Capital, Growth and Definitions of Technical Progress

Abstract

There is a silent conflict between theories of growth which tend — with notable exceptions — to describe smooth evolutions in growth processes based on neutral technical progress, and capital theory which emphasises the potentially radically different features of alternative techniques in static comparisons. Capital theory has shaken the neoclassical theory of growth by discrediting the construction of the surrogate production function but I shall attempt to show here briefly that capital theory in its full abstract generality is incompatible with any reasonable theory of growth and progress so that progress must be represented on the basis of more concrete specifications if any notion of steady growth and of regular increases of productivity is to be retained.

First published in Kyklos, 32 (1979), pp. 236–50. This issue of Kyklos was dedicated as a Festschrift to G. Bombach. I should like to thank Joan Robinson for important comments on the first draft of this paper. The responsibility for the present version is entirely mine.