MACROECONOMIC GROWTH MODELS IN A FAST CHANGING
MORDERN
ECONOMY-1
Growth and
development have been used interchangeably over the last century or so in
various economic and academic discussion worldwide.They are normally used to
draw a conclusion and a distinction over the rate of economic expansion at a
particular period and similarly being
maneuvered in the measurement of considerable
changes experimented in the technical and the institutional framework with which it is produced .While growth
implies both expansion in input and
output efficiency , development entails
massive structural changes in output and the level of sectoral
allocation of output to fully boost sustainability of growth in the long run.The
former connotes height or weights infusion and protrusion.,the latter
relaxes over growth in functioning
capacity and the level of ideological and the material changes experimented and
attained at a particular period.
However whether
the economy looses capacity at an appreciable mass or not it can be similarly
enthused that growth and development no matter what go together especially in
the development transition .Contrary to Kindleberger economic growth does not
translates into economic development most specifically at a point when growth slows down .Therefore this
requires understanding perpertual growth
cycle and growth durability for the mission of transition to be possible .At
this point one is torn to shred and doubtful about the workability of existing
macroeconomic models and the uniform pattern of these models has not for once
being agreed upon .There is need to adopt the uniform patern by all modelers
like the Newton principia that wrought magic and a foremost economic miracle
since the dawn of mrdern age
In less
developed countries , growth without development is possible and common.
Anglo-Saxons or Germanic tribes or Caucasians during the dark ages have passed
through this stage so that development
in this part of the world is 500 years backward so to say requiring similar
level of institutional and ideological reforms experimented during the period.
Existing
macroeconomic models besides ,what are the components and the criteria for the
measurement of economic growth and development ?This answer cannot be provided
in a jiffy unless the level of ideological freedom supplanting them exist
within same modeling and rationalistic prejudice that ordinarily supports the nature of growth and development
at a particular period .Alteration implies changes in the nature of growth over
time .
Majority of
these modelers are at best capitalist agents and free market apologists
I take Karl Marx
as an exception and his stage theories
National income
or an average income is often used as
more appropriate benchmark to measure economic growth and development .As a
central component and criteria for measurement of national GDP.or GNP,it can
also be calculated on per capital basis ,per member of labour force or based on hourly wage.To measure consumption
,income per head of population is most appropriate concept but if we are interested to measure
production , income per head is used while income per man hour of input is used
to measure the efficiency of the economy .
Above all
percapital income truly speaking according to conventional knowledge and
economic textbook represents the level of economic development at a particular
period.Statistics on population increase are highly more distorted in
developing nations than the data on national income Generally in economic
development parlance , national income is the numerator while
population as the denominator are both humiliated by statistical distortion of mordern era .The increase in
the depravity of such institutional arts has not been relented nor moderated
and statistical ambiguity has
become a major clog in the wheel of
economic growth .But for capitalist economies this predilection certainly will
last for a while until better means of development cycle models are discovered
the way Adam Smith did with The Wealth Of Nations published in 1776
especially with the dawn of marsolist
age
THE CONCEPTUAL DISPARITY OF NATIONAL INCOME .
There had been
disputations and intellectual bickerings betwen the communist bloc and free market advocates over exactly what
constitutes national income The marxists have used a rationale that excludes
wide range of services to conclude on what national income means and heavily
restricted its connotations to mere
martial changes in output .This however exclude issues such as
government administration , ..............contd.
ECONOMIC
GROWTH JUXTAPOSED ECONOMIC DEVELOPMENT
Economic growth
according to Kindle Berger is usually thought as unidimensional and is also
measured by growth in income .Economic development measured by structural
changes and functional transformation and where the latter is missing
measurement component swings in favour
of income ,the levels of income and the rates of economic growth and
development measured by income .
Based on
modelers' perspective , a couple of
economic system and models were developed to catalyse economic
development .We shall be heavily restricted to some of them in the vast
academic world of macroeconomic landscape .The bullionists,the mercantilists
,the classical economics and neoclassical or neomercentalists, ,the
marginalists ,the structuralists ,the keynesians and the monetarists among others,The Ricardian growth
model ,the Harrod-Domar growth model,the Kaldor model,the growth theories and
the stage theories .We shed light a bit on their legacies and historical pedigrees.
