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THE CONCEPT OF ECONOMIC GROWTH
dc.contributor.authorShearer, Ronald A.en_US
dc.date.accessioned2010-06-01T22:29:32Z
dc.date.available2010-06-01T22:29:32Z
dc.date.issued1961-11en_US
dc.identifier.citationSHEARER, RONALD A. (1961). "THE CONCEPT OF ECONOMIC GROWTH." Kyklos 14(4): 497-532. <http://hdl.handle.net/2027.42/75479>en_US
dc.identifier.issn0023-5962en_US
dc.identifier.issn1467-6435en_US
dc.identifier.urihttps://hdl.handle.net/2027.42/75479
dc.format.extent1931278 bytes
dc.format.extent3109 bytes
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dc.publisherBlackwell Publishing Ltden_US
dc.rights1961 Blackwell Publishing Ltden_US
dc.titleTHE CONCEPT OF ECONOMIC GROWTHen_US
dc.typeArticleen_US
dc.subject.hlbsecondlevelSocial Sciences (General)en_US
dc.subject.hlbtoplevelSocial Sciencesen_US
dc.description.peerreviewedPeer Revieweden_US
dc.contributor.affiliationumUniversity of Michigan Ann Arbor (USA)en_US
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/75479/1/j.1467-6435.1961.tb00368.x.pdf
dc.identifier.doi10.1111/j.1467-6435.1961.tb00368.xen_US
dc.identifier.sourceKyklosen_US
dc.identifier.citedreferenceKUZNETS, for example, is on record as having said: "Growth is a concept whose proper domicile is the study of organic units, and the use of the concept in economics is an example of that prevalent employment of analogy…" " Measurement of Economic Growth ", Tasks of Economic History, Supplement to the Journal of Economic History, VII ( 1947 ), pp. 10 – 34.en_US
dc.identifier.citedreferenceR. HOFSTADER, Social Darwinism in American Thought ( revised edition; Boston, The Beacon Press, 1955 ); D. HAMILTON, Newtonian Classicism and Darwinian Institutionalism (University of New Mexico Publications in Economics, No. 1; Albuquerque, The University of New Mexico Press, 1953).en_US
dc.identifier.citedreferenceA. MARSHALL, " Mechanical and Biological Analogies in Economics ", Memorials of Alfred Marshall, A. C. Pigou, ed. ( New York: Kelley and Millman, 1956 ), p. 317.en_US
dc.identifier.citedreferenceF. A. HAYEK, " Scientism and the Study of Society ", Economica, New Series, Vol. IX ( August 1942 ), pp. 267 – 291; Vol. x (February 1943), pp. 34–53; Vol. XI (February 1944), pp. 27–39.en_US
dc.identifier.citedreferenceE. T. PENROSE, " Biological Analogies and the Theory of the Firm ", American Economic Review, Vol. XLII ( December 1952 ), pp. 804 – 819.en_US
dc.identifier.citedreferenceHAYEK, op. cit., part III, p. 28..en_US
dc.identifier.citedreferenceW. D'ARCY THOMPSON, On Growth and Form ( Second edition; Cambridge, The University Press, 1942 ), p. 15.en_US
dc.identifier.citedreferenceJ. ARTHUR THOMPSON and PATRICK GEDDES, Life: Outlines of Biology ( New York, Harper Bros., 1931 ) as cited in Harlow Shapely, Samuel Rapport and Helen Wright, ed., A Treasury of Science (fourth edition; New York; Harper and Brothers, 1958), p. 285..en_US
dc.identifier.citedreferenceK. E. BOULDING, " Toward a General Theory of Growth ", Canadian Journal of Economics and Political Science, Vol. XXXI ( August 1953 ), p. 326. In this context, however, a distinction might be made between growth, "an increase in the amount of the organism's living matter", and development, "the formation of new and complex structures out of the undifferentiated and apparently simple". Cf. THOMPSON and GEDDES, op. cit., pp. 285, 289.en_US
dc.identifier.citedreferenceTHOMPSON, op. cit., p. 291.en_US
dc.identifier.citedreferenceTHOMPSON and GEDDES, op. cit., p. 284.en_US
dc.identifier.citedreferenceJ. J. SPENGLER, " Theories of Socio-Economic Growth ", Universities-National Bureau Committee, Problems in the Study of Economic Growth, S. Kuznets, ed. ( New York, National Bureau of Economic Research, 1959 ), pp. 97 – 101.en_US
