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Unformatted text preview: Introduction Why should you read a book on economic growth? Because the subject is important: it is about the well-being of our societies today and in the future; and because it is beautiful. It carries wonderful ideas, some exposed more than 2000 years ago, spanning all civilizations.You will certainly marvel at Ibn Khaldun&s prescience, at Mo Tzu&s wisdom, at Solow&s depiction of transition phases, at Dorfman&s incredible intuition in solving variational problems. This book is not quite similar to others. You will not be drowned in a monstrous bibliography if you had Googled economic growthin January 2007, you would have been deluged with no less than 210 million references in English only. I have rather tried to tell you what I found fascinating in the subject. But my hope is also that you will nd here a useful introduction to this wide area of research, because a lot of the book is not only on ideas but on methodology as well. A further reason for me to write this text was to submit personal views and present new results. For too many years I have expounded growth theory by dividing the subject, as many did, into two main strands of thought: positive, or descriptive theory on the one hand, normative on the other. I am now convinced that those two strands should be unied hence the title of the book. For clarity&s sake, I think however that both approaches to the theory should be rst presented separately (sections 1 and 2), and then unied (section 3). Such unication proceeds not from any personal whim, but from logical reasons: the results of both strands of thought mutually imply each other, as will be shown. Let me now underline the new results you will nd in this book: & A proof of one of the most important, daring conjectures ever made in economics or social sciences. We owe this conjecture, known under the name the invisible hand, to Adam Smith who wrote, in his Inquiry into the Nature and the Causes of the Wealth of Nations (1776): Every individual is continually exerting himself to nd out the most advanta- geous employment for whatever capital he can command. It is his own advantage,geous employment for whatever capital he can command....
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This note was uploaded on 06/16/2010 for the course MS&E 249 taught by Professor Olivierdelagrandville during the Fall '08 term at Stanford.
- Fall '08