GROWTH AND DISTRIBUTION: A REVISED CLASSICAL MODEL

Abstract. In order to understand economic growth and distribution one should not primarily look for models concerned with equilibrium, but for a classical model –a model in which the profit rate is the central variable. Economic growth depend on investment that, on its turn, depend on the expected profit rate, that, finally, depend on the wage rate and on technical progress. In this paper the author presents a revised classical model of growth where the distribution of income between profits and wages depends on the type of technical progress. It is revised model because, based on historical experience, it inverts the classical model, making the rate of profit the constant in the long run and the wage rate, the residuum, tending to grow with productivity. Given the existence of three types of technological progress (capital using or mechanization, neutral, and capital saving), the author shows how, in the process of economic growth the profit rate keeps satisfactory to capitalists, while the wage rate increases with productivity. In the final section, the author considers a third social class – the professional or technobureaucratic class that receives salaries and bonus instead of wages –, and discusses how technical progress made also the remuneration of this class consistent with a satisfactory profit rate and with wages increasing with productivity. Capitalist economic growth was well explained by the classical economists, in so far as the