dc.identifier.citedreferenceS. KUZNETS, " Toward a Theory of Economic Growth ", National Policy for Economic Welfare at Home and Abroad, R. Lekachman, ed. ( Garden City, Doubleday and Co., 1955 ), p. 16..en_US
dc.identifier.citedreferenceS. KUZNETS, " Suggestions for an Inquiry into the Economic Growth of Nations ", Problems in the Study of Economic Growth, p. 6.en_US
dc.identifier.citedreferenceI. B. KRAVIS, " The Scope of Economic Activity in International Income Comparisons ", Problems in the International Comparison of Economic Accounts, Conference on Research in Income and Wealth, Studies in Income and Wealth, Vol. XX (New York, National Bureau of Economic Research, 1957), p. 350.en_US
dc.identifier.citedreferenceHLA MYINT, Theories of Welfare Economics ( Cambridge Harvard University Press, 1948 ).en_US
dc.identifier.citedreferenceJ. R. HICKS, " On the Valuation of Social Income ", Economica, VII (New Series), May 1940, pp. 105 – 124; P. A. SAMUELSON, "Evaluation of Real National Income", Oxford Economic Papers, II (New Series), January 1950, pp. 1–29. 18See below, pp. 69–74..en_US
dc.identifier.citedreferenceS. KUZNETS, " National Income and Economic Welfare ", Economic Change ( New York, W. W. Norton, 1953 ), p. 204.en_US
dc.identifier.citedreferenceN. S. BUCHANAN and H. ELLIS, Approaches to Economic Development ( New York, Twentieth Century Fund, 1955 ), p. 22.en_US
dc.identifier.citedreferenceS. KUZNETS, " Toward a Theory of Economic Growth ", National Policy for Economic Welfare at Home and Abroad, R. Lekachman, ed. ( Garden City, Doubleday and Co., 1955 ), p. 16 (Italics added)..en_US
dc.identifier.citedreference22 Ibid., p. 99.en_US
dc.identifier.citedreferenceC. CLARK, " Theory of Economic Growth ", Proceedings of the International Statistical Conferences ( Washington, D. C., Econometric Society, 1947 )), Vol. V, p. 112.en_US
dc.identifier.citedreference24 See the introduction to Conditions of Economic Progress (Second edition; London, Macmillan and Co., Ltd., 1951 ).en_US
dc.identifier.citedreferenceN. S. BUCHANAN and H. S. ELLIS, Approaches to Economic Development ( New York, The Twentieth Century Fund, 1955 ), p. 7.en_US
dc.identifier.citedreferenceJ. VINER, International Trade and Economic Development ( Glencoe, Illinois, The Free Press, 1952 )), pp. 126 – 128.en_US
dc.identifier.citedreferenceJ. R. HICKS, A Revision of Demand Theory ( Oxford, Clarendon Press, 1956 ), p. 6.en_US
dc.identifier.citedreferenceA. C. PIGOU, The Economics of Welfare ( London, Macmillan and Co., Ltd., 1920 ), p. 10.en_US
dc.identifier.citedreferenceJ. R. HICKS, " On the Valuation of Social Income ", Economica, VII (New Series), May 1940, pp. 105 – 124; S. KUZNETS, "On the Valuation of Social Income–Reflections on Professor Hicks’ Article", Economica, XV (New Series), February 1948, pp. 1–16, May 1948, pp. 16–131; P. A. SAMUELSON, "Evaluation of Real National Income", Oxford Economic Papers, II (New Series), January 1950, pp. 1–29; T. SCITOVSKY, Welfare and Competition (Chicago, Richard D. Irwin, Inc., 1951), pp. 70–82; M. ABRAMOVITZ, "The Welfare Interpretation of Secular Trends in National Income and Product", The Allocation of Economic Resources, M. Abramovitz, ed. (Stanford, Stanford University Press, 1959), pp. 1–22. Further references are to be found in these works.en_US
dc.identifier.citedreferenceJ. R. HICKS, op. cit., pp. 108 – 110.en_US
dc.identifier.citedreferenceP. A. SAMUELSON, loc. cit.,.en_US
dc.identifier.citedreferenceJ. R. HICKS, op. cit., p. 111.en_US
dc.identifier.citedreferenceJ. R. HICKS, loc. cit.; S. KUZNETS, loc. cit..en_US
dc.identifier.citedreferenceP. A. SAMUELSON, loc. cit..en_US
dc.identifier.citedreferenceN. KALDOR, " A Classificatory Note on the Determinateness of Equilibrium ", Review of Economic Studies, 1 ( 1933 /34 ), pp. 126 – 129..en_US
dc.identifier.citedreferenceHICKS, op. cit., p. 107.en_US
