Robert Torrens and the Classical Theory of Growth

Taro Hisamatsu
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Taro Hisamatsu: Graduate School of Economics, Kobe University

No 1633, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: This paper reconstructs Torrens fs theory of economic growth. Actual wage is determined by the capital-population ratio between the maximum and the minimum wage. In the process of growth, the maximum wage keeps being lowered by the decreasing marginal productivity in agriculture, while the minimum wage remains constant. Based on these notions of wages, Torrens fs economic dynamics are described as follows. In the early stage of growth, capital increases faster than population so that the actual wage rises above the minimum. Thereafter, the economy grows with a tendency for the population to increase faster than the capital while limiting the actual wage below the decreasing maximum until it enters a stationary state and the actual wage and profit rate are reduced to their minimum. This theory has been attributed to Ricardo by some scholars, but Torrens proposed a more ingenious theory than Ricardo fs.

Pages: 13 pages
Date: 2016-10
New Economics Papers: this item is included in nep-gro and nep-hpe
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