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“The Creation of Wealth”: John Rae's Knowledge-Based Growth Theory

Published online by Cambridge University Press:  11 June 2009

Masazumi Wakatabe
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John Rae is best known for his contribution to capital theory, particularly to Austrian capital theory. J. A. Schumpeter's (1954) assessment is typical in the literature: “two cornerstones of [Böhm-Bawerk]'s structure–one of them also a cornerstone of [Nassau] Senior's–are in fact there” (Schumpeter, 1954, pp. 468-69). Although this seems to have been the standard perception (see also Dorfman, 1995, p. 21), there is growing appreciation that Rae had a theory of economic development, rather than only a theory of capital. As Klaus Hennings put it: “Rae ascribes to inventions a more important role for economic progress … than capital accumulation” (Hennings, 1987, p. 40). Spengler (1959) saw Rae's contribution as “his recognition of the importance of the role of technical knowledge and invention in economic development” (ibid., 1959, p. 406; see Deans and Deans, 1972; Birchler, 1980). Syed Ahmad (1996a, 1996b) and Anthony Brewer (1990, 1991, 1996) agree on the central role of innovation in the economics of Rae.

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Articles
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Journal of the History of Economic Thought , Volume 20 , Issue 3 , September 1998 , pp. 329 - 347
Copyright
Copyright © Cambridge University Press 1998

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References

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