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date: 28 June 2022

Abstract and Keywords

As history, institutions, and social and political forces specific to any economy have a profound effect on that economy’s dynamics, it is important to understand how these have evolved with the development of capitalism. The classical economists analyzed economies with labor surpluses, which kept wages at subsistence levels, encouraging profits and therefore economic growth. Lewis extended this model to developing economies, with the labor surplus coming from the agricultural sector. With growth and development, the labor surplus becomes absorbed into the labor force, eventually leading to upward pressure on wages This is associated with the Keynesian era, when the level of effective demand becomes an important determinant of employment and growth. As a result of further development, competitive capitalist economies have evolved to the monopoly capital stage, where oligopolistic corporations influence the dynamics of the economy. More recently, we have seen the increased prominence of the financial sector, which has both led to and been influenced by globalization.

Keywords: economic development, history of economic thought, post-Keynesian, economic history, industrialization, monopoly capitalism

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