How did It Start?

Abstract

During the 1950s a new economic god was born in Europe — the God of Growth. Or perhaps it would be truer to say he was reborn, in a new guise. The classical economists of Adam Smith’s day certainly concerned themselves with the question of what made economies grow, and why some grew faster than others. But as the nineteenth century wore on economists began to concern themselves increasingly with other matters — with income distribution and the theory of the firm, to name two examples; and in the years after the 1914–18 war the overriding priority became the achievement of full employment and economic stability, and the vanquishing of the business cycle. In the appalling economic environment of the 1930s a preoccupation with economic growth rates would have seemed at best an eccentricity, at worst criminal irresponsibility. In the age of Keynes and the New Deal the vital thing was to keep the economic machine ticking over, to stop production and wealth running down through inadequate demand.