THE ANALYTICAL METHODOLOGY OF CLASSICAL ECONOMICS AS A “WELFARE” THEORY

Authors : Hüseyin ÖZEL

Pages : 146-172

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Publication Date : 2002-11-01

Article Type : Research Paper

Abstract :This paper deals with the analytical framework of Classical School of Thought in economics and shows that it rests on the notion of “economic surplus”, which is essential in the capital accumulation process. However, such a notion creates two analytical problems and two types of analyses corresponding to these problems: first, the problem of the measurement of the surplus, requires a theory of values-prices which requires a static analysis in which the distributive shares and the technology level are taken as given. But the growth of the surplus, which is essential to capital accumulation process, necessitates a dynamic analysis in which the distribution and technology are allowed to change. It is argued in the paper that this is the main reason for the analytical separability between the price-distribution theory and the output-growth theories in the Classical School
Keywords : Classical School, prices of production, uniform profit rate, capital accumulation, distribution, production technology