Demand and structural change in Adam Smiths view of economic progress

Previous studies suggest that demand forces (as well as widely accepted supply-side
factors) work in Smiths historical account of economic development !"panding on this
line of in#uiry and yet giving corrections of misinterpretations$ this article claims that
endogenous demand is at play in Smiths theory of natural progress$ providing a
historical case study of early modern !ngland for an illustration of the demand-%ased
model of natural progress Smith drew attention to the dynamics of growth with respect to
the role of demand and the changing sectoral structure of economies in the model of
natural progress as well as in that of historical progress &n this vein$ Smiths approach to
economic development differs from 'umes historical account of it (irst$ it is significant
that Smith was concerned with a change in income distri%ution and e"penditure pattern
%rought a%out %y economic growth )ith the general e"pansion of income$ changes in
patterns of income distri%ution and consumption (ie$ a larger share of wages and profits
in national income at later stages of development) that favour manufactured items %oost
economic growth and lead an agrarian economy to move towards manufacturing and
commercial economies Second$ it is now worth noticing that along with the progress of
wealth an endogenous demand grounded on a part played %y socio-psychological power
as distinct from material motives furnishes a taste for manufactured goods more than for
agricultural goods
*ey words
+Adam Smith
,
-!conomic Development
.
/0atural and 'istorical Progress
1!ndogenous Demand and Structural 2hange
3he crisis of intellectual monopoly capitalism
3he last three decades have witnessed the emergence of a new species of capitalism &n
spite of marked differences %etween its national varieties$ a common characteristic of this
species can %e found in the glo%al monopolisation of knowledge 3his monopolisation
involves hierarchical relations among firms and %etween capital and la%our$ %ecause the
capital of some firms includes the e"clusive ownership of much of the knowledge used in
production Since the +44. 3rade-5elated Aspects of &ntellectual Property 5ights
agreements$ the growing commoditisation of knowledge has e"tended the role of closed
science and closed markets at the e"pense of open science and open markets 3he
intrinsic long-term dynamics of this species of capitalism is increasingly characterised %y
financialisation$ ine#uality and stagnation &n order to e"it from the current crisis$ we
must change many features of intellectual monopoly capitalism and rely on an eclectic
approach that draws insights from li%eral$ *eynesian and 6ar"ian traditions
*ey words
+&ntellectual monopoly
,
-7reat 5ecession
.
/(inancialisation
1
8!clecticism