Accumulation of knowledge and accumulation of capital in early ‘theories’ of growth and development

This paper argues that prior to Adam Smith economic progress was largely conceived as being based on the accumulation of knowledge. The development by Turgot and Smith of a concept of capital that subsumed other factors contributing to development led their followers to focus on capital to the neglect of the independent role of knowledge. The paper demonstrates that this paradigmatic shift was identified and challenged by Bentham, Hodgskin and Rae who argued for the independent role of innovation but without lasting impact. © The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Increasing Returns and Competitive Equilibrium--The Content and Development of Marshall's Theory

This paper reviews Alfred Marshall's attempts to reconcile increasing returns and competition from the early economic writings to the later editions of his Principles. It is shown that while Marshall's final solution to the problem involved naming external economies the cause of increasing returns in a regime of competition , both the life cycle of the firm and internal economies remained necessary to his argument. Their function was to give some operation al content to the elusive concept of external economies.