Growth and distribution: a stylized model of the Wealth of Nations

In this paper, a simplified model is developed to analyze the main characteristics of the accumulation process based on Adam Smith’s view. The model is constructed on the basis of a single product and emphasizes the relation between productivity, determined by the division of labor, the proportion of the economic surplus invested in productive labor, the natural wage and the profit rate, during the phase of progress and in the stationary state of the economies. Additionally, a process is suggested for determining the natural wage based on the elements stressed by the classical economists.

KEYWORDS:
Models of economic growth; Smith