Kuznets and Modern Economic Growth Fifty Years Later

Simon Kuznets was awarded the 1971 Nobel Prize in economics for his empirically founded interpretation of economic growth, yet, two decades after his death it is only in the guise of the “Kuznets curve” that he may be found in the literature of growth or of economic development. In this paper I review Kuznets’ contribution to growth focusing particularly on his analysis of the costs and benefits of growth and the impossibility of conceptualizing modern economic growth without substantive structural shifts. Kuznets maintained the impossibility of a purely economic theory of growth. He considered the more general theory as a worthwhile goal but a very remote one at the time. The central problem for Kuznets was to endogenize what economics mostly regards as givens: technology, population, tastes, and institutions. In his studies of national income and growth Kuznets repeatedly emphasized the problems of scope, valuation, and the distinction between net and gross outputs. The answers to these questions depend on the purpose of economic activity which in turn refers to the social values of the place and time. The solutions, therefore, can never be absolute. To be presented at the WIDER conference: Thinking Ahead: The Future of Development Economics, Helsinki, June 2005