Harrod on the classification of technological progress. The origin of a wild-goose chase

Banca Nazionale del Lavoro Quarterly Review, 208, March 1999, pp. 96-118


From the 1930s to the 1970s a number of economists were engaged in debates on the classification of technological progress into neutral, labour- or capital-saving inventions; in particular, it was asked under which conditions the definitions propounded by Hicks and by Harrod are equivalent.

Although some commentators have remarked that Harrod and Hicks were pursuing different aims, all attempts to study the equivalence of their definitions assumed at the outset that both notions were to be applied to a production function. However, this theoretical set-up was consistent with Hicksís procedure but was extraneous to Harrodís approach, which was based instead óalthough somewhat confusedlyó on the Austrian concept of capital and production. The purpose of this essay is to throw some light onto this aspect, by examining the origin and development of Harrodís notion of neutrality in its context, illustrating how it was characterised, what conceptual framework it presupposed, and what function it played within his dynamic economics.