Solow's Harrod: Transforming macroeconomic dynamics into a model of long-run growth

Verena Halsmayer and Kevin D. Hoover

The European Journal of the History of Economic Thought, 2016, vol. 23, issue 4, 561-596

Abstract: Modern growth theory derives mostly from Solow's “A Contribution to the Theory of Economic Growth” (1956). Solow's own interpretation locates its origins in his view that Harrod's growth model implied a tendency toward progressive collapse of the economy. He formulates his view in terms of Harrod's invoking a fixed-coefficients production function. We challenge Solow's reading of Harrod's “Essay in Dynamic Theory,” arguing that Harrod's object in providing a “dynamic” theory had little to do with the problem of long-run growth as Solow understood it, but instead addressed medium-run fluctuations, the “inherent instability” of economies. Solow's interpretation of Harrod was grounded in a particular culture of understanding embedded in the practice of formal modelling that emerged in economics in the post-Second World War period. Solow's interpretation, which ultimately dominated the profession's view of Harrod, is a case study in the difficulties in communicating across distinct interpretive communities and of the potential for losing content and insights in the process. Harrod's objects -- particularly, of trying to account for a tendency of the economy toward chronic recessions -- were lost to the mainstream literature.

Date: 2016
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DOI: 10.1080/09672567.2014.1001763

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