MODERN GROWTH THEORY has laid great stress on the properties of systems capable of balanced growth. Two types of discussions have predominated: those which show convergence toward balanced growth, and those which discuss the character of balanced-growth paths. Presented here is a model of steady technological progress. One implication of our findings is that balanced growth in the presence of steady technological change may be, in a well-defined sense, a razor's edge case. The present paper extends the model of Solow [2], in which he analyzes capital-embodied technological change in a Cobb-Douglas (CD) production function, to the general case of neoclassical production functions. The properties of the more general case differ greatly from CD, and CD is in fact a razor's edge case. On one side of CD, where production is substitution-inelastic,2 the long-run growth properties of the system are similar to (but not the same as) CD. On the other side, where production is substitution-elastic, the system explodes to infinite growth rates. A similar property appears in the dual space, for the (competitively determined) interest rate becomes negative on the substitution-inelastic side of CD, while it becomes infinite on the other side. Thus some striking discontinuities of asymptotic behavior arise. From this we conclude that CD may be an unfelicitous choice of production function. Economists who think about long-run models might begin to think in terms of models which show unbalanced growth; the best place to start such thinking is with production functions which are not CD. 2. THE MODEL