THE PUBLIC SECTOR AND THE THEORY OF ECONOMIC GROWTH1
| Published date | 01 February 1959 |
| Author | A. T. Peacock |
| DOI | http://doi.org/10.1111/j.1467-9485.1959.tb00096.x |
| Date | 01 February 1959 |
SCOTTISH
JOURNAL
OF
POLITICAL
ECONOMY
FEBR
UA
R
Y
1959
THE
PUBLIC
SECTOR AND THE THEORY
OF
ECONOMIC GROWTH’
I
IN
1948,
Mr. Harrod wrote
:
‘
The Keynesian concepts are not enough.
And the crying need is for the reformulation
of
dynamic concepts and
the enunciation of a minimum set of truistic dynamic principles.’2
A decade later the major economic journals bear witness to the
seriousness of the attempt to develop a theory of economic growth
by
‘
dynamising
’
Keynesian macro-static models, and the pioneer
work
of
Harrod, Lundberg and D~rnar,~ to name the most prominent
writers, has inspired many theorists to make their mark by constructing
their particular variant of the earlier growth models.
The earlier models, and, indeed, many of the later variants have
usually ignored the place of the public sector as
a
major decision-
maker in the economy. Domar has offered explicit reasons for doing
so
which are worth noting. He writes:
‘.
.
. government is the most
troublesome of the three (forms of expenditure) because we have no
theory of government expenditure. In its absence we may dump
government expenditure on top of the other two as an exogenous
factor, merge
it
with consumer expenditure
.
.
.
or assume
it
away
altogether. This last suggestion is certainly the most convenient of
all and such treatment of a troublesome factor is richly supported
by precedents in economic theory
’?
Domar, then, is content to follow
1 I am grateful to
Mr.
D.
G.
M.
Dosser of the University
of
Edinburgh and
Dr. Edwin Mills
of
the Johns Hopkins University
for
helpful comments and
suggestions in writing this article.
R.
F.
Harrod,
Towards a Dynamic Economics,
1948,
p.
14.
See the rather neglected work
Studies in the Theory
of
Economic
Expansion. by E. Lundberg, Stockholm,
1937,
especially Chapter
9.
Domar’s
earlier articles have recently been reprinted in his
Essays in the Theory
of
Economic Growth,
New York,
1957.
E. Domar, op. cit.,
p.
20.
1
1
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