However, the prevailing view in the history of economic analysis appears to be that although Smith and Ricardo lived through the Industrial Revolution, they misread its signifi cance and vastly under-rated the importance of technical progress for economic development and growth.2 In my view this assessment cannot be sustained. While it is true that Smith and Ricardo erred in some respects in regard to the problem under consideration, they can hardly be accused of having downplayed the importance of technical progress, as is often maintained. In particular, Ricardo’s respective thinking was not overwhelmed, as is frequently contended, by a concern with diminishing returns in agriculture in combination with Malthus’s law of population.3 In fact, these authors anticipated, and analysed, with the analytical tools they elaborated, what was not yet to be openly seen; that is, some of the characteristic features and long-term trends of the process of incessant technological and organisa tional change that had seized the Western European economies. Smith foresaw, for example, the emergence of a separate industry or trade engaged in what we would today call research, development and innovation as a part and parcel of the process of the deepening of the social division of labour. And Ricardo even contemplated the end-state of the process of
mechanisation that took place before his eyes: a fully automated system of production, and reasoned about its implications for the distribution of income. While the classical authors may be criticised for not having correctly described the present and forecast the future development in suffi cient detail, they deserve to be credited with having elaborated a framework and analytical concepts that allow us to describe and analyse almost any such development. They have enriched and deepened our understanding of the technological and economic dynamism inherent in the capitalist mode of production and have forged powerful analytical tools to deal with it.