Schumpeter's Work Research Articles

Firm creation and economic transitions

Virtually all industrial countries are experiencing some form of transformation in their economies, from the dramatic move from centrally planned to market economies in East-central Europe, to the rebuilding of the economies in the so-called Rust Belt of the USA, to the efforts by Asian countries to return to their recent high growth levels. The analysis builds on the work of Schumpeter, Hannan and Freeman, and Kornai to develop a picture of an economy as an evolutionary process in which the creation, survival and growth of firms is the key to continued growth. This entrepreneurial activity is vital to successful transformations at critical points when the existing enterprises are not well suited to market conditions—what Schumpeter refers to as creative destruction. This paper uses detailed data on the transitions in the Polish and Michigan economies to present evidence support these propositions. By showing that the successful transformation of two economies with obvious historical differences both depended upon the creation of new firms rather than on the restructuring of existing firms we want to contend that this is a universal necessity in successful economies.

A schumpeterian heterogeneous agent model of the Business Cycle

S chumpeter's business cycle theory is rooted in chapter 6 of the Theory of Economic Development: ,An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle which he published in 1911.1 This book, which laid the foundations for Schumpeter's scientific work, did not become famous because of its explanation of the trade cycle. Instead, it was Schumpeter's analysis of the market process that was regarded as the most important part of the Theory. The point of departure was the traditional notion of an equilibrium economy with goods and money moving in a constant circular flow. Because all of the resources were allocated to their optimal utilization, there was no economic reason to depart from the familiar path. For equilibrium theorists, changes of a given setting could only be triggered by disturbances originating from non-economic events such as wars or natural catastrophes which alter the scarcity conditions of the economy. This would affect relative prices which would force the agents to adapt their plans to the situation. Once the disturbance had been digested, the economy would assume another stationary state, which would be a stable one because nobody would have a reason to depart from it (Schumpeter 1949b, chap. 1 ). The problem with this equilibrium notion was that it was not consistent with economic reality. There was no circular flow continuously reproducing itself, and there were not only passive adaptations to exogenous changes of relative prices, but active competition among industrial corporations which introduced products and production processes. To include this form of dynamics into economic theory, Schumpeter introduced the concept of the pioneering entrepreneur, who breaks away from the equilibrium flow by generating new combinations (chap. 2). However, since the equilibrium of an economy is a state in which by definition all assets are employed, neither investment money nor production

Léon Chagnaud : un entrepreneur innovateur dans le secteur des travaux publics

Abstract For a century the Chagnaud company has been a civil engineering firm of the first order. It owes its renown to one man : Léon Chagnaud (1866-1930). Symbol of a generation of entrepreneurs and innovators, this man marked his era professionally, presiding over the Public Works Syndicate from 1911 to 1916, becoming at the end of his life an important politician (senator of the Creuse from 1921 to 1928). The fact that public works are a risky activity necessitating little initial capital was very early on a factor favorizing innovation. Ever since Schumpeter's works (1883-1950), no one has doubted the major importance of innovation, as much a factor of technical progress in general as a fundamental element of company strategy. Léon Chagnaud seized completely the opportunities offered to him at the end of the nineteenth century. From the beginning of the twentieth century, the innovating process has become more and more complex with the passage of time. To carry out monumental works, risks must be limited and to do so, it is preferable to constitute groups of enterprises. Until 1914 the type of innovative builder dominated, but the First World War brought profound changes to the conditions under which the profession operated ; firms turned away more and more from questions of technique to those of management. Léon Chagnaud' s death in 1930 marked the end of an era, in which technical innovation had been one motor of growth in civil engineering.

Schumpeter and the idea of social science: a metatheoretical study

This book is a comprehensive investigation of the work of Joseph Alois Schumpeter (1883–1950), one of the great economists of the twentieth century. In this study, Yuichi Shionoya highlights Schumpeter's methodological views and emphasizes his ideal of a universal social science. Taking on board all aspects of his work, he reconstructs a system which encompasses theory (economic statics, economic dynamics, economic sociology) and metatheory (philosophy of science, history and sociology of science). The originality of Schumpeter's work - which the author calls the two-structure approach to the evolution of mind and society - is examined in the light of the intellectual field in Germany and Austria in the early twentieth century. This book is a major contribution to the history of economic thought.

