The Nature of Capital Accumulation and Technological Progress in the Modern Economy

The saving and innovating of the favored few are not the true sources of economic progress; the full participation of all in the life process is. Hence, progress is dependent upon the ever greater participation of people from all social strata, particularly from those whose participation has been limited for whatever reason. In spite of this fundamental institutionalist insight, supply-side economists argue that the stagnant U.S. economy would recover permanently if only the tax and regulatory burdens on the saving and entrepreneurial interest groups were lifted.1 Of course, the same argument was voiced sixty years ago by Andrew Mellon and Calvin Coolidge.2 Both Presidents Coolidge and Ronald Reagan have applied the supply-side cure. Responding to the Coolidge program, the U.S. economy in 1925-29 operated at an average of 21 percent below its practical capacity, as estimated by the Brookings Institution.3 And, of course, the Great Depression followed. In spite of intense inquiry at the time, the Brookings Institution was unable to prove that excess capacity and insufficient effective demand had built up to such a point as to cause the ensuing collapse. The debate over what caused the Great Depression