Development and Underdevelopment in the History of Economic Thought

Towards a Qualitative Reassessment of Economic Laws Proclaiming the Inexorable Growth of Government Activity

Nicolarsen John, New York University (NYUSPS)

The issue as to the role and size of government involvement remains a highly disputed topic. Certain theoretical insights from the economic thought as to “laws of increasing government activity” offer rhetorically powerful pronouncements but may be questionable as to how they are empirically substantiated and methodologically derived. On top of these considerations most nations have experienced the active rollback of state activity under austerity programs. Given these developments, has the size and growth of the state actually been reduced under conservative governments? The hypothesis here is that pronouncing an increased role and regularity of government involvement is warranted and useful so far as they are grounded qualitatively and quantitatively. What, then, should the qualitative first principles be and how can they possibly be applied to other economies with different resource constraints, technologies, resource productivity, and accounting systems? In attempting to answer these and other questions this paper will: 1.) briefly trace the intellectual heritage of concepts proclaiming increasing regularities of government activities (e.g., Wagner’s Law); 2.) discuss and evaluate the differing methodological tools relied upon when undertaking empirical work supporting these types of declarations; 3.) address questions regarding development-oriented ecological-economic fiscal policy constraints and possibilities in both core and peripheral economies where varying monetary and material constraints are operative; 4.) model and show the fiscal and material growth of government activity and capacity building at federal, state and local levels using the USA as an example; 5.) outline and advance novel policies as to the logic for connecting core and periphery “convergence symmetries”; and, lastly 6.) speculate as to the larger potential and possibilities for nationalization and/or investment in key industries with postneoliberal progressive policies.


Keywords: Wagner’s Law, Public Finance, Public Works, Social Costs, Peacock-Wiseman Hypothesis, Walker and Vatter Hypotheses, Post Keynesian Sectoral Balances Approach, Technological Change, Neoliberalism, Austerity, Climate Crises, Methodology