Economic Growth, the Harrod Foreign Trade Multiplier and the Hicks Super-Multiplier

As we saw in Chapter 2, the post-Keynesian view of economic growth denies that the postwar economic performance of the majority of the advanced countries has been seriously constrained by the growth of factor supplies. Even during the ‘long boom’ of 1950–73, when the growth of output of the advanced countries in aggregate was double that of the historic norm, labour shortages were never a limiting factor. There was either sufficient disguised unemployment in the non-manufacturing sectors or enough immigration to satisfy the demand for labour (Kindleberger, 1967). The rate of capital accumulation is never a long-run constraint on economic growth as investment is as much a result of the expansion of output as its cause (Kaldor, 1970). The evidence in support of these conditions has been summarised in Chapter 2.