New Directions in Theory and Policy
Edited by Phillip Arestis, Michelle Baddeley and John S.L. McCombie
Philip Arestis, Michelle Baddeley and John S.L. McCombie In September 2005, the Cambridge Centre for Economic and Public Policy – based in the Land Economy department of the University of Cambridge, UK – hosted its second oﬃcial conference. The theme selected for this conference focused on the nature, causes and features of economic growth across a range of countries and regions. This volume is a collection of some of the key papers presented at this conference, and they address a broad range of growth-related topics – from theoretical analyses of economic growth in general to empirical analyses of growth in the OECD, transition economies and developing economics. In Chapter 2, this volume begins with ‘Is growth theory a real subject?’, in which Franklin Fisher presents the paper given at the conference as an afterdinner talk. It has been left in that form rather than making it more formal because the anecdotes are interesting as well as amusing. But the paper’s informality should not conceal that fact that, together with the sugar, it is administering very strong and bitter medicine to growth theory and to macroeconomics generally. Franklin Fisher questions the widespread use of aggregate production functions in growth theory and also raises the issue of what is meant by the words ‘capital’, ‘investment’, ‘labor’, ‘productivity’ and ‘output’. These concepts cannot be freely used as though they are related by a production function. Macroeconomic theories must question these links if they are to be more than a spurious application of microeconomic theory....