dc.identifier.citedreferenceS. KUZNETS, " National Income and Economic Welfare ", p. 204. KUZNETS also observes that "This assumption is basic to any concept of economic welfare or progress, or for that matter of any welfare or progress. Unless we are willing to grant this essential identity of man, no comparisons are possible, no results that would relate to comparable identities".en_US
dc.identifier.citedreferenceI. FISHER, The Theory of Interest ( New York, Macmillan and Co., 1930 ), pp. 3 – 35; The Nature of Capital and Income (New York, Macmillan and Co., 1930).en_US
dc.identifier.citedreferenceS. KUZNETS, " Long-Term Changes in the National Income of the United States of America Since 1870 ", Income and Wealth, Series II ( London, Bowes and Bowes, 1952, for the International Association for Research in Income and Wealth), pp. 63–69.en_US
dc.identifier.citedreference40 Cf. Supra, p. 66.en_US
dc.identifier.citedreferenceS. F. NADEL, The Theory of Social Structure ( Glencoe, The Free Press, 1957 ), p. 20.en_US
dc.identifier.citedreferenceF. A. HAYEK, " Scientism and the Study of Society ", part III, p. 27. See also T. PARSONS, The Social System (Glencoe, The Free Press, 1951), p. 31.en_US
dc.identifier.citedreferenceT. PARSONS, The Structure of Social Action ( Glencoe, The Free Press, 1949 ).en_US
dc.identifier.citedreference44 This implies a generalization of THOMPSON'S definition, "From a physical point of view, we understand by a ‘mechanism’ whatsoever check or controls, and guides into determinate paths, the workings of energy…" W. D'ARCY THOMPSON, op. cit., p. 291.en_US
dc.identifier.citedreferenceH. A. SIMON, " The Role of Expectations in an Adaptive or Behavioristic Model ", in M. J. Bowman, ed., Expectations, Uncertainty and Business Behavior ( New York, Social Science Research Council, 1958 ), pp. 53.en_US
dc.identifier.citedreferenceKINGSLEY DAVIS, Human Society ( New York, The Macmillan Company, 1949 ), p. 24.en_US
dc.identifier.citedreference47 In this regard, note should be made of the problems encountered in attempting to identify empirically what is economic and what is not economic activity. E. E. HAGEN has observed that "… human activity is not divided into such two classes (as economic and non-economic)…., the two classes are not mutually exclusive". E. E. HAGEN, "Comment", Problems in the International Comparison of Economic Accounts, Conference on Research in Income and Wealth, Vol. xx (New York, National Bureau of Economic Research, 1957), pp. 387–388. Concrete examples are provided A. R. PREST and I. G. STEWART in connection with attempts to measure the national income of Nigeria, where, they observe, "…the distinction between production and living, the distinction between working and not working,…is often nebulous". A. R. PREST and I. G. STEWART, The National Income of Nigeria, Colonial Research Studies, No. I (London, Her Majesty's Stationary Office, 1953), p. 4.en_US
dc.identifier.citedreferenceT. PARSONS, and N. J. SMELSER, Economy and Society ( Glencoe, The Free Press, 1956 ).en_US
dc.identifier.citedreference49 PARSONS defines ("in the simplest possible terms") the concept of a social system as implying "… a plurality of individual actors interacting with each other in a situation which has at least a physical, or environmental aspect, actors who are motivated in terms of tending to the ‘optimization of gratification’, and whose relations to their situations including each other, is defined and mediated in terms of a system of culturally structured and shared symbols". T. PARSONS, The Social System (Glencoe, The Free Press, 1951), pp. 5/6. Thus there is implied a body of individuals, a physical environment, patterns of motivation and shared cultural norms and symbols. The latter gives coherence to the system by providing a basis for persistent interaction.en_US
