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Heterodox Economics 2

Alternative Analysis to the Mainstream "Blackboard Economics</I> Based on the Concept of "Creative Mental Labor</I>

Hasan Gürak

Heterodox Economics 2 consists of articles which are complementary to the subjects presented in the book titled Heterodox Economics, published in 2012. The aim is to present alternative economic approaches based on the concept of Creative Mental Labor that are intended to make a contribution to the emergence of a new economics. The analysis throughout the book is based upon the principle that the original source of all the value added to products (considering nature as a given), is the mental and physical inputs of labor that continuously create new technologies while at the same time making use of the available technologies.

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3- The Creative Mind & New Technologies

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89 3- THE CREATIVE MIND & NEW TECHNOLOGIES The genesis & the engine of the prosperity of nations “Knowledge is the most powerful engine of produc- tion; it enables us to subdue Nature and satisfy our wants.” Alfred Marshall Introduction How an economy grows has always been a fascinating subject for the econo- mists. For decades and for centuries numerous attempts have been made to identify the factors determining growth by many able minded scholars like A. Smith, Marx, Solow, et al to find universally applicable explanations which can be applied to the subject. Smith's analysis on the division of labor and the corre- lated productivity increase, Ricardo's remarks that the primitive hunter's capital good (the weapon) was a product of the laborer and Marx' comments that capi- talism's internal forces in turn leads to constant technological change were all steps in this direction. But eventually, the determining factors of growth were reduced to two major factors by the neoclassical school i.e., "capital accumula- tion" and "population growth" which were used for decades to follow. For a long time, the textbooks on economic growth influenced by the neo- classical doctrine were used to inform others that this growth process was influ- enced by two factors; 1. Endogenous factor (investments),. 2. Exogenous factor (population growth). The endogenous factor was assumed to bring the economy eventually to a stationary equilibrium as the neoclassical growth models predicted. Once in equilibrium, the only factor causing growth would be the exogenous ones. The model was quite logical...

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