Article,
Neoclassical Versus Evolutionary Theories of Economic Growth: Critique and and Prospectus
Economic Journal, 84 (336): 886--905 (1974)
Abstract
This article analyzes the theories of economic growth. The authors argued that there is a sharp inconsistency between the two bodies of research surveyed in this article, the macro growth literature and the macro literature on technological change, which calls into question the basic tenets of neoclassical theory. In the first section, the authors discuss neoclassical growth theory, and the nature of its inconsistency with the micro studies of technological change. They also consider the apparent attractiveness of the Schumpeterian alternative to neoclassical theory. The basic elements of an evolutionary growth theory are discussed in section two. It is proposed that this theory provides the framework for a rigorous and rich analysis of the processes of technical change and dynamic competition, encompassing several of the Schumpeterian ideas. Section three describes a particular evolutionary model and discusses some simulation results. Acceptance of the view that growth is an evolutionary, not a neoclassical, process involves a number of important changes in perspective and interpretation, and these are discussed in the final section.
