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Managing Growth in Miniature: Solow's Model as an Artifact
Managing Growth in Miniature explores the history of the way economists think about growth. It focuses on the period between the 1930s and 1960s, tracing the development of the famed 'Solow growth model,' one of the central mathematical models in postwar economics. It argues that models are not simply 'efficient tools' providing answers to the problems of economic theory and governance. The Solow model's various uses and interpretations related not only to the ways it made things (in)visible, excluded questions, and suggested actions. Its 'success' and effects ultimately also pertained to its fundamental ambiguities. Attending to the concrete sides of economic abstractions, this book provides a richly layered and accessible account of the forms of knowledge that shaped the predominant notion of 'economic growth' and ideas of how to govern it.
292 pages, Kindle Edition
Published November 7, 2024
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October 6, 2025
Verena Halsmayer builds on a recent literature from the history and methodology of economics that treats models as artifacts. In this tradition, models are tools, epistemic objects that helps economists build their knowledge through their manipulation. Solow's model is an exemplar in this fashion. It is an object that shows many different attributes ranging from its didactic purposes, its easy manageability to answer to 'what if' questions, its capacity to prefigure its own target (a steady growing economy under technical change), its chracter as an instrument of measurement, its quality as a small-scale expandable model upon which many other economists have built, and so forth.
Essentially, a mathematical model as an artifact, as opposed to the notion of a model as a representation of reality, is an artificial economy, an object whose properties do not need to have an exact counterpart in the so-called outer world. What Halsmayer shows is that Solow was absolutely clear about the reach and limitations of this approach. Moreover, the very object Solow's model was supposed to depict had not yet been fully consolidated, that is, the economy as a whole was something that economists were still revolving around to adequately measure and understand its inner workings. That is the sense in which Solow's model prefigured its own object.
In this sense, it is necessary to situate Solow and his model in a historical framing. Halsmayer describes how Solow, since his time as a graduate student under Leontief's supervision at Harvard, got in contact with many of the most important empirical efforts to measure the economy as a whole. Wassily Leontief was a major contributor to the area, having idealized the structure of input-output matrices, which depicts the whole economy as a system of mutual purchases and sellings among its different sectors. The 1940s and 1950s were also marked by the efforts to build national accounting systems with a clear and common methodology to measure gross national product.
However, Solow distances himself from Leontief with regard to what he considered to be the best path for economics as a discipline to trail. Mathematical modeling could have an important role in a social science that is not able to submit its main object to experimentation. Solow considered that the empirical efforts of his time were limited in their capacity to explore what would happen to an economy when certain variables changed. Stressing an artificial economy was, nonetheless, possible through small-scale models that would tell the effects of such changes.
Small-scale models, such as Solow's, were very simplified objects, with clear-cut relations among variables, under simplified assumptions that would only have to be, according to Solow's vague methodological preamble to his 1956 paper, 'reasonably realistic'. Thus, many essential aspects of a real economy would have to be left aside. Solow showed how an economy could exhibit a balanced growth path under neoclassical assumptions. It was a world without fritcion, uncertainty, risk, under perfect competition, with income and capital per capita growing at exogenous rates.
One year after, in a 1957 paper, Solow used his model as an instrument of measurment for the economy, feeding it with economic data. It showed that only a minute fraction of product variation was due to the inputs of his production function (capital and labor). Growth was explained mostly by the residual term, which Solow ascribed to technological changes.
What Halsmayer brilliantly shows us is how Solow, by foregrounding growth and technical change, perfectly mingled his model with the social aspirations of the time. The 1950s and 1960s were marked by the imperatives of growth and by the technological race between the US and the Soviet Union during the Cold War.
However, mathematical modeling was not immune to criticism. The simplified assumptions and its alleged detachment from reality were common targets among its detractors. Halsmayer shows the intellectual disputes that have arisen from that, especially between Galbraith and Solow. She argues that these intellecutal clashes come from an intrinsic interpretative opening from models, an ambiguity that stems from positive and normative muddling.
When someone picks neoclassical growth models, they might as well inquire as to whether the model's assumptions are to be considered as characteristics from a real economy. This would imply that they see the world as a place where perfect competition dominates, where there is no uncertainty, where capital, labor, and prices instantly adjust to changes. Hence, the policy implications for an economy like this would be radically different from the ones supported by someone who treats Solow's model as a possible economy to be achieved.
