ABSTRACT
In order to highlight the limitations of economic theory in handling dynamic processes, this chapter outlines the timeless approach to economic change. It suggests that these limitations can be overcome by adopting an historical approach to economics in order to reconstruct real-world economic processes. The limitations of the timeless approach to economic analysis can best be exposed by focusing upon the fundamentally important subject of economic growth. The growth models of the classical school were concerned to examine and explain the dynamic forces underlying the British economic system of the eighteenth century. The ‘new’ growth theory of the late 1980s may be on the right track. It is concerned with the motivation – profits – that drive the system with the integration of technological change and trade into growth models and with the analysis of the neglected role of human capital in growth theory. The chapter also presents an overview of the key concepts discussed in this book.
