Handbook of Alternative Theories of Economic Growth

485 Pages·2010·2.86 MB·English

by  Mark Setterfield

HANDBOOK OF ALTERNATIVE THEORIES OF
ECONOMIC GROWTH

Handbook of Alternative Theories
of Economic Growth
Edited by
Mark Setterfi eld
Trinity College, USA
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
© Mark Setterfi eld 2010
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or
otherwise without the prior permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA
A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2009938384
ISBN 978 1 84720 402 8 (cased)
Printed and bound by MPG Books Group, UK
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0
Contents
List of contributors vii
An introduction to alternative theories of economic growth 1
Mark Setterfi eld
PART I ALTERNATIVE THEORIES OF ECONOMIC GROWTH: AN
OVERVIEW
1 The structuralist growth model 17
Bill Gibson
2 The classical theory of growth and distribution 49
Duncan K. Foley and Thomas R. Michl
3 Evolutionary growth theory 64
J. Stan Metcalfe and John Foster
4 The post- Keynesian theories of growth and distribution: a survey 95
Heinz D. Kurz and Neri Salvadori
5 Growth, instability and cycles: Harrodian and Kaleckian models of
accumulation and income distribution 108
Peter Skott
6 Surveying short- run and long- run stability issues with the Kaleckian model
of growth 132
Marc Lavoie
7 Kaldor and the Kaldorians 157
John E. King
8 The paths of transformational growth 173
Davide Gualerzi
PART II AGGREGATE DEMAND, AGGREGATE SUPPLY AND
LONG- RUN GROWTH
9 On accounting identities, simulation experiments and aggregate production
functions: a cautionary tale for (neoclassical) growth theorists 189
Jesus Felipe and John McCombie
10 The endogenous nature of the “natural” rate of growth 208
Miguel A. León- Ledesma and Matteo Lanzafame
11 Reconciling the growth of aggregate demand and aggregate supply 220
Amitava Krishna Dutt
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vi Handbook of alternative theories of economic growth
PART III ECONOMIC GROWTH AND TECHNICAL CHANGE
12 The classical- Marxian evolutionary model of technical change: application
to historical tendencies 243
Gérard Duménil and Dominique Lévy
PART IV MONEY, FINANCE AND GROWTH
13 “Financialisation” in post- Keynesian models of distribution and growth:
a systematic review 277
Eckhard Hein and Till van Treeck
14 Inside debt and economic growth: a neo- Kaleckian analysis 293
Thomas I. Palley
PART V GROWTH AND DISTRIBUTION
15 Feasible egalitarianism: demand- led growth, labour and technology 311
C.W.M. Naastepad and Servaas Storm
16 Dissent- driven capitalism, fl exicurity growth and environmental
rehabilitation 331
Peter Flaschel and Alfred Greiner
17 Profi t sharing, capacity utilization and growth in a post- Keynesian
macromodel 344
Gilberto Tadeu Lima
18 Gender equality and the sustainability of steady state growth paths 360
Stephanie Seguino and Mark Setterfi eld
PART VI INTERNATIONAL AND REGIONAL DIMENSIONS OF
GROWTH
19 Export- led growth, real exchange rates and the fallacy of composition 379
Robert A. Blecker and Arslan Razmi
20 Trade and economic growth: a Latin American perspective on rhetoric
and reality 397
Juan Carlos Moreno Brid and Esteban Pérez Caldentey
21 Endogenous regional growth: a critical survey 431
Mark Roberts and Mark Setterfi eld
Index 451
Contributors
Robert A. Blecker, American University, USA
Gérard Duménil, University of Paris X, France
Amitava Krishna Dutt, University of Notre Dame, USA
Jesus Felipe, Asian Development Bank, Philippines
Peter Flaschel, University of Bielefeld, Germany
Duncan K. Foley, New School For Social Research, USA
John Foster, University of Queensland, Australia
Bill Gibson, University of Vermont, Burlington, USA
Alfred Greiner, University of Bielefeld, Germany
Davide Gualerzi, University of Padua, Italy
Eckhard Hein, Berlin School of Economics and Law, Germany
John E. King, La Trobe University, Australia
Heinz D. Kurz, University of Graz, Austria
Matteo Lanzafame, University of Messina, Italy
