Abstract
Addressing an American Economic Association session celebrating the fiftieth anniversary of his 1956 “Contribution to the Theory of Economic Growth”, Robert Solow (2007, 3) issued a pointed reminder to his audience: “If you have been interested in growth theory for a while, you probably know that Trevor Swan—who was a splendid macroeconomist—also published a paper on growth theory in 1956. In that article, you can find the essentials of the basic neoclassical model of economic growth. Why did the version in my paper become the standard, and attract most of the attention?”
Robert W. Dimand and Barbara J. Spencer, 2009, “Trevor Swan and the Neoclassical Growth Model”, History of Political Economy 41 (Suppl_1), 107–126.
Barbara Spencer is Trevor Swan’s daughter. Copyright 2009 by Duke University Press.
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Notes
- 1.
We would like to thank Steve Dowrick and Robert Dixon for these exceptions.
- 2.
Swan 1956 is referenced in two of the reprints in Sen 1970. Swan 1964 is reprinted, but does not reference Swan 1956 or Solow 1956.
- 3.
Robert Solow gave the Marshall Lectures in the subsequent 1963–1964 academic year.
- 4.
See Cornish 2007 for details on the process of Swan’s appointment.
- 5.
Swan (1951, 2–3) writes, “If we bring about this reduction [in consumption and investment] by directly restricting the supply of imports (by imposing quotas etc. …), the inflationary pressure of internal demand will be revived and increased. Without the safety valve hitherto provided by supplies from overseas, the whole economy might then blow up”. Later, Swan (1955, 2–3) writes: “Now they [import restrictions] imply acute problems of allocation, unofficial rationing, black-marketing, and some transitional unemployment for lack of materials”.
- 6.
The capital stock is assumed to start at four times national income, which with a savings and net investment rate of 10% implies an initial 2.5% growth rate of capital (Swan 1950a, 2, 5).
- 7.
If the constant population desires only more manufactures, then all next investment is in machines, and “capital per head will rise steadily in manufactures, which will have constant current labor”. If it is services that people desire marginally, then all net investment is in machinery for manufactures, but the increase in capital per head and output per head in manufactures “means that manpower must be released from manufactures” to the production of services (Swan 1950a, 4).
- 8.
Solow goes on to praise Swan’s appendix, “Notes on Capital”, and also states that he has two minor reservations about the first part of the paper, arising from the lack of generality of the Cobb–Douglas production function. We are indebted to Will Hansen at the Rare Book, Manuscript, and Special Collections Library at Duke University for this letter.
- 9.
- 10.
Swan (1956) draws attention to real-world complexities such as the role of technical progress when there are diminishing returns because of a fixed supply of land or the interaction between investment and technical progress. Swan’s concern that growth models do not capture enough of reality to provide direct prescriptions for growth is shown by his introduction to Swan 1964: “In this paper I intend to ask more questions than I can answer, and mainly to urge that economists need to consider very closely what it is that theories of economic growth are about, what questions they are trying to answer, if economic theory is not merely jejune mathematics”.
- 11.
- 12.
Ahmad (1991, 112n.20) reports, “In a recent personal communication, Professor Solow agrees that Pilvin’s contribution (1953) deserves recognition, but.. rightly draws our attention to the treatment of the non-steady-state path in his model (1956). The main difference is that Solow traces the path of capital intensity in the non-steady state, Pilvin the path of income”. Solow (1956, 83) cites John Chipman’s published comment on Pilvin 1953, but gives no indication of having read Pilvin 1953.
- 13.
- 14.
Swan later relaxes this assumption to consider the response of labor supply to changes in income.
- 15.
For a Cobb–Douglas production function, \(Y={K}^{\alpha }{L}^{\beta }\) with \(\alpha +\beta =1\), Swan (1956) obtains \((dY/dt)/Y=\alpha sY/K+\beta n\). For a linearly homogeneous production function used by Swan (2002) in post seminar notes the equation is the same except that \(\alpha\) and \(\beta\) are no longer constant (see Pitchford 2002, 385).
- 16.
Leser was an economist working at the Canberra University College, which in 1960 became the School of General Studies within the ANU.
- 17.
Other Australian contributions to capital and growth theory in the wake of Swan 1956 include Pitchford and Hagger (1958) on the conditions for uniqueness of the internal rate of return and Warren Hogan (1958), who corrected a calculation error in Solow 1957. W. E. G. Salter (1959, 1960) published on embodied technical change and vintage capital, but this work arose from a 1955 Cambridge PhD dissertation predating Swan 1956 (see Swan’s 1963 obituary of Salter).
- 18.
We thank Aiko Ikeo for pointing out that the International Economic Association’s roundtable conference held at Gamagori (near Nagoya) in April 1960 was the first international conference in economics held in Japan.
- 19.
For the difficulties that Swan faced in India, see Rosen (1985).
- 20.
Swan’s appendix (1956, 343) opens with the following, “If we had to put up a scarecrow (as Joan Robinson calls it) to keep off the index-number birds and Joan Robinson herself, it would look something like this”.
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Swan, P.L. (2023). Robert W. Dimand and Barbara J. Spencer Trevor Swan and the Neoclassical Growth Model. In: Trevor Winchester Swan, Volume II. Palgrave Studies in the History of Economic Thought. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-23807-9_19
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