Question

Discuss the views of Ricardo, Malthus and Karl Marx on economic growth. How relevant are the views to today's world?

Answer 1

Economic growth refers to the Increase of output, national income or percapita income of a country over time. Economic development on the other hand, implies structural changes along with economic growth . Different Economists have expressed different perspectives of economic growth. Let's look at some of them and relevance of their ideas in today's world.

* David Ricardo

As per the Ricardian theory, economic growth takes place due to Capital accumulation. Capital accumulation is done by capitalists through investment. Investment comes from profits. As growth takes place, demand for food Increases, and intensive and extensive margins of land increases. As a result, total rents and wages Increase. This squeezes profits which eventually falls to zero and economy reaches stationary State . Solution to stationary state is the import of the product.

Eventhough the theory suffers from many drawbacks based on its simplicity. The theory is still relevant because of the development variables highlighted by the theory like capital accumulation, profits and wages . This helped in improving the formulation of development policies.

* Malthus

According to Malthus, economic growth isn't automatic. Its not smooth and it fluctuates.He argued that, population growth will overtake growth of food, leading to increase in poverty.

Capitalist makes investments while workers and landlords only consume. Increase in Capital increases output. Growth takes place. Percapita income also Increase. But Malthus was a pessimist and he held that , this won't continue forever due to population growth as population increases in geometric progression and foodsupply increases in arithmetic Progression.

Malthusian interpretation of development was proved wrong by the development experience of many countries. However, Malthusian analysis highlighted the Importance of controlling population growth. Controlling population growth is fundamental, especially for the growth of developing countries in Asia and Africa.

* Karl Marx

Marx provided an economic interpretation of history and stages of growth, motivating forces of growth and suggested an alternative path of economic development via planning.

He opined that Historical events are the result of continuous economic struggle between different groups and classes in a society. main cause of the struggle is the conflict between modern production and the relation of production. Modification of production refers to the particular arrangement of production in a society that determine the and their social political and religious way of living .Relation of production related to the class structure of the society.

Primitive communism,slavery, feudalism, capitalism and socialism are the stages of economic growth. Marxian theory also introduced the concept of surplus Value. Surplus Value is the basis of class struggle under capitalism .

The theory was widely criticised saying that, surplus value is an unrealistic concept and Marxian belief about the end of capitalism.

Eventhough Marxian theory can't be applied directly to underdeveloped Countries directly, his observations about the nature of capitalism and it's inherent weaknesses can be used as guidance for many countries in their pursuit of growth.