Halsmayer is emphatic at this point. Solow was always very careful with leaps from mathematical models to reality. He always thought that the government had a major role in helping the economy achieve full employment in the short run and estimulating technological advancements, so that the economy could eventually arive at a balanced growth path.
What is most interesting about Halsmayer work is that she inscribes her history of economics approach in a Science Studies tradition. This enables her to look at science as a historical process that unfolds through the circulation of epistemic objects that are enacted by their interactions with scientists. Instead of using the same old school of thought framing that would have a hard time in understanding Solow's Keynesian policy support and his adoption of neoclassical modeling, she shows that his conceptions of mathematical modeling was shaped by the MIT's community, where he taught in an engineering department, and at the same time this community was very much influenced by him.
Essentially, a mathematical model as an artifact, as opposed to the notion of a model as a representation of reality, is an artificial economy, an object whose properties do not need to have an exact counterpart in the so-called outer world. What Halsmayer shows is that Solow was absolutely clear about the reach and limitations of this approach. Moreover, the very object Solow's model was supposed to depict had not yet been fully consolidated, that is, the economy as a whole was something that economists were still revolving around to adequately measure and understand its inner workings. That is the sense in which Solow's model prefigured its own object.
In this sense, it is necessary to situate Solow and his model in a historical framing. Halsmayer describes how Solow, since his time as a graduate student under Leontief's supervision at Harvard, got in contact with many of the most important empirical efforts to measure the economy as a whole. Wassily Leontief was a major contributor to the area, having idealized the structure of input-output matrices, which depicts the whole economy as a system of mutual purchases and sellings among its different sectors. The 1940s and 1950s were also marked by the efforts to build national accounting systems with a clear and common methodology to measure gross national product.
However, Solow distances himself from Leontief with regard to what he considered to be the best path for economics as a discipline to trail. Mathematical modeling could have an important role in a social science that is not able to submit its main object to experimentation. Solow considered that the empirical efforts of his time were limited in their capacity to explore what would happen to an economy when certain variables changed. Stressing an artificial economy was, nonetheless, possible through small-scale models that would tell the effects of such changes.
Small-scale models, such as Solow's, were very simplified objects, with clear-cut relations among variables, under simplified assumptions that would only have to be, according to Solow's vague methodological preamble to his 1956 paper, 'reasonably realistic'. Thus, many essential aspects of a real economy would have to be left aside. Solow showed how an economy could exhibit a balanced growth path under neoclassical assumptions. It was a world without fritcion, uncertainty, risk, under perfect competition, with income and capital per capita growing at exogenous rates.
One year after, in a 1957 paper, Solow used his model as an instrument of measurment for the economy, feeding it with economic data. It showed that only a minute fraction of product variation was due to the inputs of his production function (capital and labor). Growth was explained mostly by the residual term, which Solow ascribed to technological changes.
What Halsmayer brilliantly shows us is how Solow, by foregrounding growth and technical change, perfectly mingled his model with the social aspirations of the time. The 1950s and 1960s were marked by the imperatives of growth and by the technological race between the US and the Soviet Union during the Cold War.
However, mathematical modeling was not immune to criticism. The simplified assumptions and its alleged detachment from reality were common targets among its detractors. Halsmayer shows the intellectual disputes that have arisen from that, especially between Galbraith and Solow. She argues that these intellecutal clashes come from an intrinsic interpretative opening from models, an ambiguity that stems from positive and normative muddling.
When someone picks neoclassical growth models, they might as well inquire as to whether the model's assumptions are to be considered as characteristics from a real economy. This would imply that they see the world as a place where perfect competition dominates, where there is no uncertainty, where capital, labor, and prices instantly adjust to changes. Hence, the policy implications for an economy like this would be radically different from the ones supported by someone who treats Solow's model as a possible economy to be achieved.
Halsmayer is emphatic at this point. Solow was always very careful with leaps from mathematical models to reality. He always thought that the government had a major role in helping the economy achieve full employment in the short run and estimulating technological advancements, so that the economy could eventually arive at a balanced growth path.
What is most interesting about Halsmayer work is that she inscribes her history of economics approach in a Science Studies tradition. This enables her to look at science as a historical process that unfolds through the circulation of epistemic objects that are enacted by their interactions with scientists. Instead of using the same old school of thought framing that would have a hard time in understanding Solow's Keynesian policy support and his adoption of neoclassical modeling, she shows that his conceptions of mathematical modeling was shaped by the MIT's community, where he taught in an engineering department, and at the same time this community was very much influenced by him.
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