Trump's growthism: its roots in neoclassical economic theory

Review of Income and Wealth, 1997

1997

This paper proposes a new framework for the measurement of national income which generalises and unifies the existing approaches. We begin by defining the maximum discounted utility which the economy can achieve starting from any initial capital stock vector. Using this we can then immediately formalise the Hicksian notion of income as the maximum amount which the economy could consume at a particular moment of time and leave it just as well off (in terms of the maximum present value of future consumption) as it was before. The measure of income so derived is in units of account (dollars). We then derive three key results. (i) We show that under a mild assumption this definition is formally identical to that by Weitzman (1976). (ii) The correction terms for GNP advocated by Hartwick (1990) emerge as a special interpretation of this measure in the context of natural resource depletion. (iii) The interpretation which Weitzman gave to national income as a permanent income measure of the economy's future consumption possibilities (its wealth) carries over to this context. The only difference is that, since interest rates are not in general constant, the appropriate rate of interest to use is in establishing this connection between income and wealth is a consumption-weighted average of the interest rates on the optimum path.

Ecological Economics, 2008

This paper argues that income is a flow of value to society; therefore, an economic modeler's choice of a concept of value imposes a concept of income. The argument is used to distinguish three concepts of national income. (1) In a discounted-utilitarian model, which is usually the basis for theoretic discussions of net national income, the formulation of value imposes a concept of income that is not observable and hence does not provide income statistics. (2) In a perfectly competitive economy, national income is, in principle, observable. Study of the competitive model provides a theoretic foundation for national accounting, with extensions to distorted economies. However, two unobservable components of ideal income, consumers' surplus and capital gains, are perforce neglected. (3) A maximin program is the mathematical representation of another value, sustaining an economy. It employs a method of intertemporal valuation that does not involve discounting. Income is sustained value. Since a maximin program is not expressed for a distorted economy, there is no observable indicator of whether an economy is being sustained.

What does the quintessential macroeconomic indicator, Gross Domestic Product (GDP), represent? The bourgeoning literature on the invention of GDP characterizes this object as an abstraction, used for measuring the size of the economy as a growing object. Bridging the literatures on the history of economic policymaking of the interwar period and the triumph of American Keynesianism in the postwar period, this paper argues that national income accounting and hence Gross National Product (GNP), the predecessor of GDP, were invented in the 1930s to monitor the inter-sectoral imbalances of the American economy. Tracing the formation of this discourse of inter-sectoral imbalances between the early 1920s and the late 1940s, the paper shows that the “Keynesian” macroeconomic state in the United States was constructed in the form of two concentric layers by two intergenerational groups of experts. In the first layer of substantive flows, institutionalist economists and their collaborators in...

1973

Here we focus our attention on the relative contribution of total factor input and productivity to economic growth in the national economy during the period 1948-66. To obtain growth rates, we use the real net national product (NNP), adjusted to allow for a 1 per cent per annum average increase of total factor productivity in general government. But since economic progress cannot occur unless real NNP grows faster than population, we shall also look at the relative contributions of total factor productivity and real total factor input, per capita, to rates of growth in real NNP, per capita. There is also interest in the relative growth rates of labor and property income-in the changing functional distribution of income. We shall examine this aspect of growth in terms of relative changes in productivity and in real price of the two major classes, as well as more broadly in terms of the historical elasticity of substitution during the' period covered. This analysis is confined to the business economy, for which independent measures of property and labor income are available. In view of its major role in economic growth, perhaps the greatest interest centers on the causal factors behind productivity growth. In the final section, we shall discuss causes, with particular emphasis on the proximate determinants in the form of growth in real intangible capital stock resulting from investments in: research and development, education and training, and other activities designed to increase the quality, or productive efficiency, of the tangible factor inputs, human and nonhuman. Between 1948 and 1966, real NNP (adjusted for government productivity advance, as described in the previous chapter) increased at an average annual rate of 4.1 per cent. Total net factor productivity rose at an average annual '.0

International Review of Applied Economics, 2006

This paper shows, first, that the recent proposal by and Hsieh ( , 2002 to perform growth accounting by directly differentiating the NIPA identity is simply an exercise in the manipulation of an accounting identity without any foundation. Second, simulations show that growth accounting performed with aggregate data is not equivalent to the true rate of technological progress implied by the micro data. Third, we conclude that the rate of total factor productivity growth usually estimated is simply a measure of distributional income.

2018

We consider here the necessity of redefining the concept of economic value and the system of measuring the contributions to national wealth, to be included in a new paradigm in economics, whose application should guarantee constant improvement of human well-being. Such a paradigm should be based on an adequate cultural value system. We begin with a brief description of the traditional concept of value, in which the price of a good is determined by the equilibrium between its supply and demand resulting from an unimpeded exchange. Then, the concept of value that should be the basis for the future system necessary for measuring contributions to wealth is introduced. In this concept, the value of a commodity should comprise all the costs that appear during its entire lifetime as well as a margin of profit, and the resulting value ought to be compared with the value corresponding to the utility coming out of its consumption. The corresponding prices are called the total production price...

Carnegie-Rochester Conference Series on Public Policy, 1978