The bullionists,the
mercentilists and the neomercentilists.like the physiocrats in France came
before the classical and the neoclassical
Schools.On their legacies in the successive times came the keynesian school and market Neoliberalism or
monetarism that gained increasing popularity with the stagflation of the 70s
Growth Vs Stage theories
Growth theorists
were more concerned about the influence of market forces on growth .With the
emergence of marsolist theorists and the spring of Marsolithic ages ,far
broader macroeconomic developent framework. Has evolved .Much of the effort of
the growth theorists over time could be classified as
preschool pedagogics--or scions of
the grand old master and
elementary old textbook economics outmoded by
changing necessity of the seasons and the reaction of the sun .Only few economic policies and
modeling are foolproof and sacrosanct to
the development of the market theories where development cycle is to be
operated on a moderate vision of
boosting the economy .
.The early
growth theories though still relevant
today in modern myths were specifically concerned with the implications
of insufficient demand or insufficient supply halted over growth .In the
previous article --Reviewing Monetarism and Contravening Inflation Adjusted
Monetary Policies. ‘the author noted with the invention of money ,supply was
initiated but prior to the invention
demand was initiated as sub structural law of the market in contrast to supply
as the super structural law of the market both stimulated by the market logics,
laws of nature and mother nature respectively .The demand of the factors of
production brings out the invention of
the money, the discovery , progress , productivity and the competitiveness of
the market .It is the demand subject to a given metaphysical impulse of the market
logics that brings out the invention and creation of supply .
The barter
economies thrived first on
ideological demand and material demand
arose shortly after the institution of supply .Supply is a tangible evidence of
material items that is also subject to material demand of the items once prices
are fairly quickly ascertained. Economies falter first due lack of
understanding of the nature of market logics and natural laws and also to some
extent as market forces obtrude and intrude the welfare of these laws of nature
and the boom and burst cycle intermittently evolved as bickering response
gather momentum against the surging mismatch and structural imbalance between
them .True growth theories and not fable should ordinarily evolve to bridge
this lacuna and demand or market forces in general are not been
truly influenced by what economists in general claim but as the market logics
thinks and reacts at a particular period .
In the early
growth theories Ricardo and Smith focused on supply and ignored demand and the
equitable ability of all consumers to profit from consumption of supply .The
focused on capital accumulation or savings needed to boost demand and therefore
contribute to expansion of supply .
From Thomas
Malthus to Marx and infact also Keynes
in the general theory of employment ,interest and money,this topic has been expounded by them especially the
Keynesian emphasis on Malthusian consideration of sustained demand Even in the
face of Ricardo's land diminishing returns bogey growth developed fairly so
quickly across western Europe and North America .
Consequently
,the exponential growth increased in the region was largely responsible for the
neglect ascribed to growth .There were technological advances instituted by
entrepreneurs that led to external economies of scale that boosted volume of outputs. This was the basis of
Joseph Schumpeter 's development theory .After the World War 2 ,economic growth
became the centers of public priorities .It arose as a byproduct of
revolutionary Keynesian income theory and the search for world market .For the
first time ideological prejudice was buried in favour of human needs -the
original influence factor ,drawing up the MARSHALL plan for the reconstruction
of war torn Western European nations . What market forces cannot do given the
magnitude or enormity of the situation that financial and moral
recklessness.
The fragility of
market forces under questionable circumstances cannot be effectively relied upon in times of crisis and wars as we
ignorantly and unconsciously do with the market logics and the sanction able
and credible laws of nature and mother nature. Why did the Roman authorities
shortly after Rome collapse resort to or opted for barter trade ?The German
inflation crisis of the 1920s could have been averted by the same method and a
host of hyperinflationary episodes and tragedies of the modern age .In the previous times growth was ignored but in the latter times it was more important
than market forces .If the laws of nature and market logics could manage crisis
so much effectively well ,do we really need to survive on market forces ?
CONVENTIONAL DEFECTS
AND STAGE THEORIES
Market logics or
market rational forces can be much more effective in a free market than mere
market forces .And as a matter of fact ,research discoveries by marsolism have
shown that market rational forces can be effective building block for socialist
free market in the same way in which market forces championed the direction of
free market or neoliberal economy On the other hand, as more complex theories
emerge to bridge the lacuna , the conventional defects of the growth theories
by its fallibility proven as some sort of blessings was responsible and
instrumental to this emergence .For instance the Ricardian growth model
expounded in natural resources poverty dealt a great blow to the growth and
growth modeling respectively and was
disputed and disproved by the United States ,the British Commonwealth and
Western Europe in the findesicle .It commands a FINITE RELEVANCE today.
