Schumpeter's early contributions on crises theory and business-cycle theory

Abstract

The article describes Schumpeter’s early contributions on business-cycle theory, particularly his 1910 essay “On the Nature of Economic Crises”, and the evolution of his thought on the issues involved in his Theory of Economic Development over a period of three decades until his Business Cycles (1939). From the very beginning Schumpeter made it clear that his theoretical system is based on the fundamental distinction between statics and dynamics. Therefore his use of the core concepts ‘statics’ and ‘dynamics’ is discussed in greater detail. Comments on the central Wgure of the innovative entrepreneur and the importance of credit for causing cyclical Xuctuations in the economy follow. The paper concludes with Schumpeter’s idea of the business cycle as a superposition of diVerent waves.