SCHUMPETER IN THE CONTEXT OF TWO CANONS OF ECONOMIC THOUGHT

Abstract

The publication of Schumpeter's "lost" seventh chapter--with the holistic and Faustian title "The economy as a whole", so typical of the German economic tradition--again raises the question of the ''duality'' in Schumpeter's economic thinking: On the one hand Schumpeter's typical ''Germanic'' approach, emphasizing dynamics, technical change and the entrepreneur, on the other hand his admiration for the mechanical economics of Walras. This paper attempts to explain Schumpeter's duality--his "schizophrenia"--by placing his work in the context of two different canons of economic thought, the standard mainstream canon (the ordnende and passivist-materialist tradition in Werner Sombart's terms) and what we have labelled "The Other Canon" (the verstehende and activist-idealist tradition in Sombart's terminology). The paper attempts to show that in the light of the now almost extinct Other Canon of economics, Schumpeter appears far less original than what he does to today's mainstream. It is argued that while the Harvard Economics Department during Schumpeter's tenure there moved away from the Other Canon type economics, Schumpeter found ample support and research activity in this alternative canon of economics at Harvard Business School. The paper explores the possible influences and similarities of thought on Schumpeter from three economists associated with Harvard Business School: Herbert Somerton Foxwell, Edwin Gay and Fritz Redlich.