Theory of Economic Growth, bourgeois theory which purports to substantiate the interrelation between the technico- economic categories of reproduction and the rates of its expansion. Its appearance is a consequence of the competition between the two world systems, and the attempts to shift state-monopoly regulation onto a long-term basis. This theory considers three groups of problems: factors determining potentially possible economic growth; interrelation of technico-economic categories ensuring steady growth; ways of achieving steady growth (whether achieved automatically or requiring state interference). The 1950s witnessed the appearance and development of the Keynesian version of the growth theory. Its founders and leading representatives were the British economist Roy Harrod and the American economist Evsey Domar. According to Keynesian views, the formation of demand, especially the demand for capital investment, plays the most important role in economic growth. Models created by Keynesians produced the following conclusions: the rate of accumulation is a principal strategic factor and a basic parameter for regulating long-term growth; the growth rate is stable if the share of savings in the income and the capital coefficient are also stable (the so-called guaranteed growth rate). However, this stability is not maintained automatically. Deviations of actual growth rates from the guaranteed rates engender cyclic vacillations. To maintain stable growth, the state has to interfere and make it sure that demand is effective. In the late 1950s, economists of the neoclassical school (see Neo-classical Trend in Bourgeois Political Economy), who advanced what they claimed was a more realistic version of the theory of economic growth, began to actively elaborate the problems involved. They proceeded from the production function characterising the link between the expenditure of economic resources and the output of products. A system of indicators characterising the dependence between the expenditure and the output of products and between the expenditures themselves was deduced on the basis of different production functions. Moreover, a system of quantitative characteristics was elaborated for evaluating the economic effect of technological progress on economic growth. At the same time the neo-classical theory of growth was expected to prove that the capitalist economy is internally stable and possesses the necessary means of automatically restoring the disturbed equilibrium, and that government interference in the economy must be restricted primarily to the sphere of credit and monetary policy. The extremely abstract character of the models of economic growth and the narrowness and unrealistic character of the initial prerequisites are the principal reasons why this theory is in a deep crisis today. The basic idea of economic growth as the factor that can solve such radical problems in capitalist society like creating jobs, reducing social inequality and providing higher standards of living for all strata of the population has gone bankrupt. In this situation, bourgeois economists often advance an alternative to purely quantitative growth, viz. the doctrine of rising "quality of life" (see Theory of Quality of Life). The practical recommendations of the theory of economic growth also proved 362 of no avail. It has formulated two principal trends of state-monopoly regulation of economic growth: (a) short-term regulation of the economy to smooth out cyclic vacillations, primarily by applying Keynesian formulas for controlling effective demand; (b) maintenance and development of the economic potential in order to step up the growth rates in a longer perspective. Both economic policy trends encountered huge difficulties because of the sharp aggravation of capitalist contradictions in the 1970s. Galloping inflation and the internationalisation of economic links hamper the policy of stabilisation using traditional methods of regulating effective demand. Keynesian anti-cyclic measures proved to be ineffective. The policy of protracted stimulation of economic growth turned out to be extremely lop-sided. Instead of aiming at infinitely increasing potential growth rates, economists are now more and more often posing the question of “reasonable” limits of growth as regards production and consumption. The shortage of certain raw materials, sharp rise in the price of raw materials and energy resources, and the deterioration of many "quality of life" indices demand new forms of state interference in the economy. The crisis of the theory of economic growth is one of the manifestations of the overall crisis of bourgeois political economy.