Accumulation, Effective Demand and Income Distribution

Abstract

The interest in the theory of accumulation and growth which boomed in the late 1950s and throughout the 1960s appears to have somewhat declined in the 1970s. However, this decline of interest was perhaps not so much due to a lack of concern with the problem under consideration; it seems rather to have been an expression of the growing disenchantment with the received answers given by the neo-Classical and neo-Keynesian approaches, respectively. Indeed, as was emphasized by Hicks and others,¹ to treat the problem of accumulation and growth in terms of steady-state analysis was increasingly considered inappropriate for an understanding of the process of economic expansion of industrially advanced countries. Hence attempts were undertaken to free the theory of accumulation and growth from the straitjacket of the steady-state method.

In the ‘golden age’ of the sixties, as it appears in retrospect, a steady-state model seemed often to be acceptable as an approximation to reality: in the darker days that have followed it is less appealing (J.R. Hicks, 1985, p. 10).