Money, Banks and Finance in Economic Thought

An Alternative View of Smithian Growth Theory

Yagi Takashi, Meiji University, School of Political Science and Economics

The aim of this paper is to give an alternative view of Smithian growth theory. Negishi (1989) introduces two sector growth model of commodity and labour and explains the growth theory of Adam Smith as von Neumann-Smith growth theory. We have an alternative view about the reproduction process of Adam Smith. This paper will give some new viewpoints to interpret steady state of Smithian growth pass. Firstly we will distinguish labour amount in the production process from that in the labour market. We will denote the labour amount in the production process by L, while we denote the labour amount exchanged with commodity in the labour market by N. Labour market is open at theend of production process, and the labour purchased in the market is used in the next production process. Secondly, we also introduce a notion of value of labour, which is different from the price of labour, or the wage rate. We will explain the exchange between labour and commodity in two ways. When we consider the production process, commodity price is measured in terms of labour which is used in the production process. The price in terms of labour is obtained by dividing commodity price by value of labour. On the other hand, when we consider the exchange between commodity and labour in the labour market, commodity price is measured in terms of labour commanded. The price is obtained by dividing the commodity price by the wage rate. [References] Takashi Negisi (1989), History of Economic Theory, Horth-Holland. Tomoyoshi Fujitsuka (1952), Adam Smith kakumei (Adam Smith Revolution), Univeruity of Tokyo Press.

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Keywords: Negishi's von Neumann - Smith Growth Model, Labour Commanded, Reproduction

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