'Modern Capitalism' in the 1970s and 1980s

John Cornwall built his analysis of Modern Capitalism on a combination of two strands of thought; the Schumpeter-Svennilson view of capitalist development as a process of qualitative change driven by innovation and diffusion of technology, and the Kaldorian idea of static and dynamic economies of scale in manufacturing as the driving force behind economic progress in the industrialized world. Combining these (and other) insights into a coherent perspective on modern economic growth was an important achievement in itself. He also provided convincing evidence from a group of industrialized countries in the fifties and sixties that supported his interpretation of the events. What we have done in this paper is to update and extend his empirical analysis using a larger sample of countries and more recent data. We have found that the Schumpeter-Svennilson perspective of growth as a process of qualitative (and structural) change, and the emphasis on the importance of skills and flexibility, has a lot to commend it. On the second set of ideas the evidence is more ambiguous. At least for many of the technologically and economically most advanced countries, manufacturing does not seem to be the ‘engine of growth’ assumed by Kaldor and Cornwall.