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

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  • Ken McCormick

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.

Suggested Citation

  • Ken McCormick, 2002. "Veblen and the New Growth Theory: Community as the Source of Capital's Productivity," Review of Social Economy, Taylor & Francis Journals, vol. 60(2), pages 263-277.
  • Handle: RePEc:taf:rsocec:v:60:y:2002:i:2:p:263-277
    DOI: 10.1080/00346760210146596
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    References listed on IDEAS

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    1. Veblen, Thorstein, 1904. "Theory of Business Enterprise," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1904.
    2. Veblen, Thorstein, 1915. "Imperial Germany and The Industrial Revolution," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1915.
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    Cited by:

    1. Farmer, Jane & Prior, Maria & Taylor, Judy, 2012. "A theory of how rural health services contribute to community sustainability," Social Science & Medicine, Elsevier, vol. 75(10), pages 1903-1911.
    2. Cochrane, Phoebe, 2006. "Exploring cultural capital and its importance in sustainable development," Ecological Economics, Elsevier, vol. 57(2), pages 318-330, May.

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