Introduction to models of economic growth


The classical period(1776 to the mid 19



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The classical period(1776 to the mid 19

th

century) : 1776 was the year the father of modern economics’,  

Adam Smith published his book,  The Wealth of Nations (WON).  During this period most economists 

focused a great deal of their attention on the question of economic growth.  As a result, all classical 

economists were development economists!  However, other than one part of Smith’s WON, the bulk of 

attention was directed toward the limits to growth that agriculture presented.  This is why 19

th

 century 



English historian Thomas Carlyle dubbed economics “the dismal science”. Outside the hallowed halls of 

academia the monumental changes to the British economy that were taking place largely unnoticed.  

These changes were to prove, at least for a substantial period of time (from the early 19

th

 century to the 



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present), that economic growth was not going to be held back by a limited supply of natural resources 

such as land.      



Marxism:  Karl Marx, the father of socialism, was strongly influenced by the free market classical 

economist David Ricardo (Ricardo, among other things, gave us the principle of comparative 

advantage which the doctrine of unregulated international trade is based on).  Marx’s focus, like 

the classical economists such as Ricardo whom he had read and admired, was first and foremost 

on growth. However, unlike his classical forbearers, Marx argued that capitalism was a passing 

phase. To make a long story short, this scared the hell out of other economists who, of course, 

were from wealthy successful backgrounds and the beneficiaries of capitalism. Their response 

was to basically change the subject and focus on a key weak spot in classical and Marxian 

economics, the question of how prices were determined.  The neoclassical period (roughly 1870 

to 1930) gave birth to modern microeconomics.  Much of what we learn in courses like ECON 

202 and ECON 302 is thanks to the work carried out by economists during this period.  As the 

details of how markets function were developed the subject of economic growth and 

development and the question of where the world was heading was largely forgotten.   


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