Ricardo's Theory of Growth and Accumulation: A Modern View (The Graz Schumpeter Lectures)

In the aftermath of the Napoleonic Wars Britain found itself faced with a stagnant economy. Economist David Ricardo believed that the full re-integration of Britain into the world market would allow for both capital accumulation and population growth, and used arguments that anticipate ideas entertained in modern contributions to the theory of economic growth and development. However, several of these arguments have not yet been translated into the language of modern classical economics. __Ricardo’s Theory of Growth and Accumulation__ seeks to overcome this striking lacuna. The latest entry in the Graz Schumpeter lecture series, this text explores and elaborates Ricardo’s arguments and the models utilized by those who subsequently followed in support of his work. The Ricardian system is first examined through a one-sector economy, following Kaldor’s model, and a two-sector economy, following Pasinetti’s model. These building blocks are developed through the exploration of a small open economy, which allows an analysis of the impact of international trade in exceedingly simple circumstances. This discussion expands further by considering the world economy. More sophisticated variants of the two-sector model are presented, in which commodity prices are endogenously determined by the trading interplay amongst several countries. A final analysis makes Ricardo’s case by introducing accumulation in the world economy. This book is of interest to students and scholars of Ricardo, classical economics, and – more broadly – growth theory, the theory of international economics, and globalization. The author was keen to render the analytical parts compelling to the historian and the historical parts compelling to the theorist. Cover Half Title Series Page Title Page Copyright Page Table of Contents List of Illustrations Tables 1.1 The Input-Output Data of Freni’s Example 3.1 Input-Output Conditions 4.1 Ricardo’s Four Magic Numbers Figures 1.1 The MP Curve 1.2 The MP Curve as a Polygonal 1.3 The Curve Relating Labour to (1 + r) 1.4 The MP Curve and the ω Curve (in Red) 1.5 Corn Produced by Labour Alone 1.6 A Backstop Technology 1.7 Increasing Returns 2.1 Kaldor’s Diagram for Pasinetti’s Ricardian System 2.2 The Stationary State in Kaldor’s Diagram for Pasinetti’s Ricardian System 2.3 The Ricardian System in Which Workers Consume cloth and the Rate of Growth is a Function of r 3.1 Kaldor’s Diagram for the Ricardian System of a Small Open Economy 4.1 The Described Polygonal 4.2 Step 2(i) 4.3 Step 2(ii) 4.4 Step 2(iii) 4.5 Step 2(i)bis 4.6 Step 2(ii)bis 5.1 The Phase Space When m = 1/2, α = 2, β = 1/2 5.2 Dynamics Through the Areas 5.3 The Patterns of Trade 5.4 The Phase Space of the Second Example When m = 1/2, α = 2, β = 1/2 Preface 1 The One-Sector Model 1.1 The Model 1.2 On the MP Curve 1.3 On Commodity Inputs in the Production of Corn 1.4 On the Assumption of a Given Real Wage Rate 1.5 Endogenous Growth 1.6 A Comparison with Some Models of the New Growth Theory 1.7 Concluding Remarks 1.A Mathematical Appendix 2 The Two-Sector Model 2.1 The Model 2.2 On the Production Functions 2.3 On Workers’ Consumption 2.4 Comparison with an NGT Model 2.5 Concluding Remarks 3 The Small Open Economy 3.1 Ricardo on International Trade and Long-Run Growth 3.2 The Model 3.3 On the Production Functions and the Static Gain From Trade 3.4 On the Dynamic Gain From Trade 3.5 Three Misleading Results 3.6 Concluding Remarks 4 The World Economy: Existence of an Equilibrium 4.1 An Excursus: A World Economy for Single Production Growing Economies 4.2 The Pasinetti-Ricardo World Economy Model 4.3 Ricardo and the World Economy 4.4 Remarks on the HOS Theory 4.5 Concluding Remarks 5 The World Economy: The Dynamics 5.1 A General Discussion Concerning the Dynamics of a World Economy 5.2 An Example 5.3 The Phase Space of the World Economy 5.4 Trajectories of the World Economy 5.5 The Patterns of Trade 5.6 Another Example 5.7 Ricardo on a Case of Reversal of the Pattern of International Specialization Among Trading Countries 5.8 Concluding Remarks 5.A1 Appendix: The Construction of the Phase Space 5.A2 Appendix: The Details of the Second Example References Index "In the aftermath of the Napoleonic Wars Britain found itself faced with a stagnant economy. Economist David Ricardo believed that the full re-integration of Britain into the world market would allow for both capital accumulation and population growth, and used arguments that anticipate ideas entertained in modern contributions to the theory of economic growth and development. However, several of these arguments have not yet been translated into the language of modern classical economics. Ricardo's Theory of Growth and Accumulation seeks to overcome this striking lacuna. The latest entry in the Graz Schumpeter lecture series, this text explores and elaborates Ricardo's arguments and the models utilized by those who subsequently followed in support of his work. The Ricardian system is first examined through a one-sector economy, following Kaldor's model, and a two-sector economy, following Pasinetti's model. These building blocks are developed through the exploration of a small open economy, which allows an analysis of the impact of international trade in exceedingly simple circumstances. This discussion expands further by considering the world economy. More sophisticated variants of the two-sector model are presented, in which commodity prices are endogenously determined by the trading interplay amongst several countries. A final analysis makes Ricardo's case by introducing accumulation in the world economy. This book is of interest to students and scholars of Ricardo, classical economics, and - more broadly - growth theory, the theory of international economics, and globalization. The author was keen to render the analytical parts compelling to the historian and the historical parts compelling to the theorist"-- Provided by publisher Economist David Ricardo used arguments that anticipate ideas entertained in modern contributions to the theory of economic growth and development. This book seeks to translate these arguments into the language of modern classical economics.