New Directions in Theory and Policy
Edited by Phillip Arestis, Michelle Baddeley and John S.L. McCombie
Chapter 2: Is Growth Theory a Real Subject?
Franklin M. Fisher It is, I believe, the job of an after-dinner speaker to be interesting, humorous, and provocative. I cannot guarantee the interesting part; I have hopes for the humorous requirement; but I am pretty sure about the provocative part of the job. So let me get that part started right away. This is, I am informed, a conference about economic growth, and, at least in large part, a conference about the theory of economic growth. My problem, however (kindly sit up straight, now), is that I strongly (and correctly) believe that, properly considered, there is no such theory. Further, there may even be no such subject as economic growth, considered in some of the very usual ways. Shall I sit down now before I am hustled away by the thought police? I do have some colleagues here to defend me. But I am probably safer here in Cambridge, UK, than in the United States – even though I will point out that such safety comes from an ideological rather than reasoned understanding of what I shall be talking about. Modern growth theory makes very heavy use of a national aggregate production function – whether it does so explicitly or not. The problem is that, save under very restrictive conditions, aggregate production functions do not exist and that such non-existence calls into question the use of such concepts as ‘total factor productivity’, the ‘labor-capital ratio’, the ‘natural rate of growth’, and so forth, even the macroeconomic meaning of terms such as...
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