Marc Lavoie, University of Ottawa, Canada
Miguel A. León- Ledesma, University of Kent, UK
Dominique Lévy, PSE-CNRS, France
Gilberto Tadeu Lima, University of São Paulo, Brazil
John McCombie, Cambridge University, UK
J. Stan Metcalfe, University of Manchester, UK
Thomas R. Michl, Colgate University, USA
Juan Carlos Moreno Brid, United Nations, Mexico
C.W.M. Naastepad, Delft University of Technology, Netherlands
Thomas I. Palley, Economics for Democratic and Open Societies, USA
Esteban Pérez Caldentey, United Nations, Chile
Arslan Razmi, University of Massachusetts, Amherst, USA
Mark Roberts, Cambridge University, UK
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viii Handbook of alternative theories of economic growth
Neri Salvadori, University of Pisa, Italy
Stephanie Seguino, University of Vermont, USA
Mark Setterfi eld, Trinity College, USA
Peter Skott, University of Massachusetts, Amherst, USA
Servaas Storm, Delft University of Technology, Netherlands
Till van Treeck, Macroeconomic Policy Institute, Germany
An introduction to alternative theories of economic
growth
Mark Setterfi eld
It has become commonplace for leading textbooks on growth theory to characterize
the historical development of the subject as a simple progression from fi rst- to second-
g eneration neoclassical growth theory, punctuated only by a brief hiatus during the
1970s when infl ation became the cause célèbre of macrodynamics (for representative
examples, see Barro and Sala- i- Martin, 1995; Jones, 2002; Aghion and Howitt, 2009).
But as has been remarked elsewhere (Setterfi eld, 2002, 2003), these “stylized facts” are
more apparent than real. They conceal a rich history of alternative theories of economic
growth, that both parallels and interacts with the development of neoclassical theory.
The purpose of this Handbook is to provide a comprehensive overview of these alterna-
tive theories – one that both surveys major sub- fi elds of alternative theories of economic
growth (including, but not limited to, Classical, Kaleckian, Evolutionary, and Kaldorian
growth theories) and draws attention to frontier issues in the fi eld. The ambition of this
introduction is to orient the reader towards the content that follows.
1 Common themes in alternative theories of economic growth
Economic theories that depart from one or more of the “hard core” presuppositions of
neoclassical economics (such as optimizing behaviour by decision makers, or the mar-
ginal productivity theory of value and distribution) are often said to be defi ned chiefl y
in terms of their opposition to neoclassical theory – that is, in terms of what they are
not. As is obvious from what has already been said above, it is tempting to lapse into
the same habit of thought when characterizing alternative theories of economic growth.
Fortunately, however, it is not necessary to succumb to this habit. Despite their diff er-
ences, alternative theories of economic growth exhibit many commonalities. Ultimately,
they constitute a “broad church” characterized by numerous shared preconceptions.
And even if these preconceptions cannot all be combined in a single synthetic model
of growth, distribution and technical change, they are nevertheless suggestive of a
“common research program rather than a gulf of irreconcilable scientifi c diff erences”
(see Foley and Michl, Chapter 2, this volume). In this section, fi ve broad features of
the research programme common to alternative theories of economic growth are high-
lighted, with a view to emphasizing what the corpus of alternative theories of economic
growth is, rather than what it is not.
1.1 The role of aggregate demand in the long run
An enduring theme in alternative theories of economic growth – one that was inspired by
the Keynesian revolution in macroeconomics and, in particular, such seminal contribu-
tions to growth theory as Harrod (1939) and Robinson (1956) – is the role of aggregate
demand in the long run. This is not to say that all alternative theories of growth identify
1