- Elgar original reference
Edited by Mark Setterfield
Duncan K. Foley and Thomas R. Michl Since the purpose of this chapter is to locate the classical theory of economic growth in relation to both Keynesian and mainstream neoclassical theories of growth, we begin with an overview of the problem before elaborating the theoretical frameworks and examining their interrelationships. Economic growth is the cumulative increase in the productive power of human labor effort to meet human needs through changes in the scale and technology of production, the acquisition of skills and knowledge, and the accumulation of means of production such as tools, buildings, and transportation systems. Economic growth was slow and irregular for most of human existence, up to the emergence of industrial capitalism in Europe starting in the fourteenth to sixteenth centuries ce, though the comparison of the Roman or Chinese empires with Stone Age societies shows that substantial economic growth cumulated over many millennia. A dramatic acceleration of world economic growth occurred starting in Europe at the end of the Middle Ages, which has spread to the whole world economy over the last 500 years. Economic growth in this period is based on the organization of a complex division of labor through the exchange of products as commodities bought and sold in monetized markets, the spread of the institution of free wage labor, the establishment of private property rights in means of production including land and natural resources, the emergence of strong national states with effective legal and regulatory systems, and the systematic application of scientific methods...
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