Post-Keynesian Perspectives on Economic Development and Growth

Abstract

As history, institutions, social and political forces specific to any economy have a profound effect on that economy’s dynamics, it is important to understand how these have evolved with the development of capitalism. The classical economists analysed economies with labour surpluses, which kept wages at subsistence levels, encouraging profits and therefore economic growth. Lewis extended this model to developing economies, with the labour surplus coming from the agricultural sector. With growth and development, the labour surplus becomes absorbed into the labour force, eventually leading to upward pressure on wages. This is associated with the Keynesian era, where the level of effective demand becomes an important determinant of employment and growth. As a result of further development, competitive capitalist economies have evolved to the monopoly capital stage, where oligopolistic corporations influence the dynamics of the economy. More recently, we have seen the increased prominence of the financial sector, which has both led and been influenced by globalisation.

Keywords: economic development, history of economic thought, Post-Keynesian, economic history, industrialisation, monopoly capitalism

JEL Classification: B00, N00, O10, O14