Government Deficits, Liquidity Preference, and Schumpeterian Innovation

Wray asserts that rigorous analyses of the role played by innovation in economic development must acknowledge the contribution of Joseph Schumpeter. However, the author suggests that the current stagnation confronting most developed, capitalist economies cannot be understood without synthesizing Schumpeter's insights with those of Kalecki and Keynes. Hence, Schumpeter's work alone is inadequate in explaining the links between government deficits in ensuring aggregate demand and corporate profits.

Schumpeter's theory of economic evolution: a Darwinian interpretation

A general Darwinian framework is employed to arrive at an interpretation of Schumpeter's work that brings out clearly its specific evolutionary aspects. Schumpeter's theory of economic evolution is seen to be still highly relevant to evolutionary economics, because it sheds light on some fundamental issues: the relationship between evolutionary theory and equilibrium analysis, the usefulness of Darwinian theory for economics, and the precise nature of the evolutionary forces at work in economic systems.

Market Power, Innovation, and Efficiency in Telecommunications: Schumpeter Reconsidered

During the past decade, the work of the economist Joseph A. Schumpeter has experienced a revival as a framework for the design of public policies toward business. His metaphor of capitalism as a of creative destruction, or his claim that market power is conducive to innovation, has been used to rationalize less stringent antitrust enforcement and inspired the deregulation movement. Schumpeter produced an impressive and diverse body of scholarly research but did not integrate it into a comprehensive or unified theory. The absence of such a coherent representation creates the danger that isolated concepts are hastily applied without careful exploration whether the underlying model is applicable. Due to their unique economic characteristics, infrastructure industries, including energy and telecommunications, provide such a case in point. Schumpeter addressed public utility and infrastructure issues only in a few scattered passages. He was most outspoken when criticizing the wisdom of government antitrust and regulatory policies based on the static model of perfect competition, rather than on a more dynamic notion of competition. Regrettably, the vast literature on public utilities and their regulation barely responded to this challenge and continued to focus on static efficiency and equity issues while remaining largely silent with respect to innovation. This paper attempts to explore the implications of Schumpeter's work for the public regulation of telecommunications services. The paucity of his explicit writing to these issues renders my analysis an exercise in interpretation (but not exegesis). The next section reviews Schumpeter's overall research program and his perspectives on the process of economic development. His analyses are then applied to the

Joseph Alois Schumpeter: The Public Life of a Private Man.

In this major scholarly study of the life of Joseph A. Schumpeter, one of the great intellectual figures of the twentieth century, the distinguished economist Wolfgang Stolper delves into the mind of his former teacher, exploring the development of his ideas and, especially, their influence on politics and public policy. After reflecting briefly on Schumpeter the man, Stolper explains the evolution of Schumpeter's work, particularly his insights during the 1920s on public finance, his contributions to monetary theory and the study of business cycles, and his writings on socialism. Stolper goes on to describe and evaluate Schumpeter's public activities following World War I and his role as a finance minister, placing the development of his thought in the turbulent political context of his times. Drawing on a vast array of new and exciting sources, Stolper paints a portrait of his mentor as a decent, ambitious, and complex man whose many insights into economy and society found their way outside of the academy and into the practical world of economic policy. All readers interested in the history of economic thought and twentieth-century political and intellectual history will find this book invaluable.

Schumpeter's vision of socioeconomics

Just as Schumpeter many years ago had a brilliant vision of a new and broad kind of economics (what he called Sozialökonomik), so do many socioeconomists today have a similarly grand vision. Will they be able to implement it and translate it into important scientific works, on a par with the grandeur of the vision? Schumpeter's work may be relevant to answering this important question. Schumpeter experimented in his lifetime with two versions of socioeconomics, which were not equally successful. In his youth, he advocated a form of economic imperialism and erased the boundary between socioeconomics and the other social sciences. Later, however, Schumpeter accepted the valuable contributions that the noneconomic social sciences can also make to the understanding of economic phenomena, coming to advocate a collaboration between economics, sociology, economic history, and statistics.

