Classical Growth Theory, Robert Malthus, Adam Smith, and David Ricardo
Conducting an examination on theories developed over the years, reveals that while some theorists received stimulation from accidental incidences, theories on classical economies involves combinations of common strands of focus contributed by classical economists on how the market economies operated. Although neoclassical and modern economists levy a general trend of criticism against the rationality of individual theories contributing towards the collective classical theories, it is essential not to overlook the existing rationality and applicability in today's economy.
Classical theory of growth comprising contributions from Robert Malthus, Adam Smith, and David Ricardo amongst others explains that the process of economic growth will end as the population increases and resources become limited. Economists behind the development of this theory based their theoretical foundations to generating the concept of subsistence level while modelling their individual theories. They held that if the Gross Domestic Product (GDP) recorded a rise above the subsistence point, it would stimulate a population explosion that would bring the real GDP to the initial level they identified as the equilibrium level (Brewer, 2010).
[...] ( 2008, March 26). Malthusian Population Dynamics: Theory and Evidence. Retrieved December from http://www.brown.edu/Departments/Economics/Papers/2008/2008-6_paper.pdf Boianovsky, M., & Hoover, K. D. (2009, January 29). The Neoclassical Growth Model and 20th Century Economics. Retrieved December from http://www.cultureofdoubt.net/download/docs_cod/neoclassical%20growth%20model.pdf Boundless. (2010). Malthus' Theory of Population Growth. Retrieved December from https://www.boundless.com/sociology/understanding-population-and-urbanization/populationgrowth/malthus-theory-of-population-growth/ Brewer, A. (2010). The Making of the Classical Theory of Economic Growth. New York: Taylor & Francis. Brym, R. [...]
[...] In particular, the theory fails to provide clear limits of population growth despite predicting about doomsday. This disregards the application of the theory since the areas associated with population explosions such as Indonesia and the developed Europe portrays the most prosperous economies. CLASSICAL GROWTH THEORY 6 Bibliography AAG. (2011, September 18). Malthusian Theory of Population. Retrieved December from http://cgge.aag.org/PopulationandNaturalResources1e/CF_PopNatRes_Jan10/CF_PopNatRes_Jan10 8.html Andersen, M. L., & Taylor, H. F. (2010). Sociology : The Essentials ed.). Belmont: Wadsworth Cengage Learning. Ashraf, Q., & Galor, O. [...]
[...] (2008). Classical Economics: The Encyclopedia of Libertarianism. SAGE. Vitez, O. (2013). Problems With Keynesian Economics. Houston: Houston Chronicle. [...]
[...] J., & Lie, J. (2007). Sociology: Your Compass for a New World ed.). Mason: Cengage Learning. Griffith, G. T. (2010). Population Problems of the Age of Malthus. Cambridge University Press. Meade, J. E. (2012). A Neo-Classical Theory of Economic Growth (Routledge Revivals). Oxon: Routledge. [...]
[...] With the above development platform, it is possible to evaluate the rationality and applicability of the classical theory of economic growth. To begin with, Smith model assumes that capital and labour exists in fixed proportions, with the latter supply becoming elastic at the end of a natural wage rate. Here, Smith belief of constant increasing returns to factors of production is questionable since his individual theory fails to demonstrate how output levels respond to increasing labour supply of a fixed proportion of land. [...]
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