Classical theory of economic growth

This book provides clear and comprehensible accounts of François Quesnay's Tableau Economique, Adam Smith's theory of capital accumulation and economic growth, and Thomas R. Malthus's theory of population and his theory of effective demand. It continues with an account of David Ricardo's theory of income distribution, and Karl Marx's theory of exploitation, and his theory of the declining rate of profit, the emergence of a growing reserve army of the unemployed and the collapse of capitalism.

These accounts are complete in themselves. In combination they also offer a general statement of the classical theory of economic growth. In this, only part of the economy creates an investable surplus over costs and growth depends on the reinvestment of a sufficient fraction of that surplus. Decline is inevitable if luxury consumption or unproductive government consumption exceeds the surplus that the productive sector generates.

In Quesnay's original statement of the theory, the surplus is derived solely from agriculture. The great British classical economists believed that industry and commerce also contributed to it, while Marx believed that at a fundamental level the economic resulted from the exploitation of labour engaged in material production in both industry and agriculture.

Each author modified, corrected and developed the argument of his predecessors and made important additions. The book concludes with a chapter which summarises the contributions and sets out a complete account of the classical theory of economic growth. It explains how far this is still relevant to our world, and why some elements of the theory are now obsolete.

The successive theories are restated in the original authors' own words and also in the language of modern economics. Readers can follow the bulk of the argument without reading the mathematical sections, which seek to show that logically coherent models lie behind the enormously influential eighteenth- and nineteenth-century prose in which these theories were originally advanced.