ECONOMIC GROWTH: STATEMENT OF THE PROBLEM ital supply per capita with weights proportionate to the base period produes. going to labor and property, respectively. If we may equate tivity with earnings, we obtain a combined index of resources which has a particular meaning. It tells us how net national product per capita would have grown had the productivity of resources re- mained constant at base period levels while only the supplies of re- sources per head increased Such an index, based on the twenties, rises only some 14 per cent between the seventies and the last decade. To account for the quadrupling of net national product per capita, the productivity of a representative unit of all resources must have in creased some 250 per cent. This seems to imply that almost the entire increase in net product per capita is associated with the rise in produc tivity. This result may arise in some part from our choice of a base period. We chose a fairly recent base period, 1919-28, close to the valuation base of the national product estimates, 1929. Since the rela- tive importance of service and property incomes remains fairly stable over the entire period (cf. Kuznets, "Long- Term Changes, "pages 135 137), and since capital increased far more rapidly than labor, the price of a unit of capital service must have fallen over time compared with that of a unit of labor. The choice of a fairly recent year as a base for our relatives in effect means weighting each unit of capital by a relatively low price. Experiment, however, indicates that choice of base is of minor im- portance for the question at hand. If we shift the base of the index of resources to 1869-78, the increase of total input between 1869-78 and national product per capita in 1929 prices, the indicated rise in pro- ductivity is still much greater, 175 per cent. This calculation, how- ever, overstates the importance of the shift in base If we shift the base for our resource index to 1869-78, we should also value national prod uct in the prices of that decade This would, in all likelihood, make the trend of national product steeper and so indicate a greater increase in productivity than the 175 per cent mentioned above. (See Kuznets Long-Term Changes, " pages 44-47. pears to give to productivity increase, and it should be, in a sense ss ap- 3. This result is surprising in the lopsided importance wl ing, if not discouraging, to students of economic growth. Since we know little about the causes of productivity increase the indicated importance of this element may be taken to be some sort of measure of our ig lorance about the causes of economic growth in the United States and some sort of indication of where we need to concentrate our attention Since it will do little good to provide a catalogue of the possible causes of the rise in efficiency i shall merely add two notes which have to