Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Technological Progress in the Theory of Accumulation of the Classical Economists and Marx

Smith Matthew, University of Sydney

The paper is concerned with identifying the role of technical progress in the theory of accumulation of the classical economists and Marx. The paper particularly focusses on how these economists conceived that technical progress promoted accumulation, mainly from the standpoint of a supply-side approach to growth. The paper explores the notion that the reduction in the price of products induced by productivity growth stemming from technological progress plays a critical role in promoting growth by increasing the real value of the social surplus product and, thereby, by lifting real saving and investment through time. In the introductory section we define in general terms what we mean by technological progress consistent with classical analysis as the basis for our later discussion. In Section 2 we begin with a concise account of the treatment of technical progress in the analysis of accumulation by the earliest classical economists of Petty and Quesnay and then by Adam Smith. From Smith we then consider in Section 3 Ricardo’s more complex position on the causes of technological progress and its promotion of accumulation, the latter in connection to his argument on the machinery question and technological unemployment. Section 4 considers Malthus’s different position on how technological progress promotes growth, mainly in relation to the machinery question, from the standpoint of an explicit demand constraint in his theory of accumulation. In Section 5 we consider Marx’s analysis on the connection between technological progress and accumulation by reference to his theory of a tendency of a falling rate profit and the logical counteracting forces to that tendency. A brief conclusion is provided in the final section.

Area: Eshet Conference

Keywords: classical economics, technological change, Marx, growth.

Please Login in order to download this file