On Transformational Growth

The theory of “transformational growth” starts with the historical observations discussed in this interview and expands to develop structural and behavioral theories of capitalist and precapitalist economies that build on the works of Marx, Sraffa, Marshall, and Keynes. The structural theory links Sraffian classical price and quantity equations to economic growth through the “golden rule,” and to monetary circulation through the “Marxian balancing condition” (Nell 1996, 1998a, 1998b). ¹ These conditions lead to a linear wage/profit tradeoff in a growing economy, which anchors a modified “circulation theory of money” (Deleplace and Nell 1996). ² The theory then derives behavioral insights for nineteenth-century “craft economies” and twentieth-century “mass production” economies that build on Marshall and Keynes.