The limited rationality of democracy: Schumpeter as the founder of irrational choice theory

Joseph Schumpeter's work has been all too selectively appropriated by public choice theorists. Schumpeter criticized the high level of rationality the classical model of democracy imputes to citizens, and he provided an alternative theory, inspiring rational choice theory and allowing for diverse forms of irrationality. Following in Schumpeter's footsteps I will discuss four problems: the deficient rationality of voters, politicians as “political entrepreneurs,” leadership in democracy and the rise of the “political class,” and the affinity between democracy and capitalism.

From Creative Action to the Social Rationalization of the Economy: Joseph A. Schumpeter's Social Theory

Schumpeter's writings on the transition from capitalism to socialism, on innovative entrepreneurship, on business cycles, and on the modern corporation have attracted much attention among social scientists. Although Schumpeter's theoretical and sociological writings resemble the works of Marx, Durkheim, and Weber in that they further our understanding of the rise and nature of modern society, his contribution to social theory has yet to be assessed systematically. Arguing that Schumpeter's perspective, if understood in social theoretical terms, provides a promising starting point for the sociological analysis of the changing relationship between economy and society, I concentrate on two elements of his work that are of value to theoretical sociology today: the distinction between creative action and rational action that is fundamental to his theory of the entrepreneur, and his thesis that the success of the capitalist system leads to its demise. Joseph Schumpeter's work is widely received as paradoxical and contradictory.' He was the conservative champion of innovative entrepreneurship whose lifework culminated in the thesis that the success of the capitalist economy leads to the downfall of the capitalist social order. For decades, readers of his works have tried unsuccessfully to reconcile the tension between his attitudes toward, and his analyses of, capitalism and socialism. Schumpeter's diverse writings are read most often by economists whose familiarity with the history of the social sciences is too narrow to encompass his work. When read from a social theoretical perspective, however, his work gains greater coherence as a compelling interpretation of the social and economic transformations of capitalism in the twentieth century. Schumpeter was one of this century's most complex economists. His view of economics was unconventional, as shown by this quote from the History of Economic Analysis: [S]cience as a whole has never attained a logically consistent architecture; it is a tropical

Capital and Credit: A New Formulation of General Equilibrium Theory.

Contemporary general equilibrium theory is characteristically short-run, separated from monetary aspects of the economy, and as such does not deal with long-run problems such as capital accumulation, innovation, and the historical movement of the economy. These phenomena are discussed by growth theory, which being short term, cannot deal with the fundamental problem of how the production function is derived. This book provides a much-needed synthesis of growth and monetary theory, drawing on the work of Schumpeter, Keynes and the prewar neoclassical economists to formulate a capital-theoretic general equilibrium theory.

Four theorems about the market and democracy

Abstract. Schumpeter's account of the relationship between capitalism, socialism and democracy is reviewed by means of a critical analysis of four contemporary neo‐liberal theorems about the market and democracy. It is argued that they each embody partial truths that can only be accepted with considerable qualifications, which the paper seeks to provide. The connection of the four theorems with Schumpeter's work is then traced through the continuities of the liberal political tradition.

Schumpeter's early work

Schumpeter's early work

The economics and sociology of capitalism

The renowned economist Joseph A. Schumpeter (1883-1950) made seminal contributions not only to economic theory but also to sociology and economic history. His work is now attracting wide attention among sociologists, as well as experiencing a remarkable revival among economists. This anthology, which serves as an excellent introduction to Schumpeter, emphasizes his broad socio-economic vision and his attempt to analyze economic reality from several different perspectives. ambitious introductory essay by Richard Swedberg uses many new sources to enhance our understanding of Schumpeter's life and work and to help analyze his fascinating character. This essay stresses Schumpeter's ability to draw on several social sciences in his study of capitalism. Some of the articles in the anthology are published for the first time. The most important of these are Schumpeter's Lowell Lectures from 1941, An Economic Interpretation of Our Time. Also included is the transcript of his lecture Can Capitalism Survive? (1936) and the high-spirited debate that followed. The anthology contains many of Schumpeter's classical sociological articles, such as his essays on the tax state, imperialism, and social classes. And, finally, there are lesser known articles on the future of private enterprise, on the concept of rationality in the social sciences, and on the work of Max Weber, with whom Schumpeter collaborated on several occasions.

