Economics Dictionary of ArgumentsHome
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| Economic growth: Economic growth is the increase in the production of goods and services in an economy over a period of time. It is typically measured as a percentage change in real gross domestic product (GDP), which is the total value of all goods and services produced in a country in a given year, adjusted for inflation. See also Economy, Economic development._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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David Bensuan-Butt on Economic Growth - Dictionary of Arguments
Harcourt I 78 Economic growth/ Bensuan-Butt/Harcourt: An approach (…) to analyse the development through accumulation of an economy from the handicrafts industry stage to mechanized, capital-intensive industries, industry by industry, is used by Bensusan-Butt [1960] in On Economic Growth(1). (…) it is one man's vision of the historical process of growth over centuries, a process whereby techniques of production and institutions change endogenously and the macro aggregates which have become so fashionable in the post-General Theory(2) era are shown to be the complicated outcomes of micro happenings in individual industries and firms. >J. M. Keynes, >Keynesianism, >Neo-Keynesianism. Harcourt: Indeed, Bensusan-Butt is properly sceptical of the role of these aggregates in growth theory, 'suspect [ing] that national income aggregates have, when stretched over centuries and not kept to their proper role in short-period analysis, little significance' (Bensusan-Butt [1960](1), p. 4). Again factor prices and competition are the means by which the processes occur and a slowly falling rate of profits, the value of which at each moment is determined within the system, plays a key role. Unless there is a shortage of land, the real wage rises as productivity in each industry, and in turn, rises. Economy/history: Bensusan-Butt envisages an economy consisting, initially, entirely of handicraft industries in which labour alone is required. There are no capital goods and no accumulation. Harcourt I 79 There exist, though, known mechanized techniques of production which can be constructed by labour alone, i.e. the investment-goods sector is a handicraft industry, a very common assumption in this literature: see Solow [1962a](3), p. 207, for a justification. When these machines are manned by the appropriate team of workers, the productivity of the latter is raised. There is perfect competition in the goods and factor markets, perfect foresight and labour is homogeneous in all uses. It follows from these assumptions that if we inject an accumulation process into this economy, industries will become mechanized, labour both to man machines and to make them being absorbed from the handicrafts sectors, and prices of products will be forced down, and therefore real wages raised, in order that the additional products may be sold. (There will, however, be alternating phases of constant and falling prices, of one product only in turn, depending upon whether one industry's mechanization is being completed or another's just begun.) Rate of profit: The rate of profits at any moment of time is determined by the physical productivity of the machines in the industry which is on the margin of being mechanized, competitively determined factor and product prices being the agents by which this is achieved. In this way there emerges a recognizable process of accumulation, absorption of labour from handicraft to mechanized sectors, and falling rates of profits and rising real wages. (There is as yet no population growth and, therefore, no land shortages and accompanying diminishing returns puzzles to worry about. These are, however, introduced in the second model.) Coincident with these processes there occurs a falling general price level (measured in terms of current labour time, the standard of value in these economies), accompanied by a relative price structure which reflects the current rate of profits and the different productivities of the mechanized methods either existing or currently being introduced. At each step the author discusses the conditions of supply and demand in each industrial market. 1. Bensusan-Butt, D. M. [1960] On Economic Growth: An Essay in Pure Theory (Oxford: Clarendon Press). 2. Keynes, J. M. [1936] The General Theory of Employment, Interest and Money (London: Macmillan). 3. Solow, R. M. [1962a] 'Substitution and Fixed Proportions in the Theory of Capital', Review of Economic Studies, xxrx, pp. 207-18._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Bensuan-Butt I David Bensuan-Butt On Economic Growth. An Essay in Pure Theory. Oxford 1960 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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