Veblen and the New Growth Theory: Community as the Source of Capital's Productivity

Abstract

A century ago Thorstein Veblen argued that knowledge, which is produced and possessed by the community as a whole, is the foundation on which the productivity of "capital" rests. Orthodox economists chose to ignore Veblen and instead accepted John Bates Clark's definition of capital and the marginal productivity theory that goes with it. Recently, however, mainstream economists working on the "New Growth Theory" have rejected Clark's approach and have redefined capital so as to emphasize the importance of knowledge as well as its social character. Nevertheless, they still have an important lesson to learn from Veblen about growth, namely that technological development is nothing less than a process of cultural transformation.Veblen, New Growth Theory, Technological Change, Capital,

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“…La technologie, la connaissance et les rendements croissants ont une place prépondérante dans l'analyse de la dynamique économique développée par Veblen. Ceci a été formalisé depuis dans les modèles de croissance endogène (McCormick, 2002). Mais Veblen a plus encore anticipé la tendance à considérer les institutions (7) et la cohérence des institutions comme le facteur majeur de la croissance et du développement.…”

Free Software, Business Capital, and Institutional Change: A Veblenian Analysis of the Software Industry

“…10 It is important to note that whatever differences there may be between these two economists in their theories of capital, they both adhere to an exogenous conception of technology (McCormick 2002). Namely, even though both Clark and Böhm-Bawerk acknowledge the role of technology in the productivity of capital, they do not incorporate technological knowledge as a constituent element of the definition of capital.…”

Modeling the Economy as a Whole: An Integrative Approach

“…In short, under circular production, scarcity has no theoretical meaning and hence is not an organizing principle of economic inquiry in heterodox economics. 2 Finally, the absence of original factors of production and scarcity means that with circular production, the restraints on the social provisioning process are not a result of given quantities of scarce factor inputs located in production, but are located in the decisions and social values that affect the production of the surplus (Q2) and its distribution (McCormick 2002;De Gregori 1985Zimmermann 1951;Levine 1977Levine , 1978Veblen 1908).…”