Group Carries on Schumpeter's Work

The American Journal of Economics and SociologyVolume 47, Issue 2 p. 221-222 Group Carries on Schumpeter's Work , Search for more papers by this author , Search for more papers by this author First published: April 1988 https://doi.org/10.1111/j.1536-7150.1988.tb02030.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume47, Issue2April 1988Pages 221-222 RelatedInformation

Macroeconomic Relations in the Islamic Economic Order

Josef Alois Schumpeter indicated in his monumental work that economic science, if it is to be a science, must be bereft of all shades of value judgements. He defined “scientific economics” to mean “the sum total of the historical, statistical and theoretical techniques, together with the results they produce”. The impingement of all shades of value judgements was to be considered outside the pale of economic theory, because, as Schumpeter claimed, such judgements leave economic analysis unaffected. Notwithstanding this claim, the statement could not be sustained in the body of Schumpeter's work.

Schumpeterian innovation and entrepreneurs in capitalism: A case study of the U.S. biotechnology industry

This paper uses the theoretical framework developed by Joseph Schumpeter to examine the first ten years of the U.S. biotechnology industry. The role of the entrepreneur, scientist/inventor, manager and capitalist are distinguished. There is a discussion of the obstacles the small firms have had to overcome to create a “New Economic Space” in the marketplace. It is argued that the earlier Schumpeter of The Theory of Economic Development and Business Cycles emphasizing the role of small firms more accurately describes the U.S. biotechnology industry in 1985, than Schumpeter's later work Capitalism, Socialism and Democracy which postulated that the large established firms have preempted the role of small firms in innovation. A discussion of the role of large established firms and the small entrepreneurial firms presents the tensions inherent in the “cooperative” arrangements between these two types of business enterprises. The role of small biotechnology firms in reducing these innovations to practice and in their ability to continue to grow demonstrates that the independent entrepreneur recognized by the early Schumpeter has been very active in the biotechnology industry.

Political Ambitions, Volunteerism, and Electoral Accountability

A generally accepted interpretation of American politics today is associated with the “theory of electoral accountability.” The salient features of this theory are well known. The thesis was initially shaped in Schumpeter's classic work on democracy, and since has been elaborated by a generation of scholars. The elaboration, especially where grounded in empirical studies, has established (1) that the public, being largely apathetic about political matters and in any case ill-informed regarding public issues, cannot provide the necessary and sufficient conditions for the maintenance of democratic procedures; (2) that a liberal political and social elite are committed to the preservation of democratic forms, at least more committed than the average citizen; therefore, (3) what maintains the democratic tradition is not extensive public participation in political policy-making, but, instead, competition among elites whose behavior is regulated by periodic review procedures. Competition among elites and review by citizens of political leaders are provided by elections. Thus elections hold political leaders accountable to non-leaders.Writers associated with this general position have recently come under scholarly attack. The critique, directed at the first two assertions, can be reviewed briefly: although true that the public is not well-informed politically and is not actively engaged in political life, this is not to be attributed to the inherent traits of citizens so much as to the structure of political opportunities in the United States. Moreover, although true that research has detected among political leaders a greater commitment to democratic procedures than is the case for the ordinary citizen, this commitment is to procedures in which only the leaders participate.

The Transfer of Technology to Developing Countries

Abstract : The theme is the search for an optimum method to transfer technology. Topics include: historical cases of transfer; economic theory as applied to the technological gap concept; a reexamination of the seminal work of Schumpeter and continental scholars, comparatively unknown in the U.S.; analysis of socio-economic variables with particular reference to the possibility of utilizing simulation technique; and possible strategies for improved methods of technological transfer, using sponsoring institutions such as 'fomentos', international business, indigenous military organizations, external military bases and missions, and others. Results, among others, include: (1) Recognition of relative neglect of transfer of technology studies in social science, particularly in economics: (2) Acceptance of the concept as a strategic tool for theoretical and operational use; (3) Criticism of the linear homogeneous production function technique (4) Exploration of the potential of simulation models for technological transfer; (5) Establishment of a nexus between historical or European experience and present day operational problems; (6) Exposure of the issue between those who think that transfer is a problem in imitation and information theory, and those who feel that the shock of social change attendant on the introduction of new technology must be socially engineered; (7) Emergence, from the dialogue, of a beginning strategy of transfer of technology. (Author)