Lewis and Kuznets on Economic Growth and Income Inequality

The early 1950s were an exciting period for anyone doing research on economic growth and development. Mauro Boianovsky’s erudite survey of the classical roots of W. Arthur Lewis’s work begins with an overview of the many contributions made in 1954 and 1955, the years of publication of Lewis’s celebrated article and book on economic development. In this note, I focus on one aspect of this research: the relation between economic growth and income inequality. Although Lewis paid a lot of attention to the distributional aspects of economic development (such as the different character of a society where the main source of high incomes was capitalist profit rather than land rent), he was criticized for his treatment of inequality. In a review of The Theory of Economic Growth, Kenneth Kurihara (1957, p. 190) perceived the lack of consideration of the effect of income distribution on economic growth as a major weakness of the book. According to Kurihara the same applied to the work of Colin Clark (1940) and that of Simon Kuznets (1955). Kuznets’s article on growth and inequality is now considered as a classic, mainly because it is assumed to lay the foundations of the famous “Kuznets curve.” What I would like to do here is to confront Kuznets’s and Lewis’s views on growth and inequality. I proceed in three steps: I begin by analyzing Kuznets’s findings; then I turn to Lewis’s 1954 article and 1955 book, and his later work on the relationship between economic growth and inequality; and finally I briefly explore the similarities and differences between their positions.