The Harrod Domar
model opined that capital constitute the origin of growth Scholars and students
have tested this relevance others .For
instance Madison among..................contd.The economic growth in the United
States was catalysed by structural
inputs of labour and capital. Moses Abramovitz and Robert Solow provided
strategic historical evidences to back
up the studiesA and had also been confirmed by successive studies . The
limitation in the Ricardian growth model was basically inclined in the
limitation imposed in the use of land The limitation of growth according to
Harrod Domar was determined by the limitation of land from which food prices
are also set and labour supply .The interaction between capital -output ratio
and savings lead to growth with capital as the engine of growth .. Planned savings and capital-output ratio
maintains equilibrium growth path from which too much or too little demand can
be controlled .
The modification
of the Harod-Domar by Meade and Solow in the neoclassical direction assumed
provision for substitution and not fixed proposition as assumed by Harrod Domar
model and the technical to progress investment function noted by Kaldor
.Various efforts according to KindleBerger by all statistical standard have
been made to verify and explain the
reliability of these models .While they still left a considerable portion of
historical growth unexplained ,the residual exposition that was offered
included technical progress ,human capital investment ,growth in organizational
efficiency ,increasing returns of scale ,government policies etc.
Nevertheless
,economic theories had also produced a considerable growing proportion of stage theories
competitively vying for recognition alongside rival growth theories .By the
mid-60s ,Rostow's listing of traditional society ,preconditions ,take off
,drive to maturity ,high consumption mass seemed to be the most popular.
Walter Hoffman's
theories of stages which examines
industrial production relationship between the consumer and capital goods was
elevated into a law of development
,having gathered some uniformity of data
infrequently from a given level of anti-theoretical prejudice .Colin Clark
examination of relationship between primary goods-agriculture and secondary
goods -manufacturing ,mining and construction and the tertiary sectors
Classical division of labour was also examined and materials gathered for
historical testing.
Simon
Kuznets-the pioneer of American national income statistics in the light of
historical statistics gathered data in which he was familiar with.Rostow's
facts have been interrogated by economists and historians alike specifically
the inevitability of transitions between these stages .Alexander Geshenkron's
differed from Rostow's .He disputed the relevance of some of these stages across countries
especially the backward countries with dominant government not being private .driven.
MARSOLISM:CHANGING WORLD MACROECONOMIC ORDER
All over the world , economic theories change and
differ by pedigrees and depth from time
to time,and is also subject to the possible change in the prevailing economic trends and apex needs of
the volatile modern society .At this level the capability of the economy is
increasingly threatened and challenged to buy the kind of change it desires .Transformation
begins at this level .Thousands of theories exist worldwide and each with its
own peculiarity informed by changing necessity of times have sought at one
point in time endeavoured to change and address fundamental economic problems
of modern society to no avail.In this lacuna and debris that requires cleansing
the Augean stable and proper sanitation and theoretical reorientation not as it
were since Renaisance ,marsolism as
unique dose is oriented to further revolutionary movement as unleashed by successive apex macroeconomic
models .
There is no doubt that money is very important and a
strong pillar of modern economy .Almost everyone agrees ,it is central to the
utmost survival of modern civilization .The use of money and especially poor
handling of money politics has caused
catastrophes and relentlessly economic storms with the rise and fall of the ages .Several schools of thoughts have treated
this never-ending voluminous subjects
and each new approach and model
unleashes new economic challenges .
Unlike monetarism, a prominent school of thought
which maintains that money supply and rise and fall of money supply being the
total amount of money in an economy is
the chief determinant of Current dollars GDP in the short run and changes in
the price level in the long run .But we must be able to identify the true nature of money and classify them accordingly
.It is debatable and arguable whether
normal money is reliable or not .But it is still yet to be proven or determined given the profliferation of
economic storms down the millennia. Infact ,it cannot be relied upon a bit and the most reliable
form of money being credit money has not been discovered and applied both in
technology and usage .To be candid ,the two basic forms of money excluding
equity money includes free money –money not borrowed and then credit money or
borrowed money first discovered in ancient Egypt. And then paper money that
came later with emergence of either Roman civilization and Chinese
civilization or thereabout translated
into circulation through the exchange of paper or metal money .
The latter is prominent in modern society or for the
larger swathe of human history ever since money was first discovered .Marsolism
treats money differently and that credit money it believes has a more stability
effect in the short run and a
multiplier effect in the long run on the economic welfare of all social
classes than free money .It has
lasting impact on the generality of the
economy .
Marsolism maintains that credit money as total
amount of loans in a debt economy tied
to debt oriented output is a reliable benchmark
and central determinant of the growth in
GDP in the short run and is also extremely influential impact
on credit and general price level in the long run .Therefore it uses a monetary
credit policy