dc.identifier.citedreferenceHe further notes that to be worthy of study the social system must have means of "…duration sufficiently long to transcend the life span of the normal human individual, recruitment by biological reproduction and socialization of the oncoming generation". Any social system "… which meets all of the essential functional prerequisites of long-term persistence from within its own resources, will be called a society ". "It is not essential to the concept of a society that it should not be in any way empirically interdependent with other societies, but only that it should contain all the structural and functional fundamentals of an independently subsisting system." That is, it should be potentially independent. Op. cit., p. 19 (italics added).en_US
dc.identifier.citedreference50 Cf. Supra, pp. 61/62.en_US
dc.identifier.citedreferenceJ. R. HICKS, " On the Valuation of Social Income-A Comment on Professor Kuznets’ Reflections ", p. 166.en_US
dc.identifier.citedreference52 On this latter point, see the testimony of EWAN CLAGUE before the Joint Economic Committee, Hearings on Employment, Growth and Price Levels, Part III (April 25-28, 1959), pp. 468–493; C. D. LONG, The Labor Force Under Changing Income and Employment (Princeton, Princeton University Press for the National Bureau for Economic Research, 1958).en_US
dc.identifier.citedreference53 Phrasing the question so that we are looking hackward in chronological time seems preferable to phrasing it from the opposite point of view. It probably makes no difference in terms of identifying the presence of growth, and it minimizes (but does not eliminate) the conceptual difficulties posed by the introduction of new products.en_US
dc.identifier.citedreference54 In this context the appropriate statistical concept would be gross domestic product rather than gross national product. The difference, which in most cases may not be great, derives from the existence of incomes accruing to residents which result from productive activities performed outside the nation ("net factor incomes received from abroad"). This again suggests the nature of the difference between this approach and the welfare approach. For the welfare approach, the appropriate concept would be gross national product. On the distinction see United Nations, A System of National Accounts and Supporting Tables, Studies in Method, No. 2 ( New York, United Nations, 1953 ), pp. 7/8, 17.en_US
dc.identifier.citedreference55 It should be noted that this rationale of price weights for aggregation is free of the basic criticism made above, i. e., it is ethically neutral. However, many of the subsidiary criticisms do apply, particularly with respect to the implications of new products and changing degrees of monopoly power. Cf. Supra, pp. 72–74. It should also be noted that the use of price weights involves a simple linear approximation; they can only be assumed to reflect marginal transformation rates for small reorganizations of the composition of output, not for large reorganizations. They can at best provide a crude index.en_US
dc.identifier.citedreference56 It can be noted paranthetically that a physical production capacity concept of growth necessarily raises certain questions with respect to the meaning of the concept of the "rate of economic growth". The concept of a rate of change implies a single dimension. The production frontier is a multi-dimensional concept, and hence economic growth implies multi-dimensional changes. Only if one is willing to make some assumption with respect to the possibility of specifying a set of constant marginal rates of transformation is it possible to give simple meaning to the concept of a rate of growth in aggregate productive capacity.en_US
dc.identifier.citedreferenceW. D'ARCY THOMPSON, op. cit..en_US
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