European Contributions and Concepts
New Horizons in Institutional and Evolutionary Economics series
Edited by Jürgen G. Backhaus
Chapter 2: Growth or development: the concept of the historically writing economist
Jürgen G. Backhaus INTRODUCTION1 In his review of economic development ‘From the beginning to Rostow’ Robert Dorfman2 gives a sketch of his view of the history of economic thought on the subject of development. In this history of thought, he notes a big gap between the contributions of Mill and Marshall. For about a hundred years after the end of the classical period, the problems of economic growth seem to have lost their urgency. At any rate, other problems such as justifying and redressing the income distribution or explaining and moderating the business cycle displaced economic growth at the top of the economists’ agendas. As evidence, when you read the sections on economic growth and progress in Marshall’s Principles of Economics, you are struck by how closely they echo the corresponding sections in Mill’s Principles, written 40 years before3 (p. 573). This gap needs some explanation. The purpose of this chapter is to bridge the gap and to provide the missing link. The first part gives some reconstruction of Robert Dorfman’s lineage of the history of development economics up until Rostow.4 The second offers an amendment to Robert Dorfman’s family tree of development economics in emphasizing the work of the historical school, notably of Gustav Schmoller (1838–1917). It is emphasized that Schmoller’s is a complex evolutionary theory emphasizing institutional prerequisites for economic development, going far beyond a theory of stages. This is illustrated in the third part with respect to the institution of money. A GAP IN DEVELOPMENT...
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