The same world

To explore the question of how individuals come to know the world, whether all humans know the same world or know the world ın the same way, the rationalist view was that knowldege of the world was based on the inner subjective world of the mind, that it was innate. Rationalists believed in the possibility of objective knowledge, uncontaminated by the point of view of any observer and derivable from reason alone. For empiricists, the foundations of knowledge were to be found in immediate intuitions. The empiricist mind was an observer and collector of facts or appearances; it relied on faith in its own perceptions that the knowledge it acquired represented actual reality.



Keynes and others believed that the rich had higher marginal propensity to save, so that redistributing from poor to rich would raise national savings and the growth rate.

The opposing view was emerged later with studies identified several policy levers that governments could use to raise both the growth rate and the share going to the poor.



History

Before about 1800 the policy and institutional changes that most advanced growth in the North Atlantic region were ones that did raise inequality. This was the world that Adam Smith saw when emphasizing private freedoms as the key to progress. Thus growth appeared in places that experienced rising inequality as the merchants and investors prospered. The same securing of private propety rights, raising efficiency at the expense of equality, has proved crucial in countries that are restoring order in the world's worst war zones, and in China's industrial reforms of the late 1980s and early 1990.

But as North Atlantic economy grew and became more skill intensive after about 1800 the leader countries came to be those that fostered the accumulation of human capital and had distributed land more equally. America advanced by being a pioneer in tax funded primary schooling and by distributing new lands relatively equally.

On the equality efficiency trade-off, many have misread British History. One often hears the view that Britain's growth suffered in the welfare state era between the 1940s and 1970s, in contrast to an acceleration of growth during the inegalitarian industrial revolution era (1760- 1830). There are several things wrong with this common view. Over all of British history the best growth rate wa in that income leveling era of the welfare state, between the 1940s and the 1970s. İn the earlier era of rising inequality during and before the industrial Revolution, growth rates were slower and did not accelerate at all. İn fact Britain's policies in that era were anti growth, such as the Corn Laws and special taxes on business contracts and industrial goods.

Thus the only historical settings in which countries clearly tended to choose efficiency at the expense of equality were those early phases when property rights were first being secured. The long subsequent history features growth under more egalitarian policies.

Source:

Hindert, P., Voice and Growth: Was Churchill Right? Journal of Economic History 63, 2 JuneUniversity of California

Chenery, Hollis, Montek, Ahluwalia et al. 1974, Redistribution with Growth, NY: Oxford Univ Press