing with this conjunction, thus seemingly dictating a turn to alternative theories. It is important to be clear that, at this point, multiple interpretations of the economic problem were possible. The production of inflation through wage rigidities and trade union power was not the only possible framing of the problem, and neoliberalism was not the only possible solution.
The problems of 'stagflation' in the core regions of capitalism in the 1970s were partially addressed by the opening up of world trade to a globalised structure of competition
The problems of 'stagflation' in the core regions of capitalism in the 1970s were partially addressed by the opening up of world trade to a globalised structure of capitalism.
Neo-Keynesian success brought its own downfall in over-accumulation, over-production, and sundry other dislocations: OPEC price hikes in oil, stagflation, the beginnings of financialization, the transfer of production to low-wage areas, the end of social compromise and the appearance of the disastrous, neoliberal solution of market fundamentalism that would reach its peak in the 1980s and 90s.